Predatory Lending
As a consumer, every individual has rights under the federal Truth and Lending Act, which may entitle you to monetary damages and possibly the right to rescind, or unwind, a mortgage loan. Through rescission, a consumer may have the legal right to set aside a mortgage for violations of the Truth and Lending Act, and collect damages.
A consumer may also have rights under their respective states Unfair and Deceptive Practices Laws. Most states have laws that protect consumers if they were victims of fraud or deception in consumer transactions and a real estate loan is a common consumer transaction.
Forbearance Agreements
Mortgage lenders routinely enter into forbearance agreements with borrowers in order to restructure, refinance or modify a loan agreement. Forbearance agreements generally provide that the lender will refrain from pursuing remedies under a loan agreement due to the borrowers default for failure to pay in exchange for a proposed refinancing, payoff or similar restructuring of the loan. Depending on your financial strength and situation, a repayment plan may be available for delinquent borrowers, or even a temporary reduction of loan payments. Your lender may agree to enter into a forbearance agreement and a restructuring of your loan obligations if you have recently experienced a reduction in income or an increase in living expenses. The Schwartz Law Firm can help you provide the necessary information to your lender and negotiate a forbearance agreement in order to demonstrate that you will meet all the requirements of the agreement and any related payment plan.
Refinancing or Mortgage Modification
If there is equity in your home, refinancing your current obligations, or simply extending the term of your mortgage loan may be a viable option to solve any current cash flow issues. Modification of your mortgage terms may also be an option, provided your lender is willing to agree to any necessary changes. Either refinancing or modifying your mortgage loan may reduce your monthly payments to a more affordable level.
Deed-In-Lieu of Foreclosure
Some lenders will accept your property in exchange for your loan obligations, without going through the foreclosure process. The primary benefit of a deed-in-lieu of foreclosure, which requires giving title in your property to your lender, is that it forgoes a foreclosure, which may in turn cause less damage to your credit rating. If prior attempts at selling the property were unsuccessful, agreeing to a deed-in-lieu of foreclosure may be the safest and quickest way to get out from under the mortgage debt.
Pre-Foreclosure Sale
A pre-foreclosure sale or short sale involves selling your property for an amount that is less than the total needed to pay off your mortgage loan. Lenders may agree to a short sale if there is a willing and able buyer who will close in a short period of time.
Bankruptcy
Consumers facing a foreclosure or excessive credit card debt may be able to obtain immediate relief through the United States Bankruptcy Code. Chapters 7 and 13 of the Bankruptcy Code provide consumers with the ability to either eliminate their debt entirely, or restructure their debt in an effort to salvage certain personal assets, such as a home.
Specifically, Chapter 13 of the Bankruptcy Code allows a debtor to repay some or all of his or her debt over a period of 3 to 5 years. Typically, the Chapter 13 debtor possesses the ability to repay some or all of their debt but requires time to do so. The benefits created by filing for relief under Chapter 13 of the Bankruptcy Code are that a debtor can keep some or even all of his or her property (typically a home and car). One of the additional benefits of a Chapter 13 bankruptcy is interest and late fees do not accrue in a chapter 13 payment plan, allowing consumers to recover from their debt at a faster rate.
Examples of the typical use of Chapter 13 of the Bankruptcy Code include debtors who fall behind on their mortgage payments or who simply earn too much money to eliminate all of their debt. Importantly, the automatic stay applicable in all bankruptcy cases will stop a foreclosure proceeding and give the debtor the right to pay back the past due payments over a period of up to sixty (60) months. As part of the payment plan, a debtor is required to pay back a percentage (or all) of his or her unsecured debt. Upon the completion of the plan, the debtor will receive a discharge of debts and will be able to keep their property.
Similarly, through Chapter 7 of the Bankruptcy Code, individuals can liquidate all of their debt and obtain a fresh financial start. Few assets can be kept through the Chapter 7 process, but for an analysis of whether you are a candidate for either Chapter 7 or Chapter 13 of the Bankruptcy Code, please contact us.
Corporate Restructuring & Ch. 11
The Schwartz Law Firm has extensive experience providing business advisory and crisis management services to companies both in Chapter 11 bankruptcy and working to avoid a chapter 11 filing. The Schwartz Law Firm helps navigate clients through the turmoil of situations involving financially troubled companies. Chapter 11 of the Bankruptcy Code provides businesses with the opportunity to undergo an organized restructuring of their balance sheets, which in turn creates the ability to regain strength.
