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Unsecured Mortgages

CAN COMPLETELY UNSECURED OR “UNDERWATER” MORTGAGES BE ELIMINATED THROUGH FILING FOR BANKRUPTCY?

foreclosure

The premise can be explained somewhat simply: a second mortgage is completely underwater.  The mortgage is no longer attached to ANY equity in your house because the first mortgage eats up all the value of the house.  This kind of thing is pretty common after the 2008 financial crisis.  Home values plummeted.  The bottom “dropped out” of many real estate markets.

If a second or third mortgage has no ACTUAL secured interest in your real estate because the first mortgage by itself exceeds your home’s value, the bankruptcy code appears to allow you to avoid these second or third mortgages that are “wholly unsecured.”   Section 506 of the bankruptcy code along with relevant sections should in theory allow the avoidance of such a “wholly unsecured” mortgage in either a Chapter 7 or Chapter 13 case.

However, courts are split on the decision of when (if ever) “underwater” mortgages can be avoided in bankruptcy.  The bankruptcy courts usually fully deny such an avoidance under a Chapter 7 case.  Although there are some conflicting opinions, several bankruptcy courts, including the Indiana Southern District (Indianapolis’s Court), allow such wholly unsecured mortgages to be avoided only in Chapter 13 filings.

Challenges to the inability to strip wholly unsecured mortgages during Chapter 7 cases have lead to the recent in Supreme Court decision of Bank of America v. Caulkett.   In this case, the Supreme Court made very clear that they would not allow avoidance of “unsecured mortgages” in Chapter 7 cases simply due to the lack of previous precedent being an “unfair taking” of potentially valuable rights of these mortgage holders.

Bank of America argued the value of retaining their secured status: the right to receive payments and the benefits of retaining their liens to realize future gains in value.  The Supreme Court decided to allow wholly unsecured mortgage avoidance in Chapter 13 but denied it for all Chapter 7 cases.

Therefore, the rules remain the same for greater Indianapolis-Area bankruptcy filers.   You can “avoid” a wholly unsecured mortgage in Chapter 13 potentially, but the right to avoid a wholly unsecured mortgage will NOT be allowed still in Chapter 7 cases.

If you are interested in any form of debt relief, especially in stripping mortgages off your home, give our office a call.

~Indianapolis Bankruptcy Attorney John F. Bymaster

John F. Bymaster

God’s View on Finances

IS GOD’S VIEW OF FINANCES  MUCH DIFFERENT THAN OURS?

God's View on Finances

What is God’s view on finances?  None of us are perfect.  We live in a very imperfect world.  Each of us has different financial difficulties we face.  We all have learned faulty and imperfect perceptions and habits about money.  Let’s take a quick view at some of God’s views about finances in the Bible (an insightful look for those who believe or do not believe the Bible alike):

For Israel, debts were to be short term, limited, and automatically released every seven years WITH the retention of inherited, ancestral property.  This is MUCH different than our current system:

Deuteronomy 15:1-2

At the end of every seven years thou shalt make a release. And this is the manner of the release: every creditor shall release that which he hath lent unto his neighbor; he shall not exact it of his neighbor and his brother; because Jehovah’s release hath been proclaimed.

It is Very Unwise to Take out Any Debts based on your Home and Personal Belongings – Do not get loans/mortgages if at all possible- they are arguably anti-biblical (if long term) and are NOT God’s system for doing things:

Proverbs 17:18

A man void of understanding striketh hands, And becometh surety in the presence of his neighbor.Proverbs 22:26-27

Be thou not one of them that strike hands, Or of them that are sureties for debts. If thou hast not wherewith to pay, Why should he take away thy bed from under thee?

*NOTE:  Before the 1950’s, mortgages and car loans were EXTREMELY uncommon practices.  Now the vast majority of people believe mortgages and car loans are okay or even beneficial for society.  Has it been beneficial?

DO NOT LEND OR BORROW PRINCIPLES- ESPECIALLY DO NOT BORROW:

Proverbs 22:7

The rich ruleth over the poor; And the borrower is servant to the lender.

Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”

NOTE: Romans 13:8 is frequently quoted to convince people to have “no debt”.  This is most likely an over application.   However, if you make a lifestyle of debt with no financial understanding,  it will take away your ability to love other people and live the life God intends for you.  God wants us to live a “simple” life.

GET RID OF THE RICH IS BAD, POOR IS GOOD MENTALITY: IT’S ALMOST ALWAYS MISAPPLIED AND TO MANY’S SHAME

In the book of Proverbs and throughout the Bible, it says continuously that the rich are wise and the poor are not wise.    We have to take out of our mind the glorification of being poor.  The lack of study and understanding prevents earthly riches and blessing that you can use to help others.  A poor person can be VERY limited in what they can do for the Lord on this earth (both in time and money).

GOD DESIRES US ALL TO BE GOOD STEWARDS

If the Holy Spirit leads you in a ministry that makes you very poor, then that is WONDERFUL because it is for God’s Kingdom.  Otherwise, you are to be the ABSOLUTELY BEST STEWARD OF ALL – which will usually result in much better use of your time and money.   Money and time management can be the beginning of putting your life in order and becoming a biblical “good steward.”  Greater spiritual blessings may follow quickly after you allow God to put physical things- such as your finances –  in order.

~Indianapolis Bankruptcy Attorney John F. Bymaster

BANKRUPTCY JUDGES & FEDERAL POWER

BANKRUPTCY JUDGES: THE “FEDERAL” JUDGES WHO ARE NOT “FEDERAL” JUDGES.

BANKRUPTCY JUDGES & FEDERAL POWER

BANKRUPTCY JUDGES & FEDERAL POWER:  The domain of bankruptcy was allotted to the federal government by the constitution itself where it says, “The Congress shall have Power To…establish…uniform Laws on the subject of Bankruptcies throughout the United States…. .”   This clause eventually led to the creation of the current federal bankruptcy system in 1978.   Federal bankruptcy judges were appointed to the bench in every District throughout the United States.  These federal judges, however, were not given the same power as full “Article III” judges (or the power of a regular federal judge to hear all federal and state matters-at least within the confines of their jurisdiction).

Certainly, a bankruptcy judge can hear ALL matters that pertain to bankruptcy, correct?  The answer to that question would surprisingly be NO at least according to the ruling of the famous Stern v. Marshall bankruptcy case which involved the famous (now deceased) Anna Nicole Smith.  This ruling greatly limited (and confused) federal judges’ ability to try cases that involved any State Court matters.  The jurisdiction of federal bankruptcy judges was limited to any dispute that “stems from the bankruptcy itself.”

Therefore, even if a matter is fully relevant, related, and essential to proper administration of a bankruptcy case, a federal bankruptcy judge may have no jurisdiction or authority over the matter.   If a state or federal court matter exists and it “does not stem from the bankruptcy itself,” the federal bankruptcy judge may have no power to decide on such matters.    Even a consent to jurisdiction for such a matter may not give the bankruptcy judge sufficient authority to decide such a matter.   Well, at least until very recently.

In Wellness International Network vs.  Sharif, the Supreme Court of the United States recently has given bankruptcy judges new authority to make final judgments on bankruptcy disputes that contain state issues.  If the parties consent to the jurisdiction, this new ruling appears to give federal bankruptcy courts full jurisdiction over such matters.   Federal Bankruptcy court can now serve as a useful and all-inclusive venue for deciding complex bankruptcy-related matters in one place.

Although Bankruptcy Judges are still not full “Article III” Federal Judges, the Supreme Court’s new holding greatly increases bankruptcy judges’ power to take care of bankruptcy disputes.   Most parties would naturally assume (or at least prefer) that all disputes related to bankruptcy can be determined in one place: bankruptcy court.   Now, with the consent of parties, it appears that all bankruptcy-related matters can be determined in one place: by the Federal Bankruptcy Judge.

~Indianapolis Bankruptcy Attorney John F. Bymaster

Timeshares and Bankruptcy

Indianapolis Bankruptcy Attorney John Bymaster explains timeshares and bankruptcy

Timeshares can frequently be handled according to your preference in bankruptcy: you can either KEEP them or even better for many people  . . . YOU CAN GET RID OF THEM.    A discussion of timeshares and bankruptcy should probably be broken down into three topics: 1) How to retain timeshares in bankruptcy, 2) How to surrender timeshare responsibilities in bankruptcy, and 3) How to recognize timeshares too valuable to retain in bankruptcy.

How to Retain a Timeshare in Bankruptcy

Many times the value of a timeshare is either too insignificant to administer in bankruptcy or your State’s bankruptcy exemptions will protect it in bankruptcy.   Because your timeshare may fit within this value range, it may be possible to retain your timeshare even though you are filing for bankruptcy.

In order to retain a timeshare in bankruptcy in Indiana, we first check to see how much similar time shares sell for.   Many times there is either a very low-price-fetching or NO market for many timeshares.   Other times timeshares may value in very low such as for $1000-$3000 for the timeshare right.  Timeshares in this range will be protected many times by Indiana’s “tangible property and OTHER REAL ESTATE” bankruptcy exemption.   Therefore, if this exemption is properly taken and the Trustee “abandons” your time share, you usually can keep your time share property.   Remember, ALL regular fees and ongoing maintenance amounts must continued to be paid if you plan on retaining the timeshare.

How to Surrender Timeshare Responsibilities in Bankruptcy

To many of our clients, keeping a time share through bankruptcy is the LEAST concern on their mind.   Most of our clients would prefer to GET RID OF THE TIMESHARE property.   They can no longer afford the fee and maintenance on the property.   What sounded great during the timeshare presentation has now become a nightmare.   Fortunately, timeshare responsibilities can be fully surrendered in bankruptcy.

Because bankruptcy can discharge debt and reject contracts, timeshare debt and ongoing contract responsibilities can be FULLY eliminated through a bankruptcy filing.  To surrender a timeshare, you need to file bankruptcy, list the timeshare creditor, and clearly state your intention to surrender in the Statement of Intention section of the filing.  You may also be requested to “deed” back the property to the timeshare company at some point.

How to Recognize Time Shares that are Too Valuable to Retain in Bankruptcy

Although it is very rare, some timeshares are too valuable to retain in bankruptcy.   Most time shares only can generate some $2000-$3000 or less in value in an open market because they simply possess too little rights with too many ongoing fees – these type of timeshares can almost always be retained during bankruptcy.  But, as in every area in real estate, some timeshare situations can be vastly different than the industry “norm.”  Timeshares, in theory, can be worth even hundreds of thousands of dollars: it is VERY possible that a time share can exceed whatever Indiana (or other state) exemption allots for your bankruptcy protection.

Time shares that could be of VERY substantial value should always be fully analyzed by a real estate Agent, appraiser, or timeshare expert.  A professional valuation of the timeshare will allow your bankruptcy attorney to help you make the plans necessary for retaining as much value from the timeshare situation as possible.   Remember, all time shares are not treated equally: value is the key to how your time share will be treated in bankruptcy!

Conclusion: You Can Usually Achieve Your Goal with Timeshares and Bankruptcy

Whether you want to surrender or retain your timeshare, you can usually achieve your goal in bankruptcy.  Bankruptcy usually allows you to completely reorganize your financial status no matter what situation you are facing.  Therefore, timeshares are usually no major obstacle to the debt relief you can achieve in bankruptcy.

 

 

 

Indianapolis Bankruptcy Attorney Reviews

online-customer-reviews

Indianapolis Bankruptcy Attorney Reviews: Are Bankruptcy Attorney Ratings Available for Indiana?  Are They reliable?

When looking for bankruptcy help, some of our clients have shown interest in Indianapolis bankruptcy attorney reviews.   They ask if Indianapolis bankruptcy attorney ratings are available online or in any other format to help them in their selection process.   Although there is no official Indiana bankruptcy attorney ratings system, there are several ways to identify either individual reviews or other relevant information for choosing a bankruptcy attorney.

Google, Yahoo, or Other Legitimate Bankruptcy Attorney Reviews Methods

Available on the internet and other legitimate business reviewing services, are a very limited amount of actual, relevant reviews.  These reviews (if you can find them) may be able to help you in your selection process.   Google and Yahoo usually contain at least a couple authentic reviews under the official listing for the bankruptcy attorney’s office.   In addition, review services like the Better Business Bureau and Angie’s List both provide reviews and keep businesses accountable with a higher scrutiny level on business practices.   Keep in mind that either the lack of reviews or occasional bad reviews may not be a fully revealing to “rate” any particular Indianapolis Bankruptcy Attorney.

Beware of Advertising Services Disguised as Reviews

Beware of claims such as the “Top 10’s” or “Best Attorneys Reviews” and other like-natured sites because many times these Indianapolis bankruptcy attorneys ratings or reviews are merely advertising.    Reputable publications that give thoughtful information about a bankruptcy office can be useful, but there are NUMEROUS advertising services claiming to contain some form of comprehensive “review” of attorneys in any particular area.  If that Attorney does not “pay” that “service” then he is not “reviewed” at all!  Therefore, these result can be limited and flawed for obvious reasons.

Word of Mouth Can Be Better Than Online Indianapolis Bankruptcy Attorney Reviews

There is nothing better than a word-of-mouth “review” of a professional at the exact moment that you are searching for such an individual.    Although such personal reviews are never 100% accurate, they can be very useful especially if you know the person giving you the recommendation is reliable.   If you know somebody who has filed bankruptcy in the past, ask them who they used and who they would recommend if they had to file bankruptcy all over again.

Research May be Much Better than Indianapolis Bankruptcy “Ratings” or “Reviews”

Bankruptcy Attorney Representation is a very important and personal service.  If you are seeking a good Indianapolis-Area bankruptcy lawyer, it may be MUCH better to do some quick, yet thorough research.   Seek previous clients and ask them how they would “review” their former Indiana bankruptcy attorney.  Go to a prospective Indiana bankruptcy attorney’s website and other online material and get a feel for what to expect on personal interaction, fees, and other matters.   Sometimes bankruptcy attorneys will have client reviews right on their website.  Obviously, reviews posted on the attorney’s website will most likely be positive, but at least that attorney cares about client reviews which may be a good sign.  Also, make sure that the particular attorney you are interested in is properly fitted for what you actually need in bankruptcy representation.    The best Chapter 7 attorney choice for you may not be the same as the best Chapter 11 attorney choice!    Call the office to get a feel of what to expect.   It will be worth the extra time you spend.

Conclusion: Use Indianapolis Attorney Reviews and Ratings But Do Your Own Research!

Although Indianapolis Attorney Reviews can be helpful on occasion, they cannot replace the benefit of fully researching an attorney’s office before hiring them.   With the vast amount of information available on the internet and the general transparency in which most bankruptcy offices conduct their operations, research and inquiry can quickly reveal what choice may be best for you.   Of course, if you have reviewed our office (using the methods described herein) and would feel comfortable with contacting us, feel free to call us for a free consultation or for more information.