The Elliot Schlissel New York Law Blog

Walking Away From Your House

Strategic default is the new concept in how homeowners are dealing with mortgages on homes that are underwater.  A strategic default is simply when you stop paying your mortgages .  Many homeowners are considering strategic defaults on their mortgages.  It is estimated that over eleven million homes are now underwater in America.  More than three and a half million homeowners are behind in their mortgage payments.  There are already a million and a half homes currently in the foreclosure process.

The New York Federal Reserve estimates that there are an additional 3.6 million foreclosures that will be taking place in the next few years.  Does it make sense to keep paying a mortgage on a home where it will be many years before the home regains its former value?  A columnist named James Surowiecki recently wrote in the New Yorker Magazine that paying mortgage payments for a home that is underwater is “setting a pile of money on fire every month”.

Mortgage Payments: A Moral Quandary?

For some families there is a moral quandary in making the decision to stop making mortgage payments on a home that is underwater.  Should families be embarrassed or feel they are going to lose respect as they break their mortgage contract obligations and stop paying their mortgage?  Companies utilize the bankruptcy process to default on their financial obligations when they feel it is appropriate.  So why shouldn’t individuals consider it is a business decision as to whether they should pay their mortgage payments when their home is underwater and it is unlikely it will ever get back to its former value at anytime in the near future?

Penalties For Not Paying Your Mortgage

Obviously the first penalty is that your home will eventually go into foreclosure.  However the foreclosure process in the State of New York, as in most other states, is a slow process.  This means you won’t be forced to leave your home in the short run.

The second issue involves your credit score.  Not making mortgage payments will definitely have a negative impact on your credit score.  It is estimated that your credit score will go down a minimum of 85 to 100 points if you default on making mortgage payments.

Strategic default is not something to be taken lightly.  It should be considered as a last option.  Your first option should be to make a mortgage modification.  Mortgage modifications allow you to rework your mortgage to more favorable terms.

If you decide to strategically default you should save the funds that had formally been allocated to make mortgage payments.  This will give you the ability to retain an attorney to fight the foreclosure in court.  It will also give you money for a down payment on an apartment that you may need to rent down the line.

Tax Implications of Strategic Defaults

If a portion of your debt is forgiven by a financial institution the forgiven amount is considered taxable income by the Internal Revenue Service.  You may end up receiving a 1099 from your bank that you will have to declare on your income taxes.  You should talk to a tax professional with regard to how to handle this tax issue.

Strategic defaults are not for everybody but more and more people are making this choice!

Foreclosure Lawyers

If your house is in foreclosures we can help you.  The Law Offices of Elliot Schlissel have been helping New Yorkers stay in their homes.  To start with we can help you with the mortgage modifications.  We are familiar with the problems mortgage modification programs have.  We can also assist you with a forensic audit with regard to your mortgage.  Should you be served with a summons and complaint we will appear in court for you and attend settlement foreclosure conferences.  During these conferences we will press the financial institutions to cooperate in giving you a mortgage modification.  We will submit answers to the formal compliant submitted by the banks.  Our answers will allege defenses such as defective mortgages, defective foreclosure law suits, predatory lending, foreclosure fraud and other real estate related defenses.

We will advise you with regard to all of your foreclosure options.  One of your options may be a foreclosure related bankruptcy.  There are two types of bankruptcies that can be utilized in foreclosure. A Chapter 7 bankruptcy and a Chapter 13 bankruptcy.  There are benefits and drawbacks to each of these bankruptcies.  When you file bankruptcy it immediately stops creditor harassment.  All debt collection activity has to come to an end when a creditor receives notice of a bankruptcy filing.  Foreclosure proceedings also are immediately frozen upon the filing of a bankruptcy.  At the end of the bankruptcy process you receive a discharge of your debts.  We educate our clients with regard to reestablishing credit and the end of the bankruptcy.  There are many bankruptcy myths such as you will never receive credit again that are simply untrue.  At your initial free consultation with our office will we describe the bankruptcy process.  We will explain to you what bankruptcy exemptions are and why it may be necessary to file bankruptcy.  Feel free to call us for a free consultation 1-800-344-6431, 516-561-6645 and 718-350-2808.

If you have debt, such as credit cards, there is a timeline followed by your creditors in collecting these debts.

Thirty Days

make a payment, you should call the creditor and explain your financial circumstances and advise the creditor when a payment will be forthcoming.

Sixty Days

Ninety Days

Charge Off and Litigation

you with legal action if the debt isn’t paid. Should the collection activity by the collection agency be unsuccessful, your debt may be turned over to a collection lawyer who will institute a lawsuit against you. Should you receive a summons and complaint with regard to the debt, it is important you either go to court and submit a written answer to the summons and complaint or retain counsel to represent you.

Bankruptcy

There are many myths that people believe regarding bankruptcy that are simply untrue. Should you have questions regarding debt collection activity or bankruptcy issues, feel free to call the Law Offices of Elliot Schlissel. Our office has filed hundreds of bankruptcies and assisted our clients in numerous lawsuits against them regarding alleged debts. Feel free to call us for a free consultation

If one of the parties to a divorce action files for divorce, can he or she later file bankruptcy during the course of the divorce? The answer to this question is yes. Now let’s change the circumstances a bit. A husband and wife are involved in a divorce and during the course of the divorce, the husband is ordered by the court to make mortgage payments. Unfortunately, he falls behind in the mortgage payments. Is filing for bankruptcy the best route to stop the house from being foreclosed upon? The answer to this question in many instances is yes.

Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, the debtor sets up a plan to reorganize his or her debts. The plan is designed to bring the debtor up to date on his or her debts during a period of three to five years. The amount of the payment pursuant to the bankruptcy plan is based on the debtor’s income.

Debts are classified into various types within the plan. Unsecured creditors, such as debts related to credit cards, may be paid on a percentage of what is owed. Interest and penalty payments to these creditors are eliminated in the plan.

Mortgage Payments

Secured creditors, such as mortgage holders on real estate, are paid 100% of what they are owed under the plan. Banks holding mortgages who have refused to accept payments from the debtors are now forced to accept mortgage payments from the debtors under the bankruptcy plan.

Bankruptcy Protection for the Spouse

Under the bankruptcy law, child support and spousal maintenance payments are non dischargeable debt. This means a father obligated in the divorce to pay spousal maintenance and child support to his wife cannot eliminate these debts. Financial obligations of the payer’s spouse, under court orders of the divorce to make mortgage or home equity line payments, are considered to be part of the spousal maintenance and child support payments and these obligations are also non dischargeable in bankruptcy.

Chapter 13 bankruptcies can successfully be utilized to give a spouse who has obligations to make mortgage payments and pay spousal maintenance and/or child support an opportunity to come current in these obligations, save the home from being sold in foreclosure and comply with the state court order.

Foreclosure Defense

The foreclosure defense lawyers at the law office of Elliot Schlissel have been representing individuals with financial difficulties for more than three decades. Our office helps our clients prepare mortgage modification applications. We also deal with mortgage modification programs that fail to meet our clients’ needs. We defend foreclosure lawsuits for our clients. We attend foreclosure court conferences, litigate defective foreclosure lawsuits, predatory lending issues, defective mortgages and bad faith on behalf of financial institutions. We also assist our clients with other types of real estate litigation. Should bankruptcy be the route to dealing with our clients’ problems, we file both Chapter 7 and Chapter 13 bankruptcies on behalf of our clients. Feel free to call us for a free consultation at 1-800-344-6431, 516-561-6645 or 718-350-2802.

The Republicans in Congress are challenging the health care law passed in 2010 by President Obama and the Democratic controlled Congress. Question: How does the health care law affect you?

One Million Americans Lose Health Insurance

More Americans Given Healthcare Coverage

Starting in the year 2014, insurance companies will no longer have the ability to reject individuals with preexisting medical conditions or to charge individuals who currently are suffering from illnesses higher premiums for medical insurance.

There are a number of court challenges to the Affordable Health Care Law. Several Federal Judges have set aside the law for various reasons. It will be interesting to see how the Appellate Federal Courts deal with this issue.

New York Wills Lawyers

Elliot S. Schlissel, Esq. is a member of the National Academy of Elder Law Attorneys. He provides his clients with detailed Elder Care legal services involving Medicaid planning, nursing home issues, special needs trusts and issues involving special children. If you have a probate, Wills, Trusts and Estates or Elder Care matter, we are the law firm that can help you. Call us at 1-800-344-6431; 516-561-6645 and 718-350-2802.

JP Morgan Chase previously announced that it was seizing all further legal action on 56,000 pending foreclosure proceedings.  The bank is taking this action due to the fact that its employees have improperly prepared legal documents related to foreclosure proceedings.

These suspensions took place in the 23 states where foreclosure lawsuits must be approved by a court.

New York is one of these states! Chase Manhattan has started an investigation examining their employees actions in foreclosure proceedings.  Chase is the third financial institution to take this action.  GMAC and Bank of America have already taken similar actions.

Chase has acknowledged that their employees who signed numerous documents related to foreclosure proceedings have signed so many documents that they are now referred to as “robo-signers”.

Lawyers in foreclosure proceedings representing homeowners have uncovered that individuals have signed as many as 10,000 affidavits a month.  Query: Is it possible they actually read these affidavits? These affidavits indicate that the person who prepared them reviewed the mortgage file.  There was not sufficient time to review the mortgage files.

The courts expect numerous foreclosure proceedings brought by Chase Manhattan to be contested by attorneys who represent the homeowners.  Due do uncovering this new information, it is expected that courts will look more carefully at the documents in proceedings brought before them involving the foreclosures of these homes.  The solution to this foreclosure crisis is for the banks to become more realistic, more accessible and more willing to provide the homeowners with mortgage modifications.

Our law office can help you with foreclosure defense, foreclosure conferences, mortgage modifications, Chapter 7 bankruptcy and Chapter 13 bankruptcy.

Bank of America is the largest bank in the United States.  They have recently taken action to stop moving forward with foreclosures throughout the United States.  Allegations have arisen with regard to how the bank is handling the foreclosure process.  Bank of America is among many large financial institutions which also include Chase Manhattan and GMAC that are reexamining how they handle foreclosures.

Document Problems

Bank of America, GMAC and JP Morgan Chase have uncovered problems with the documents they have utilized in processing foreclosure proceedings. Attorneys representing homeowners who homes have been foreclosed upon are developing new and innovative defense techniquess to deal with the document crisis created by the financial institutions.

Attorney Generals in California, Connecticut and Florida are investigating the materials submitted by various financial institutions in foreclosure proceedings. The Associated Press recently reported that a Bank of America official acknowledged that she signed up to 8,000 foreclosure documents per month without reading them. Consumer advocates claim that there are numerous problems with the foreclosure process.

Should you find your home in foreclosure, please call our offices 1-800-344-6431 or contact us by email.  Our law firm has represented individuals in debtor/creditor matters for more than 30 years.  We are experts in handling foreclosure defense, foreclosure conferences, mortgage modifications, Chapter 7 bankruptcy and Chapter 13 bankruptcy.

Numerous financial institutions are finding that the documents they anticipated using in foreclosure proceedings are flawed! GMAC and JP Morgan Chase are among two large financial institutions that have acknowledged that mistakes were made with regards to the processing of mortgages.  Both companies have suspended all foreclosure proceedings.Attorneys in many states are demanding legal action to investigate foreclosure proceedings brought by financial institutions. The treasury department is looking into these new disclosures.

Motions In A Foreclosure Proceeding

Contact us regarding foreclosure defense, mortgage modifications, filing mortgage modifications, foreclosure conferences, Chapter 7 bankruptcy and Chapter 13 bankruptcy.

Slow Home Sales

Feel free to call the law office of Elliot Schlissel at 1-800-344-6431 or contact us by email to discuss your personal situation concerning foreclosure defense, mortgage modifications, foreclosure conferences, bankruptcy and reestablishing credit.

In the month of July, 2010, 800 homeowners in Nassau County had their homes foreclosed on (foreclosure is the start of a proceeding by a lender of financial institution to take the home back).  In the same month, 170 homes were taken back by the lenders on Long Island.  This is an increase of 86% from July of 2009.

Although the Obama administration currently has a program to help individuals who have had their homes foreclosed on, the average homeowner in New York has not experienced any benefit from this program.  Most individuals who apply for mortgage modifications under the various existing programs get turned down.  Those who are approved often receive a modification for only three months.  The three month modification is simply not long enough to allow individuals to get back on their feet.  Many aspects of the existing mortgage modification programs simply do not meet the needs of individuals who apply for modifications.

The foreclosure process in New York can be quite long and time consuming.  Homeowners who find themselves facing a foreclosure lawsuit can retain counsel and tie up a case in court for years.

Mortgage Modification:

The mortgage modification process can be very aggravating for a homeowner.  After diligently submitting all necessary documents, the homeowner sometimes finds him or her self in a never-never-land.  Telephone calls to the mortgage processing company typically go unanswered or the individual who does answer is clueless as to the situation.  After numerous phone calls and attempts to discuss the matter with a mortgage company representative, the result is obvious frustration.  It quickly becomes apparent that the banks are not serious about the mortgage modification process.

A good way of dealing with the failure of a bank to properly process a modification application is to bring it to the court’s attention during the statutorily mandated settlement conferences.

Our office has represented individuals with financial difficulties involving issues of bankruptcy, mortgage modifications and foreclosure defense for many years.  We understand the aggravation and torment an individual goes through when dealing with the prospect of losing their home.  We are experienced in fighting to allow our clients to stay in their homes by putting pressure on banks and financial institutions.

Should you have any questions regarding mortgage modifications, foreclosure defense and/or bankruptcy, feel free to contact us at 1-800-344-6431, or by email.

Students have been borrowing more and more money in recent years to pay for college expenses.  Due to the downturn in the economy, many students have been unsuccessful in finding employment upon graduation.  Even those who find employment often have difficulty paying off their student loans.  Filing for bankruptcy can help with problems involving credit card, home or other types of debt; however, student loans are not dischargeable in bankruptcy.  This is true even if the student loans are from a private lender, such as a bank or Sally Mae.

Congress is considering new laws to ease the burden on students who took out loans for educational expenses and are unable to pay them back.  There are two types of student loans: loans underwritten by the federal government (such as Stafford and Perkins loans) and loans underwritten by banks.

Current Bankruptcy Law:

Under the current bankruptcy law, debtors can discharge students loans if they experience “undue hardship”.  This condition is almost impossible to prove in bankruptcy court unless the debtor has become totally disabled.

There is concern that if the bankruptcy laws are changed to allow students to discharge loans underwritten by banks for educational purposes, then the banks will stop lending money to students.

In the event that bankruptcy laws are modified to allow the discharge of student loans, the cost of such loans in the future will most likely increase.  Congress should liberalize the laws concerning the discharging of student loans but the statue should be carefully written.  Student loans should become dischargable only under limited circumstances.

Should you find yourself in financial difficulty, bankruptcy may be a solution to your problem.  Call the bankruptcy attorneys at the law office of Elliot Schlissel at 1-800-344-6431 or by email to discuss your situation.

The federal government has bailed Wall Street firms out to the tune of $700,000,000.00. This is a form of corporate welfare. The restructuring was done to prevent large Wall Street firms from going bankrupt. Instead of amending the Bankruptcy Law to help these Wall Street firms, the government simply gave them $700,000,000.00 in loans.

Recently, Jamie Dimon of JP Morgan Chase and Lloyd Blankfein received millions of dollars in salary packages. The government bails out Wall Street and the Wall Street tycoons get richer and richer. During this period of time, between 7.1 million and 7.9 million households according to mortgage bond trader, Amherst Securities, fell behind in their mortgage payments and are subject to losing their home.

It is estimated that as many as 25% of all the homes in the United States have mortgages on them that are greater than the value of their home. The term used to describe this situation is calling the home “under water”. President Obama had initially asked that when individuals do mortgage modifications with their banks that the banks restructure their mortgage so they only have to pay an amount equal to the value of their home. The banks have refused to do this. The mortgage modifications by banks in the United States modify the payments but do not reduce the amount that is owed.　

The Bankruptcy Law Needs to Be Changed

The United States Constitution reserves all rights to make laws concerning bankruptcies to the federal government. Congress passes all laws that deal with bankruptcy.

Congress needs to strengthen the bankruptcy court’s ability to restructure mortgage loans when individuals file bankruptcy. Congress has already bailed out Wall Street. Now they need to bail out the American homeowner. Unfortunately, the large financial institutions in this country oppose any modifications to the Bankruptcy Law to help out homeowners.

Congress needs to help the American homeowner and modify the Bankruptcy Laws to deal with the issue of restructuring mortgages that are under water. Congress has already bailed out the financial industry to the tune of $700,000,000.00, now they need to bail out the American homeowner!

Should you have questions concerning bankruptcy or mortgage modifications, feel free to contact the Law Office of Elliot S. Schlissel to discuss these matters at 1-800-344-6431 or email us at schlissel.law@att.net.

-Elliot S. Schlissel, Esq.

Picture courtesy of grassland properties.