Is it Possible to Reverse a Foreclosure?

          The short answer: Maybe.  If the foreclosure was conducted improperly then there are limited remedies, but only in a few rare situations can a reversal be granted. And those remedies are not statutory based.  Our office has successfully reversed a foreclosure.  In that instance the homeowner received a letter from her servicer stating that they would not foreclose on her property within the next 20 days because she was in a modification trial period.  The letter also stated that if foreclosure proceedings had begun (which they had) they would be ceased.  Well our client relied on this letter and decided not to file a bankruptcy, which would’ve ceased the foreclosure.  After the foreclosure the bank tried to evict her but we showed up to court with that letter and the bank agreed to reverse the foreclosure. 

           There is also another way in which a foreclosure can be reversed, but this is more of a technicality.  For any real estate to change owners, the sale must occur in writing.  It is not possible to transfer real property without a writing.  Thus a foreclosure is effectuated in writing through a Trustee’s Deed.  Well, in Tennessee, foreclosures occur as an auction at the court house steps.  The problem is that just because a winner was selected at the highest bid and the gavel struck does not make the property sold.  It must be conveyed through a Trustees Deed.  Many foreclosures result in the lending bank buying the property themselves for the amount of the loan.  When that is the case there is usually no hurry to prepare a Deed and it may take them 7 days, 10 days, or 2 weeks to sign a Trustee’s Deed.  If that is the case and a bankruptcy is filed before the Trustee’s Deed has been signed, then the sale never actually occurred.  So while technically the foreclosure was not reversed, it was still prevented after a winner was selected and “sold” during an auction.

What is the Automatic Stay?

The Automatic stay is one of the primary reasons that people file for bankruptcy. The automatic stay is a legal protection that is given to a debtor when he files bankruptcy. No court order is needed to create the stay, hence the term “automatic.” The instant a petition is filed, federal law makes it illegal for creditors to attempt to collect the debts of a debtor. If a creditor knowingly takes action against the debtor then the creditor will be liable to the debtor for any damages, attorney fees, and costs incurred against the debtor, plus possible punitive damages if the violation is egregious.

Therefore, the automatic stay stops all foreclosures, repossessions, law suits, levies, harassing calls, letters, etc. Furthermore, if a car has been repossessed filing bankruptcy within 10 days can actually allow a debtor to get the car back.

Now some restrictions may apply depending on the debtor's individual circumstances, but the automatic stay is a great benefit to filing bankruptcy.

Wrongfully Foreclosed? 4 Tips to Protect Your Rights!

      Since the collapse of the housing market in 2008, the number of foreclosures on people’s homes has dramatically increased.  However, with that increase of workload on the bank’s, not all of the foreclosures were properly done.  Now if you are the victim of a Wrongful Foreclosure, there are certain steps you must take to protect your rights. 

  

     First, as with any legal issue, consult an attorney immediately.

     Second, if you get served with detainer warrant, you MUST attend the hearing.  A detainer warrant is how an eviction is done in Tennessee.  After your home is foreclosed on the Bank will open a law suit to gain possession of the property.  There will be a hearing and it will be in front of a judge.  It is absolutely critical in your case to show up to this hearing and tell the judge that you were wrongfully foreclosed on.  Many strong wrongful foreclosure cases in Tennessee have been later dismissed because at that original hearing, the victim did not claim wrongful foreclosure.  There is a legal doctrine called Res Judicata, which means that the same issues cannot be litigated again in a different court.  And by failing to raise an issue out of the same fact scenario and circumstance bars that claim forever.  Now, the law in Tennessee is not settled on this issue with foreclosure, but it is not worth having to fight that battle.  Show up to the hearing!  Be sure to bring up the wrongful foreclosure at the eviction proceeding.   Hire and have an attorney there with you.

 

      Third, start building up a savings fund.  Because you were foreclosed on and still living in the property, you are not paying a mortgage or rent.  So start paying yourself the rent/mortgage.  For example, if your mortgage was $1,000 per month, then on the first of every month take $1,000 and place it in a separate savings account so you will not spend it.  This fund will help you in many ways.  It will help you find a new place to live and move if unsuccessful, and it will help you make bond if you sue for wrongful foreclosure.  If you sue, then the Bank is not able to sell that house or have someone living in it paying rent or a mortgage.  So to protect them, most courts will require you to purchase a bond in the amount of the year’s mortgage from an insurance company.  This account will help with that purchase. 

 

       Lastly, save every written communication between you and the bank, save every payment and statement, and take detailed notes on phone conversations you have with the bank.  All of this could be critical evidence in a wrongful foreclosure case.

 

      Tennessee laws weigh heavily in the favor or mortgage companies.  It is difficult to reverse a foreclosure once it has happened, but we have done it in the past.  Call us to protect your rights. 

How much does a Bankruptcy Cost?

      This is a frequently asked question in the bankruptcy world.  How much does a bankruptcy cost, and how am I supposed to pay for it?

     

      Well first it depends on under which chapter you are filing bankruptcy.  Chapter 7 is the least expensive, but you must first qualify, and there are lots of restrictions.  Chapter 13 is next highest, but with relatively low risk if you have a job and can afford your repayment plan.  As for Chapter 11, if you have to ask, you cannot afford it.

 

      Currently in the Middle District of Tennessee, which consists of Nashville and surrounding counties, the filing fee for a Chapter 7 is $306, Chapter 13 is $281, and Chapter 11 is $1,213 but also with quarterly fees that depend on how much debt is owed. 

 

      For Chapter 7 and Chapter 13 debtors, the filing fee does not need to be immediately paid. For Chapter 13 debtors, the trustee will pay the fee for you out of your monthly payments.   For Chapter 7 debtors, they have up to 4 months to pay the filing fee; however, failure to do so will result in closing of the case without a discharge.  Thus we recommend paying the fee up front.

 

      The attorney fees for bankruptcy are set by the court.  Chapter 7 fees can range from $1,000 to $1,500 depending on how complicated the case is.  Some newer attorneys and high volume law firms will charge less, but like most things in life, you get what you paid for. 

 

      As for Chapter 13 cases, the fee can range from $2,500 to $4,000, but these fees are paid through the monthly plan payments and are disbursed by the Trustee of the case.  Also, chapter 13 fees are higher because the case lasts from 3 to 5 years. 

 

      Lastly, are the counseling courses.  The 2005 amendments to the bankruptcy code requires that debtors attend 2 budgeting courses.  The course holder must be a non-profit agency and approved by the Bankruptcy court.  The agencies that we recommend our clients to charge $25 for the first course and $15 for the second course.  In a chapter 13, however, the trustee will teach the second course for free. 

 

      At our firm, we do take pro-bono cases and will charge less fees for individuals who truly cannot afford the fee.

How to File Bankruptcy?

      The easiest answer is to call a local attorney, explain your situation, and then see what she advises. However, the point of this post is to explain what you need to do in order to file a bankruptcy petition.

1)      Collect and compile all of your debts.  Pull your credit report, for free with no strings at annualcreditreport.com.  Gather all bills, statements, and collection letters from your creditors to make sure you have all account numbers, balances, recent payments made, their names and addresses.  All of this information, except for the account numbers, must be included in your bankruptcy petition. So get all of this organized.

 

2)      File your taxes.  Bankruptcy law does not allow you to file a bankruptcy unless you have filed your taxes.  It does not matter if today is February 3 and you have until April 15.  Bankruptcy law will not grant you a discharge unless you have filed your taxes.

3)      Collect and organize your previous 6 months of paystubs or other proof of income.  The Bankruptcy court requires that you disclosure all income received and its source from the previous six months prior to filing the case.  The court also requires that the previous 2 months of income statements be submitted to the US Trustee’s office for review. 

4)      Organize and know all of your assets.  In your petition, you will have to list everything you own.  The underlying, extremely simplified premise behind bankruptcy is: that when you file a trustee is appointed to your case who has the ability to take and sell everything you own, use that money to pay your debts, and whatever debts still remain are discharged, or “wiped away.”  Well, having everything you own being sold does not really help with a “fresh start,” therefore, federal and state law allow you to keep certain items to a certain amount.  That is why you need to tell the court everything you own, so the trustee can calculate the value of your assets and determine which ones are exempt and which ones are not exempt from seizure. 

5)      Property Identification.  The Bankruptcy Court requires government photo-id and government issued social security number.  You cannot use a tax return, because you send that to the government. You need your SSN card, Medicare Card, W-2, or Tax Transcript because those are from the government.

       Filing bankruptcy is a completed process and we strongly urge that you hire an attorney to represent you in a bankruptcy case instead of trying this on your own, but having the above things taken care of will significantly help with a smooth process.