Archive for the ‘Chapter 13 Bankruptcy’ Category

The Mortgage Foreclosure Process in Luzerne County and Northeastern Pennsylvania

Friday, November 25th, 2011

In Luzerne County and other parts of Pennsylvania, including neighboring Lackawanna, Columbia, Monroe, Wayne and Pike Counties, banks will not take formal mortgage foreclosure action against a homeowner until he or she is several months behind with his or her mortgage payments.

If the homeowner fails to respond to the bank’s initial informal notice, the bank will issue Act 6 and Act 91 letters as required by Pennsylvania law, to notify the homeowner of: (A) his or her right to bring the mortgage arrearage current within 30 days to avoid attorney’s fees and costs; and  (B)  the availability of assistance from the Pennsylvania Housing Finance Authority.

If the arrearage is not then cured or Act 91 assistance is not applied for within the 30-day period, or the Act 91 application is rejected, the bank will file and serve a mortgage foreclosure complaint upon the homeowner.

The homeowner will then have 20 days to answer the complaint to raise any defenses he or she may have.

If the complaint is not answered, the bank will issue another ten day notice of its intention to file a judgment.

If the complaint is then not answered, a judgment is entered. If the complaint is answered, a hearing or trial on the issues raised will be held several months later.

If the complaint is not answered or the homeowner is not successful at the hearing or trial, a judgment in mortgage foreclosure will be entered of record, after which the bank will file a series of documents with the court to notify other mortgage or judgment holders of its judgment and to set a sheriff’s sale date for the auction of the homeowner’s property.

The homeowner must get at least 30 days advanced notice of the actual date for the sheriff’s sale.

As a practical matter, it takes at least 6 months or more from the date that the homeowner stops paying his or her mortgage until the date of the sheriff’s sale in Luzerne County.

In my next post, I will describe how a sheriff’s sale is conducted in Luzerne County and its neighboring counties. Until then, please feel free to call me at (570) 823-9400 or send an e-mail at davidharrisesq@epix.net with any questions regarding the mortgage foreclosure process in Luzerne County and neighboring Lackawanna, Columbia, Monroe, Wayne and Pike Counties and whether a Chapter 13 bankruptcy filing may be a solution to resolving your foreclosure problem.

Please also visit MY HOME PAGE to learn more about my law practice and me.

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Stopping Mortgage Foreclosures in Pennsylvania With The Help Of A Chapter 13 Bankruptcy Filing

Thursday, January 13th, 2011

If you are confronted with a mortgage foreclosure in Wilkes-Barre, Scranton or Stroudsburg, or in Luzerne, Lackawanna or Monroe Counties or anywhere else in Pennsylvania, a filing under Chapter 13 of the Bankruptcy Code may provide you with relief by allowing you to formulate a plan to “cure” the past due amounts owed on your mortgage over a 3-5 year period, while at the same time allowing you to make your regular monthly mortgage payments directly to your bank or mortgage lender.

The filing of a Chapter 13 petition will immediately cause the foreclosure proceeding to stop and the successful implementation of a plan will enable you to catch up on your mortgage obligation and may even enable you to discharge credit card and other debts, including some types of tax debts.

If you are interested in learning more about whether Chapter 13 will afford you benefits, please feel free to call me to discuss your options or to schedule a free consultation. At your request, I will also provide you with my biography, with a listing of my credentials as well as some free informational materials about Chapter 13 and the bankruptcy process.

Please note that the Chapter 13 option will be effective to stop a sheriff’s sale only if a bankruptcy petition is filed prior to the date of the foreclosure sale. As the law requires the gathering of a significant amount of paperwork, it is best not to address the Chapter 13 option at the last minute. Time is also of the essence as the bank’s costs in pursuing the foreclosure increase as each day passes.

If you and your spouse are on the mortgage that is being foreclosed, you may also have the option of having only one spouse file a petition under Chapter 13 to stop the sheriff’s sale and cure the mortgage arrearages.

Please visit MY HOME PAGE to learn more about my law practice and me.

Can I Transfer My Property To Friends or Family to Keep From Losing It in a Bankruptcy

Saturday, December 19th, 2009

Generally a debtor cannot transfer property to others to keep from losing it in bankruptcy…unless the debtor has transferred the property for fair value or in exchange for other property of the same value or, in Pennsylvania, the debtor has transferred the property more than 4 years prior to a bankruptcy filing.

The Bankruptcy Code allows a bankruptcy trustee to “avoid” any transfer of property by a debtor if: (a) the debtor intended to hinder, delay or defraud creditors, or (b) the debtor receives less than a reasonably equivalent value (in money or other property) in exchange for the property, (c) the debtor was insolvent at the time of the transfer or was made so as a result of the transfer, and (d) the transfer occurred within 2 years of the date of the bankruptcy filing. Pennsylvania law extends the “lookback” period to 4 years.

“Avoid” means that the trustee can retrieve or repossess the transferred property or obtain a judgment (against the debtor or the person who receives the property) in an amount equal to the value of the transferred property as of the date of the transfer.

What is worse is that once the trustee retrieves the transferred property, the debtor will not be entitled to exempt any portion of the property because, technically, the debtor is not the owner of the property on the date of his or her bankruptcy filing (a prerequisite under the Bankruptcy Code to being allowed to take an exemption).

Nevertheless, there are several legal, ethical and court-approved ways to transfer property to keep from losing property in a bankruptcy case.

If you wish to discuss the content of this post, please feel free call me at (570) 823-9400 or write to me at davidharrisesq@epix.net.

How Long Does Bankruptcy Take

Saturday, December 12th, 2009

I have known bankruptcy cases to take anywhere from 5 months to 24 years!

Most consumer Chapter 7 cases take approximately 5 to 6 months from the date that it is filed until the date that it is closed, unless: (a) the debtor has assets to be liquidated and distributed in the case, (b) when the Chapter 7 trustee is investigating past actions of the debtor, (c) when the Chapter 7 trustee is investigating whether unreported assets exist, or (d) when the Chapter 7 trustee simply forgot to close the case as a matter of oversight.

Most Chapter 13 cases take from 3 to 5 years.

A Chapter 13 case will take 3 years where the debtor’s household income is less than the debtor’s residence state’s median income for a same-sized household or where the debtor has significant income and can pay all his or her debts in 3 years or less.

A Chapter 13 case will take 5 years where the debtor’s household income is more than the debtor’s residence state’s median income for a same-sized household or the debtor simply chooses a 5-year plan term instead of a 3-year term.

A choice of this nature may exist if the debtor is seeking to cure a mortgage arrearage as part of his or her Chapter 13 plan and would prefer a lower monthly payment by spreading out the cure obligation over 60 months (5 years) instead of 36 months (3 years).

A choice of this nature may also exist if the debtor is compelled to file a Chapter 13 case rather than a Chapter 7 case as a result of having non-exempt equity in assets that would have been liquidated in a Chapter 7 case. Thus, a debtor who had $20,000 of non-exempt equity may prefer paying $333.33 to a Chapter 13 trustee over a 60-month period instead of paying $555.55 over a 36-month period.

A debtor will not have the option of a 3-year Chapter 13 plan where the debtor is an “above median debtor,” unless the debtors pays all his or her unsecured debts within the 3-year period in the plan. Simply, an “above median debtor” is required to commit all his or her income to a 5-year plan, unless the debtor has certain, but significant, expenses. However, as stated earlier, if a debtor has significant income and, as a result, can pay all his or her debts in less than 5 years, he or she will conclude his or her case in a shorter period of time.

And now…the case that lasted 24 years…the “Blue Coal” case, here in my home town of Wilkes-Barre, Pennsylvania. The case was filed one year after I graduated from high school. I spent four years in college, three years in law school, two years in grad school, began my career far from home, then moved back home and had the unique experience to participate in the case, more than 12 years after the case was filed.

If you have any questions about this post, please write to me at: davidharrisesq@epix.net or call me at my Wilkes-Barre, Pennsylvania office at (570) 823-9400.

Should I File A Chapter 13 Case Instead Of A Chapter 7 Case

Thursday, October 22nd, 2009

Ideally, a debtor who contemplates filing a bankruptcy case to discharge debts strives to do so under chapter 7 of the Bankruptcy Code because a chapter 7 case is of shorter duration and is less costly than a chapter 11, 12 or 13 case filing.  However, a debtor typically considers filing under chapter 7 if he or she: (A)  will not lose property that he or she desires to keep; and (B) has household gross income that is less than the published median for the debtor’s state of residence.

By contrast, a debtor may file under chapter 13 for any of the following reasons:

1.  The debtor has non-exempt equity in assets.  Simply stated, this occurs when the value each of the debtor’s assets or value of an asset group exceeds the encumbrances on the asset or asset group and the allowed exemptions afforded by the Bankruptcy Code for each asset or asset group.  If a debtor will lose property that he or she desires to keep, he or she will file a petition to institute a chapter 13 case and pay an amount equal to the non-exempt equity of his or her assets in a chapter 13 case over a period of 36 to 60 months. This may result in unsecured creditors receiving anywhere from 1% to 100% of their allowed claims.

2.    Even if a debtor has no non-exempt equity in assets, the debtor must file under chapter 13 if his household gross income exceeds the published median for the debtor’s state of residence.  Nevertheless, even if the debtor is an “above median” debtor,  he still may be able to file under chapter 7 if his “allowable ” monthly expenses offset his monthly gross income, leaving him with net disposable income of approximately $182.50 per month or less. (“Allowable” is defined by IRS standards.)  If a debtor is compelled to file a petition to institute a chapter 13 case as a result of being an “above median” debtor with $182.50 or more of monthly disposable income, then he or she must pay that monthly excess into a 60-month chapter 13 plan. This may result in unsecured creditors receiving anywhere from 1% to 100% of their allowed claims.

3.      A debtor may consider filing a chapter 13 case if he or she desires to keep his or her home but has incurred a mortgage arrearage or is subject to a mortgage foreclosure action.  A chapter 13 filing is a common way to enable a debtor to “cure” or bring current a mortgage arrearage by making payments to a chapter 13 trustee over a period of 36 to 60 months while maintaining monthly mortgage payments directly to the mortgage company. This is known as a “cure and maintain” plan, where the trustee will distribute funds toward the arrearage each month.

4.    A debtor may consider filing a chapter 13 case to cure non-dischargeable unsecured debts over a 5-year period (i.e., 60 months) while stopping the running of interest.

5.    A debtor may also consider filing a chapter 13 case simply to keep creditors at bay until a sale of assets at fair value is consummated.

6.   A debtor may consider filing a chapter 13 case to eliminate or modify  a mortgage or other secured debt if certain conditions are met.

7.   A debtor may  consider filing a chapter 13 case where the debtor desires to control his or her assets and avoid administration or scrutiny by a trustee.

8.    A  debtor may consider filing a chapter 13 case where the debtor has potential claims  for lender liability, or collection, creditor reporting or other violations, where the debtor believes that the bankruptcy court will be a better forum to hear such claims.

9.    A debtor may  consider filing a chapter 13 case to altruistically pay back some or all of his or her debt.

Please call me to discuss your situation at (570) 823-9400 or send an e-mail to me at davidharrisesq@epix.net. You may also write to me at 69 Public Square, Suite 700, Wilkes-Barre, PA 18701.

Please also visit MY HOME PAGE to learn more about my law practice and me.