Reduction in Wisconsin Foreclosure Filings, Not a Trend

On behalf of Debt Advisors, S.C.

In Wisconsin, foreclosure filings fell in November to their lowest total in two years. With unemployment rates rising, this was a curious development. Analysts were quick to point out that this apparent good news masked the real reason for the decline.

For the past few months, there have been revelations that banks and major lenders like Bank of America and JP Morgan improperly submitted foreclosure documents using techniques called “robo signing.” This involved lenders’ employees attested to or signed off on thousands of mortgage documents without having read or reviewed them. The consequence is that there might be no proof that a loan was properly sold. Thus, the company that tried to foreclose on a home might not have had the authority to do so.

The downturn in Wisconsin foreclosure filings is reportedly a consequence of the documentation fraud investigation that slowed filings across the country, allowing some homeowners to challenge their foreclosures. However, analysts and those monitoring foreclosures in the state do not feel that the decline is a trend. A key fact is that just two months earlier, foreclosure filings in Wisconsin set a one-month record. Further, the delinquency rate in home mortgages rose in the third quarter to 6.72 percent from 6.65 percent. Banks and lenders have been cleaning up their procedures and returning to the courts, so defaulting homeowners might not be in their homes much longer.

Homeowners facing foreclosure should consult with an attorney to explore their legal options. The federal loan modification initiative known as the Home Affordable Modification Program (HAMP) was designed to assist qualified homeowners in reducing their monthly mortgage payments or in using short sales and deeds in lieu of foreclosure. An attorney can help you determine eligibility and the viability of a short sale.

Another alternative with which an attorney can assist you is filing for bankruptcy protection under either Chapter 7 or Chapter 13. A Chapter 7 filing, if you meet the means test, would temporarily stay a foreclosure proceeding and provide time to sell your property, although the lender would ask the court to lift the stay and allow it to continue with the foreclosure. A Chapter 7 would, however, wipe out unsecured debt, which might allow you to meet your mortgage payments.

An attorney can also explain the benefits and your eligibility for a Chapter 13 filing, which reorganizes your debts and allows you to make repayments over a three- to five-year period. This would also stay any foreclosure proceedings and permit you to make up any past-due mortgage payments during this time.

If you are in financial hardship, your situation may seem daunting and overwhelming. Speak to an attorney knowledgeable in debt relief matters to evaluate your situation and help you pursue the best option for you and your family.

Consumers Have Rights Against Debt Collectors

On behalf of Debt Advisors, S.C.

From time to time, debt collectors have been known to employ some shady tactics. From verbal intimidation over the phone, to mailing documents that look like official court papers, debt collection agencies have tried every trick in the book to get people to pay up.

For anyone who encounters a debt collection agency, it’s important to remember two things. First, the agency has “purchased” the debt from another company-often for pennies on the dollar. This means that they only get paid if you pay them, so they often try everything they can to receive payments. But it doesn’t mean that the debt is valid, or even that they’re going to listen to what you have to say if you claim you owe nothing.

The second thing to remember is that under U.S. and Wisconsin law, individuals have rights when dealing with debt collectors, and when those rights are violated, the individuals may be able to sue. Under the federal Fair Debt Collection Practices Act (FDCPA), debt collectors in violation may be sued for actual damages (mental, physical or financial injuries), statutory damages of $1000 (additional damages provided by law) and attorneys’ fees. Under the Wisconsin Consumer Act, the debt collectors could again be liable for those same actual damages, as well as twice the amount of the finance charge in question (but not greater than $1000).

A few of the actions prohibited by these state and federal laws include:

  • Threatening violence or harm
  • Using obscene language
  • Falsely claiming to be attorneys or government employees
  • Misrepresenting the amount owed
  • Misrepresenting documents as legal documents or government documents if they are not
  • Disclosing (or threatening to disclose) any information about the debtor’s reputation
  • Threatening criminal prosecution
  • Using of a false company name
  • Contacting the debtor by postcard

Although the protections provided by federal and state law may sound compelling, taking a debt collector to court may not be the best course of action for everyone, nor does it change the debt owed. The only certain way to keep debt collectors at bay is to declare bankruptcy. As soon as the bankruptcy filing is made, a court order (called an automatic stay) comes into effect. This automatic stay prohibits creditors or their collection agencies from contacting the debtor without permission of the bankruptcy court.

Is Bankruptcy the Best Option for Me?

On behalf of Debt Advisors, S.C.

Many people feel bankruptcy isn’t for them. They have debts, sure-but they have a job. They have trouble meeting ends meet, sure-but they generally find a way to pay the bills. They watch their credit card debt go up and up, sure, but-well, you get the picture.

Most people do not consider bankruptcy the best option-at first. But for some, the debt elimination offered by Chapter 7 or the structured repayment plans offered by Chapter 13 may be just what they’re looking for, even though they don’t even know they’re looking for it.

Every situation is different, so it’s best to talk with an experienced bankruptcy attorney to learn how bankruptcy could affect you. But here are a few brief points to consider.

  1. At its most basic, bankruptcy eliminates the legal obligation to pay some or all of your debts (called a discharge of your debts). It also has the added effect of stopping harassment by creditors and debt collectors.
  1. Bankruptcy can help you to meet your basic needs, by restoring or preventing the termination of utility service, stopping foreclosure on your home or prevent repossession of your car.
  1. Not all debts can be discharged in bankruptcy. Obligations to pay student loans, mortgages, tax debt and court-ordered payments (such as child support) are still valid during and after bankruptcy. But by discharging other debts through bankruptcy, it may be much easier to make these other payments on time.
  1. Employers cannot discriminate against you in employment just because you have gone through bankruptcy, according to federal law.
  1. Although bankruptcy can negatively affect your credit score, it does not mean it will be impossible to get credit again. Because your existing debts have been eliminated and a second discharge of debts under Chapter 7 isn’t possible right away, creditors have greater assurance that they will be paid back. However, you may face higher interest rates and greater down payment requirements.

If you have trouble making ends meet due to high debts, and you feel debt elimination would benefit you greatly, then maybe you are a candidate for bankruptcy. Or perhaps the debt repayment option offered by the State of Wisconsin known as Chapter 128 would be best. (Chapter 128 does not discharge debts, but does offer some of the same protections from creditors, while establishing a structured payment plan.) Whatever your situation, an experienced attorney practicing in bankruptcy law can discuss your resources and needs, and recommend a course of action to bring you greater financial stability.

Challenging Errors on Your Credit Report

On behalf of Debt Advisors, S.C.

Each year millions of Americans fall into financial hardship. Whether it’s the loss of a job, increased bills or debt from an emergency, financial hardship creates stress and can affect your life for years to come. Trying to dig your way out can also be difficult, especially if you have missed payments on credit cards and/or your mortgage. Regardless of the reason, if you have fallen into financial hardship choosing the right option to help you recover can be daunting and confusing. The best option for you will depend on your personal situation; if you and considering obtaining a loan to help you recover, it is important to check your credit report first to address any potential errors.

Three companies, Equifax, Trans Union and Experian, monitor individual credit, and a 2004 study revealed that a quarter of all reports had errors that could lead to a credit denial. Experts suggest obtaining your individual report from all three agencies before you apply for credit, especially if you are in financial hardship.

Consumers are allowed one free copy of their report each year (annualcreditreport.com), and if you find an error, the Fair Credit Reporting Act stipulates that an individual can challenge what he or she believes is false information. The Federal Trade Commission suggests that when you discover an error, notify the credit agency in writing of the inaccuracy and include copies of documents that verify your dispute. Send the letter by certified mail and wait 30 days for a reply. There is no charge to challenge your report, and if you are right, the false information should be removed, which will often improve your credit score and could help you out of your financial difficulties.

If you encounter difficulties correcting an inaccuracy in your credit report or have questions regarding what options may be the best for you, speak to an attorney knowledgeable in debt related issues. Financial difficulties can be stressful and complex to navigate on your own. With the assistance of a lawyer, you can learn more about your options for relief from debt and help get yourself back on the road to recovery.

Changes Coming to Mortgages?

On behalf of Debt Advisors, S.C.

In a troubled economy, banks are finding that an increasing number of homeowners are unable to meet their mortgage payments. Unemployment remains high, and those that have jobs may have seen their standard of living decrease dramatically. Loans that used to be available easily to borrowers are now more difficult to obtain. Home sales have slowed and those who do find a buyer often find themselves still owing money when the transaction is complete.

Borrowing, Then and Now

During the Great Depression, many homeowners were facing foreclosure due to the system of lending in place at the time. In response, the Home Owner’s Loan Corporation (HOLC) was established. HOLC created the system of borrowing that we see today. HOLC would spread the mortgages out over a longer period of time, usually 20-25 years. This allowed for more manageable payments, and it drastically cut down on the number of foreclosures.

This type of lending works best in a strong economy. The mortgage is designed based on the assumption that people will have continuous employment throughout the duration of the typical 30-year loan. But what happens when a borrower loses his or her job? The terms of the mortgage do not change, making it difficult for the homeowner to continue to make payments. If the period of unemployment lasts for a significant time, which is surely possible in a tough job market, chances are very high that the home will end up in foreclosure.

How to Address the Problem

Critics have called for a new method of lending that takes the reality of today’s economy into consideration. Changes to the system could include allowing interest-only payments during the period of unemployment. While this would extend the time it takes for a borrower to repay the loan, it will allow the mortgage holder to receive full value. Additionally, workers could be allowed to create a flex-spend account that will allow them to withdraw their contributions in the event they become unemployed. If they never need to use the money, it could be disbursed when the borrower retires.

For those who are unemployed, the changes could allow them to remain in their homes. Many borrowers are having trouble making ends meet. By allowing borrowers to make these types of changes, it may provide them with more options when they find themselves in dire financial circumstances.

Hardest Hit Fund Expands, Still Seeking to Keep Homeowners Afloat

On behalf of Debt Advisors, S.C.

In February 2010, President Obama announced the “Hardest Hit Fund,” intended to provide assistance for homeowners in the states most affected by the downturn of the housing market and the recession. Under the program, $1.5 billion was initially allocated for innovative measures to help keep people in their homes, thereby preventing foreclosure and increasing the stability of the housing market.

At the outset, the federal government chose states for participation in this program based on two considerations. The five states selected had either higher than average unemployment rates or had experienced more than a 20 percent decline in home prices. Recognizing that the economic crisis has affected people across the country differently, each state’s Housing Finance Agency was granted the authority to distribute funds as necessary to effectively serve people in the state.

However, it quickly became apparent that this was not enough to address a problem the magnitude of the housing crisis.

In March, the program expanded to include five more states. These states were chosen because they had high concentrations of people living in areas of concentrated economic distress. The program aims to prevent what could become a tidal wave of foreclosures in these distressed communities. In August, Obama announced another $2 billion for the Hardest Hit Fund, adding five new states to the ranks of those receiving assistance.

For many, mortgages have simply become unmanageable. Between falling home values and rising unemployment rates, many individuals and families have simply become unable to meet their monthly mortgage payments, or it has become unreasonable to continue trying.

The federal government will undoubtedly keep trying to stabilize the housing market, as a strong housing market helps ensure a strong economy. However, for individual homeowners, it is important to consider personal situations. The fact that housing assistance is available does not mean that everyone should take it — for some, surrendering a home is an essential step in the financial recovery process.

If you are considering accepting housing assistance, or have questions related to bankruptcy and foreclosure, speak to a knowledgeable bankruptcy lawyer.

Will the Build America Bonds Push Cities into Bankruptcy?

On behalf of Debt Advisors, S.C.

Build America Bonds were created in 2009 as part of the American Recovery and Reinvestment Act. The federal government offered state and local issuers a 35 percent subsidy on interest costs if they sold the bonds on a taxable basis. Now the Treasury says it will reduce the subsidy by any amount the state or municipality owes the federal government.

This will force states and cities to come up with cash to pay the government at the same time that they are faced with severe budget deficits. As revenue declines faster than expenses in the recession, debt-laden cities are considering filing for Chapter 9 bankruptcy.

Chapter 9 bankruptcy was created in the wake of the Great Depression to give municipalities protection from creditors while developing a plan to pay off their debts. It is generally considered a last resort because it creates uncertainty for everyone from city employees to bondholders. By compromising the security of bonds, a traditionally low-risk investment, municipalities considering bankruptcy make it harder to raise money from investors, slowing economic recovery even more.

Detroit, Los Angeles and Miami have discussed Chapter 9 bankruptcy this year. They also have sold a combined $4.5 billion in Build America Bonds. If they lose a portion of their government subsidy, bankruptcy may become a reality for these cities. Some municipalities have raised taxes to help relieve the problem, but experts say a surge in municipality bankruptcy filings is inevitable, especially with the change to the Build America Bonds program.

Options for College Graduates Drowning in Student-Loan Debt

On behalf of Debt Advisors, S.C.

The number of college graduates with student-loan debt is increasing dramatically. The Project on Student Debt, a nonprofit research and advocacy organization, estimates that the number of college graduates with student-loan debt has increased by nine times since 1996. According to the College Board’s Trends in Student Aid study, the median debt amount for bachelor’s-degree recipients who borrowed while attending private, nonprofit colleges was $22,380.

Many student-loan borrowers find themselves in a position similar to subprime borrowers who assumed the value of their houses would always increase. Like subprime lenders, some universities enroll students without asking many questions about whether they can afford to pay the bill. If the students cannot afford the tuition, universities direct students to private, for-profit lenders who have no idea what the student might earn after graduation, just like mortgage lenders who did not verify borrowers’ incomes.

It is almost impossible to discharge student-loan debt in bankruptcy, but bills in the U.S. Senate and House of Representatives might help graduates who are drowning in student-loan debt. Under proposed changes, rules on the discharge of private loans would be less stringent than current laws, which require the debtor to prove “undue hardship.”

However, borrowers could not discharge their federal loans such as Stafford and Perkins loans because the federal government and ultimately taxpayers stand behind the loans. Also, federal loans offer various payment plans and forgiveness programs, which are generally not available from private lenders.

There are also options other than bankruptcy for people who are struggling with their student-loan debt obligations. Underemployed graduates may be able to find a flexible second job to supplement their income. Others who live in cities with a high cost of living may find some relief by moving to a cheaper area. Finally, borrowers might be able to work out a flexible or short-term payment plan by contacting their lenders directly.

Welcome to Our Wisconsin Bankruptcy Blog

On behalf of Debt Advisors, S.C.

Throughout the state of Wisconsin, the experienced bankruptcy attorneys at Debt Advisors, S.C., have helped thousands of people find debt relief. If you are faced with financial difficulties, whatever the reason for your debt, you should know that you have options for relief that include Chapter 7 and Chapter 13 bankruptcy protection. From our offices in Milwaukee, Madison, Green Bay, Oshkosh, Kenosha and Sheboygan, we can help you through this challenging time.

This Blog page is dedicated to issues concerning our clients, their injuries and how the law may impact their ability to obtain the compensation they deserve. Check back at this Blog from time-to-time to read periodic updates, posts and comments from our attorneys. Learning more about your rights can help to make important decisions about your case.

Talk with an attorney at Debt Advisors, S.C., by calling us toll free to schedule an appointment for a free initial consultation at 888-222-5615. Learn more information about bankruptcy, how it can protect you and what life will look like after your bankruptcy is over.

We are a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.