Foreclosures

Riverside, California Bankruptcy Attorneys
J.L. Borrie & Associates

Representing individuals and businesses in bankruptcy filings, Foreclosures and Tax Problem resolution throughout the Inland Empire area of Southern California, including Riverside, San Bernardino,, Redlands, Colton, Lake Arrowhead, Running Springs, Big Bear, Rancho Cucamonga, Fontana, Highland, High Desert, and Victorville.

This page will cover the foreclosure process, including time periods and procedures involved. Considerations on whether you should refinance, file a Chapter 13 or Chapter 11 proceeding, or walk away from the property, and the effects and potential problems which may arise with each option. It discusses how a Chapter 13 Bankruptcy or Chapter 11 Bankruptcy works, and how the Automatic Stay prevents the sale of your property, a discussion of our fees, procedures and experience, and a discussion of the scams, cons and outright thievery that is currently being practiced against unsuspecting persons who find themselves in a foreclosure.

We would also like to remind you that choosing a lawyer is not like buying a commodity, where we all are essentially the same. Just like other professions and trades, lawyers vary greatly in their intellect, experience, and degree of caring, from very good, to incompetent and uncaring. This office does first class work, at reasonable court approved fees, and we encourage you to see other attorneys before seeing us, so that you may compare our service, knowledge, plain language advice, and fees before you decide who you want to represent you. Please keep in mind, that if an attorney cannot explain your rights, including the detailed procedures and likely results in your case in plain every day English, he doesn’t know the answers, so don’t accept mumbo jumbo confusing legalese opinions which tell you nothing. Insist on clear, complete, and concise information

Foreclosure Procedures And Timetable

Except for Judicial Foreclosure proceedings, which are relatively rare, and are not covered in this discussion, foreclosures in California are conducted as follows.

Whenever you are late on a payment and outside the grace period, the trust deed holder (or mortgage company) can record a notice of default with the county recorder. Now generally they don’t do so when you are only one month late, and many will not do so until you are several months late, however, it is solely up to them how long they wait before recording the notice of default, which is commonly referred to as a NOD. You will receive a copy of the NOD by certified mail, return receipt requested, so you will know when it is done. In fact, many times you receive several copies of the same notice. Generally, in the upper right corner, or on the top lines of the page, you will see a statement that says something similar to “This is a copy of a notice of default recorded on”, and it will give the specific date it was recorded.

Generally you have 90 days from that date to catch up the payments and foreclosure costs in full, in one lump sum, and the loan will be reinstated. If not caught up, a specific sale date and time can be set for the sale of your property, and the notice of the date and time must be published in a local newspaper for a three week period prior to the trustees sale. You generally do not get a copy of the notice of trustees sale by certified mail, but usually a copy is taped to your front door. If you have not timely caught up the costs and arrears or filed a Bankruptcy Proceeding, the property will be sold to the highest bidder at the trustee’s sale. Generally only investors looking for real bargains bid at trust deed sales, so unless there is a large equity in the property, no one will bid, and your mortgage company will bid in the amount of their note and become the owners of the property. If you have not moved out by the sale date, the mortgage company can file a lawsuit against you called an unlawful detainer, which will result in them obtaining a court order for possession of the property, and allowing the marshall to move you out, and store your possessions if necessary, and at your expense, and for a judgment for costs and accrued rental value after the sale.

If you have junior liens on the property, and the senior lienholder becomes the owner of the property at the sale, or a bidder buys the property for less than the total owed to all lien holders, generally the junior lien holders are free to sue you for the balances due them. Additionally, the VA can sue on their guarantee for any funds paid or advanced by the Veterans Administration.

Should I Refinance, File A Chapter 7, 11, Or 13 Bankruptcy, Or Just Walk Away From The Property?

If you want to keep the property, and you can qualify for a refinance at a reasonable cost and interest rate, and you have no other debt or cash flow problems, refinancing may be the best alternative, but should not be chosen until you at least obtain initial information on how Chapter 13 plans work. If you cannot obtain refinancing at a reasonable cost and interest rate, or you have other debt or cash flow problems, a Chapter 13 may be your best, and perhaps your only alternative. (Keep in mind, only persons can file chapter 13's, corporations and partnerships are prohibited from filing 13's, and must file Chapter 11's to reorganize)

Chapter 13’s, are commonly referred to as a wage earner plan, and is what some unscrupulous lawyers advertise by saying, "avoid bankruptcy, file a wage earners plan or a debt consolidation", implying that it is a non bankruptcy procedure. Of course they aren’t being truthful. Generally speaking, a Chapter 13 is a reorganization of your financial affairs, as to monthly payments, and many times, as to the principal balance of your debts, without borrowing any money. It allows you to stop foreclosures, repossessions, wage garnishments, tax levies, IRS seizures, etc, by allowing you to set up a court enforced repayment plan to restructure secured debts including past due payments on your home or other real property, generally over three to five years, and of unsecured debts, including taxes, over a period of 5 years, thereby reducing monthly payments to an affordable amount, and allowing you to keep your property.

In most cases, it immediately stops interest charges on unsecured debts, and protects most co signers from any creditor action. Commonly Chapter 13s are used to stop foreclosures on homes, and probably the simplest way to explain how it works is by way of an example. Assume your are $6,000.00 behind on your house payments, the mortgage company has commenced a foreclosure, you owe the IRS $3,00000, and they are garnishing your wages, you owe miscellaneous charge cards and personal loans totaling $10,00000, with payments of $300.00 monthly on credit cards alone. Further, when you prepare a budget, you only have $300.00 excess monthly income after paying your regular current house payment, food, and utilities, but without any payment to the IRS, charge cards or personal loans, or on the house payment arrears. If you were to file a Chapter 13, you could start making the regular house payment, and an additional payment of $285.00 monthly, which would be used to catch up the past due payments on your home, pay the IRS in full, and pay all the charge cards and personal loans. Immediately upon filing the Chapter 13, the foreclosure and IRS garnishment would be stopped and none of your creditors would be allowed to take any action to collect the amounts owed. In some cases, the principal balances of your credit card and personal loan debts can be substantially reduced. Now I know that some advertisements you may see will say you can pay 100.00 monthly on a 60,000 debt, but in the real world, it rarely happens, and when it does, it generally means that you filed the wrong chapter, and you shouldn't be paying any of it back.

Chapter 11 cases are similar to Chapter 13’s, but are much more flexible. A Chapter 11 proceeding, is a much-expanded version of a Chapter 13 designed primarily for large businesses, partnerships and corporations, though individuals can file a Chapter 11. Chapter 11's are commonly used to obtain an expanded time period within which to pay back all or part of the outstanding obligations, including the ability to stretch tax repayments to the IRS, EDD, etc, up to six years even if the tax entity objects, and if they consent, an even longer time period is possible. The procedures are complex, and involve the selling of a plan to creditors who ultimately will vote on whether to accept the plan. Generally, if more than half the creditors in numbers, and two thirds in dollar amounts vote for the plan, the remaining creditors in that class are bound whether they like it or not. Composition plans, where less than the full amount is paid back, are common in Chapter 11 cases. Tax creditors generally do not get to vote and are stuck with the plan provided they are to be repaid within 6 years.

The problem with Chapter 11 cases, is that they are very lawyer intensive, and therefore expensive compared to Chapter 13 cases, so in most cases, the Chapter 13 is the preferred course of action for individuals. Again, corporations and partnerships cannot file Chapter 13s, and are restricted to filing Chapter 11's to reorganize their financial affairs.

What If You Don’t Want The Property?

Generally, on residential property with 4 or fewer units, mortgage companies that hold purchase money trust deeds cannot sue you for any damages, past mortgage payments, or foreclosure costs, and are limited to obtaining the property at a foreclosure sale. Unfortunately, the VA can sue on their guarantee for any funds paid or advanced by the Veterans Administration. Additionally, (non purchase money) junior trust deed holders generally can sue after foreclosure unless they were paid in full. Watch out for anyone who wants you to transfer the property to them without their paying off the trust deed or mortgages. Many of these persons rent out the property, and collect advance rents and security deposits until the foreclosure sale, without telling the renters a foreclosure sale is pending, and then abandon the property. Unfortunately, because the loan or loans weren’t paid off when you transferred the property, the foreclosure is against you, and junior lienholders and the VA can still sue you for their unpaid balances, (unless you file a Chapter 7 Bankruptcy). There are a lot of other scams, crooks and incompetent lawyers (without malpractice insurance) out there, so choose who you hire very carefully.

Even if you intend on walking away from the property and no one can sue you, don’t just walk away. Sometimes we can find an investor willing to pay some amount to you to cover moving expenses, etc, and sometimes more.

We offer a free conference of up to one hour with an experienced (a minimum of 10 years) bankruptcy, tax problem, foreclosure and debt resolution attorney (not a junior associate or paralegal) who will fully analyze your specific financial situation, and advise you as to your available options, likelihood of success, and the costs and procedures involved in each alternative.

If you would like someone to contact you regarding your problems or concerns, please choose the appropriate choice below, or call us at 951-686-6432 and mention that you visited our web site for a free, no-obligation conference.