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When a bank wants to repossess or foreclose a property from a bankruptcy filer, it must be relieved from the automatic stay (given by 11 USC §362) by the court. The lenders can resume their collection activities once they get permission from the court.

Select Portfolio Servicing (SPS) wanted to foreclose a mortgage on a property of a Chapter 7 debtor which was in the trust hold of First Franklin Mortgage Loan Trust. The debtor had objected to the SPS’s motion for automatic stay relief, saying that the Mortgage Electronic Registration System (MERS) was unable to prove an enforceable right towards the property because of a lack of enforceable and valid interest in the mortgage.

There are many requirements of recording for secured loans in the states, “Perfection” being one of the most common terms. In order to attach a lien to the subject property, it must be perfected. “Perfection” and “Recorded with the County (or state)” are synonymous with one another. In case of improper recording, the lien does not get attached to the property and is unsecured like a credit card. This means that there will be no mortgage payment and no taking of the homestead by the lender.

 The recording of liens and any subsequent assignments of interest was done by the banks for years. However, the banks started selling mortgage notes a number of times by 1995. Consequently, a publicly-traded company, MERS, came into being which offered a new solution for the issue of assignment recording to the bank: proper recording of the initial lien and then assigning the interest to MERS. The buying and selling of the mortgage notes in the house will then be done by MERS without assignment recording. The nomination of servicers for the collection of unpaid mortgage notes will also be done MERS. The things became much easier for the lenders because of this method.

The New York court had considered the issue and had blatantly stated, “This Court does not accept the argument that because MERS may be involved with 50% of all residential mortgages in the country, that is reason enough for this Court to turn a blind eye to the fact that this process does not comply with the law.” The entity, requesting permission for foreclosure, must be the note and mortgage holder as per the court’s requirement. However, in this case, MERS and the U.S. bank lacked the evidence of valid holding of the note or mortgage. They couldn’t even prove valid recording of transfers with the county or state which is required to remain secure. The court of New York also made it compulsory for all MERS involving loans to prove their ownership of both mortgage and note before asking permission for relief from the automatic stay.

Moreover, there are huge implications involved beyond this single bankruptcy case. In case, notes and mortgages are lost and MERS is found to be an invalid way of lien assignment, it will cause an absence of basis of perfection for thousands of loans and all those mortgage liens will become unsecured debts. In such circumstances, the borrowers in Florida would be able to file a Chapter 7 bankruptcy, get the unsecured mortgages discharged and keep their house. However, the banks would be severely affected and would also suffer a loss of millions of dollars of home backed loans.

To learn more about secured assets and MERS in bankruptcy, contact the Recovery Law Group (best in Los Angeles & Dallas, TX) at www.staging.recoverylawgroup.com or on 888-297-6203.

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People of Jacksonville, Florida, are often confused about the amount of debt that they must owe in order to qualify for bankruptcy. However, there is no particular amount of debt required to be eligible to file for a Chapter 7 or a Chapter 13 case, though there is an upper limit in Chapter 13 (over a million dollars).

One of the first questions which a bankruptcy attorney might ask you on meeting you for the first time is that why do you think you need bankruptcy? You will then have to answer some general questions regarding your income, liabilities, assets, and expenses so that the attorney can analyze your financial situation. Sometimes, bankruptcy might not be the best option for you. In that case, you should take advice from your attorney and then make any decisions.

A person can file for bankruptcy irrespective of whether he or she owes a hundred thousand dollars or just a hundred dollars. The question is not about the eligibility, it is about the need to file for bankruptcy at all. It is not an easy decision to make. The process of bankruptcy can be stressful and embarrassing. No one actually wants to be a bankruptcy filer. Unfortunately, bankruptcy is the only best option at times. For example, Abraham Lincoln had to file for bankruptcy after the failure of his grocery store. He must have surely considered other options before settling for bankruptcy. Later on, he became one of the most famous presidents of the United States.

Bankruptcy was enumerated in Article 1, Section 8 of the Constitution, with an effort to recognize the need to have a fresh start for the people with heavy debts. With bankruptcy, no one needs to remain a slave to their creditors. You can consult the best bankruptcy attorneys of Los Angeles & Dallas, TX, for best and proper guidance in matters of bankruptcy. Visit www.staging.recoverylawgroup.com or call on 888-297-6203.

Call: 888-297-6203

The rapper, Curtis James Jackson III, popularly known as 50 Cent, had filed a petition for a Chapter 11 bankruptcy in a bankruptcy court of Connecticut. The value of his total assets was shown to be between $10 million and $50 million, in the documents. But, one thing that makes 50 Cent’s bankruptcy case unique is that he had filed for Chapter 11 bankruptcy instead of Chapter 13 bankruptcy.

So, what does exactly happen in Chapter 11 bankruptcy? In a Chapter 11 bankruptcy, small businesses, filing for bankruptcy, get an opportunity to restructure their business-related finances by following a repayment plan which is approved by the court. Many large businesses such as Carmike Cinemas and General Motors had also opted for a Chapter 11 bankruptcy. Normally, the repayment plan in a Chapter 11 bankruptcy allows the debtor to continue operating as a business even during the case, strike a balance between the income and expenses, and also regain profitability.

A business will be able to get its debts discharged, only if, it follows all the rules and requirements of the court of bankruptcy. Even small business debtors (a person or an entity) can file for Chapter 11 bankruptcy. But, they will have to fulfill these two eligibilities to file for a Chapter 11 bankruptcy:

• It is involved in a business or other commercial activities.
• It does not owe total claims of more than $2,490,925.

Individuals, who are unable to file for a Chapter 7 bankruptcy, are required to file for a Chapter 11 bankruptcy instead of a Chapter 13 bankruptcy if they have unsecured debt of more than $336,900 or secured debt of more than $1,010,650. The main difference between a Chapter 13 repayment plan and a Chapter 11 repayment plan is that a Chapter 13 plan varies between 3 to 5 years, but a Chapter 11 plan has to be 5 years long.

The bankruptcy petition of 50 Cent did not clearly mention the reason for him to file for a Chapter 11 bankruptcy despite having an estimated $50 million worth of assets. To learn more about the benefits of a Chapter 11 bankruptcy filing, contact the best bankruptcy lawyers of Los Angeles & Dallas, TX, the Recovery Law Group. You can visit Recovery Law Group or call on 888-297-6203.

Call: 888-297-6203

Having a vehicle is no longer luxury, it has become a necessity. You need it to commute between your office and home and to drop your kids off to school. However, bankruptcy is a trying time and you might find it difficult to hold on to assets in such cases. According to Dallas based bankruptcy law firm https://www.staging.recoverylawgroup.com/, state and federal exemptions can be used to keep your property, including home and car as long as you can prove that the latter is a necessity and not a luxury.

Since most people take automobile loan while purchasing a car, the payments can continue as before even in case you file for bankruptcy. However, the situation changes slightly when you file for bankruptcy. Depending on which exemption you opt for, you need to determine the equity in the vehicle. If the equity in the vehicle is more than the exemptions, you can opt for wild-card exemption (if allowed in your state) to protect the remaining equity. In case, you are unable to exempt all equity in the vehicle, you can either:

• Surrender the vehicle to the trustee for liquidation in case of Chapter 7 bankruptcy; or
• Pay the remaining equity in the vehicle to the trustee in order to keep it.

Generally, trustees allow monthly payments to cover the equity. However, before going ahead with any plan, it is important to know that the bankruptcy trustee conducts 2 tests to determine whether you can keep your vehicle or not:

1. Whether you can afford to pay the monthly payments to keep the vehicle?
2. Whether it is fair to your creditors or not?

The U.S. Bankruptcy Code states that in case you wish to keep any non-exempt property in a Chapter 13 bankruptcy, you should pay your creditors the amount they would have received if the property had been liquidated (as in Chapter 7 bankruptcy).

If what you owe on your vehicle is more than its worth, then you can opt for a Cram Down. In this case, a Chapter 13 bankruptcy filer can ask the judge to establish the value of the vehicle and reduce the secured loan amount to that value. Any amount over the vehicle’s current value becomes a part of the unsecured debts which are then discharged on completion of the Chapter 13 repayment plan.

There are more ways to save your vehicle when you file for bankruptcy if you can prove that it is a necessity. An experienced bankruptcy lawyer can help you with this. You can call 888-297-6023 to consult with qualified bankruptcy lawyers to discuss your case.