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CHAPTER 7 BANKRUPTCY

Chapter 7 bankruptcy is often referred to as a "straight bankruptcy" which is in effect, a liquidation proceeding. Non-exempt assets can be taken by the trustee assigned to your case and sold to help pay some of your debt. In many cases debtors do not have any non-exempt assets because most assets are protected by either New York or Federal exemption laws. I will use my expertise to help you do the bankruptcy planning.

One of the primary purposes of a chapter 7 is to give individuals a financial "fresh start". After discharge, the debtor has no legal obligation to repay the discharged debts.

Generally, chapter 7 is the cheapest, quickest and least burdensome of the bankruptcy chapters. Costs and fees vary depending on the number of creditors you have, the complexity of your case, as well as other factors. You can rest assured my fees are very reasonable compared to what a lot of other law firms charge. I generally charge lower fees because I believe hard working people deserve a break.

Approximately one month after filing for a chapter 7 you will meet with the trustee assigned to your bankruptcy for what is called the 341(a) Meeting of Creditors. Most of the time your creditors will not show, but you must be examined by the trustee as to the information provided in the petition. Rest assured you will feel thoroughly prepared and we will go over the possible questions that can be asked of you.

CHAPTER 13 BANKRUPTCY 

Generally, a chapter 13 bankruptcy is preferred by debtors who have valuable assets they do not want to lose, or those who earn above the median level of income and do not pass the Means Test. A debtor may also file a chapter 13 bankruptcy to repay arrears on a mortgage and keep his or her primary residence.

Under a chapter 13, the debtor proposes a plan to repay all or some of his or her debts over a period of several years. Since the plan will call for monthly payments to a bankruptcy trustee, a chapter 13 bankruptcy is only appropriate for debtors who have a regular source of income and can make an additional payment on a monthly basis.

A chapter 13 bankruptcy, unlike a chapter 7, is not a "liquidation" bankruptcy and therefore the debtor does not lose any assets. In some cases the debtor need only pay back a small percentage of his or her debt if the plan is proposed in good faith. Another reason to file a chapter 13 bankruptcy is to "cram down" a second mortgage on a house. If your house worth less than what you owe on the first mortgage the second mortgage is considered unsecured and therefore can be listed along with the unsecured debt. The debtor would only have to pay back a percentage of the second mortgage, along with a percent of the other unsecured debt. At the end of the chapter 13 bankruptcy the second mortgage would be wiped out and the debtor would only owe what remains on the first mortgage.

MORTGAGE MODIFICATION

It can be a complicated process to obtain a loan modification and usually requires a lot of documents and following up with the bank. Borrowers can attempt to modify their mortgage on their own but statistics show that 85% of homeowners are denied a modification if they go about it without the help of a trained professional. You also need to follow up constantly with the bank's loss mitigation department to ensure they are doing what they are supposed to be doing. In order to get the best results possible you need someone who knows what to ask for. Loss mitigation departments are trained to get the most amount of money from you as possible. John P. Brooke, Esq. has received formal training from a major law firm that represents banks on how the process works and what the requirements are to obtain a loan modification.

You may be eligible to apply if you meet all of the following:

  •     You occupy the house as your primary residence.
  •     You obtained your mortgage on or before January 1, 2009.
  •     You have a mortgage payment that is more than 31 percent of your monthly gross (pre-tax) income.
  •     You do not owe more than $729,750 on your home.
  •     You have a financial hardship and are either delinquent or in danger of falling behind.
  •     You have sufficient, documented income to support the modified payment.
  •     You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
Some of the steps used to lower your monthly mortgage payments under the program are to:

  •     Lower your interest rate to as low as 2%;
  •     Extended the term of the mortgage up to 40 years;
  •     Defer principal interest free with a balloon payment at maturity; and
  •     Reduce the amount of principal owed so it reflects the current market value of the home.

FORECLOSURE DEFENSE

If you have been served a notice of foreclosure, do not wait to see what happens. Do not avoid the situation or ignore it, you need to act quickly and defend your legal rights. It is important to act as soon as possible as you have only a small window of time to file an answer to the foreclosure and fight to keep your home.

But keep in mind there may be other options to help you save your home. A chapter 13 bankruptcy allows you to pay back the mortgage arrears and a loan modification allows you to alter the terms of the mortgage to make the monthly payment more affordable. You may be able to work with the bank to lower your mortgage payment and interest rate and extend the time to pay back the mortgage.

We make the bank prove its case. We search for legal violations by the mortgage broker, original lender, appraiser, loan servicer, and law firm representing the bank. We make the bank or mortgage holder prove that they actually own the mortgage and note, have legal standing to file the lawsuit, and have the evidence to prove the loan was properly transferred between each of the entities that owned the mortgage at different times. We assert all affirmative defenses and counterclaims that we know of and conduct discovery to support any claims our client may have against the bank or any other entity involved in the lending process.

Generally, in New York a foreclosure could take a year or two and with the right attorney defending your case you may be able to buy more time in your home.
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