Archive for January, 2011

The night before the big storm

Monday, January 31st, 2011

Pretty much the only thing on our minds here in Chicago tonight is snow. Snow. Snow. Apparently we’re about to be hit by a storm that rivals the blizzard of 1967. People are stocking up and hunkering down. I’m hoping for a snow day on Wednesday so that we can all be home together.

My theory about winter is if you have to endure the cold, there may as well be lots of pretty snow. I love snow. Because to me snow always suggests play. Yes, I know it also suggests hassle. And possibly disaster. But I’m thinking like a kid here. And all I can see is snowball fights, snow men, snow angels, pretty snowflakes and people coming together.

So here’s hoping for a lovely snowfall full of play and wonder and hassle and disaster-free.

Now, on a completely separate note. I was recently interviewed by my friend and fellow playwright Sara Israel for the Blog at Boston Court as the first in a series called where Sara takes a look at writers’ writing spaces.

We talk about my physical writing space as well as a bit of my process and the new play I’m working on. There are a few pictures too. I love the one of my writing space where you can see both Malcolm and Pablo. Check it out .

Okay, Malcolm’s crying. Gotta run! Net realizable value of the asset on december 31 in the years 2001, 2002, and 2003 is $1,500, $600, how to write a better essay and 0, respectively

Bankruptcy and Foreclosure: Fighting a Motion to Lift the Automatic Stay

Monday, January 31st, 2011

Recently, homeowners are having more success in preventing mortgage lenders from continuing with a foreclosure (by lifting the “automatic stay”) after the homeowner has filed for .

Bankruptcy’s Automatic Stay

When you file bankruptcy your creditors must stop all activities related to collecting a debt, with a few exceptions (usually involving child support and taxes). The prohibition against collection activities is part of what’s called the automatic stay, meaning that collection activity is stayed while your bankruptcy case is pending, and that this stay occurs automatically upon your filing. In some situations creditors can file a document known as a “motion to lift the automatic stay” which requests the bankruptcy court to give them permission to proceed with the desired activity listed in the motion.

The most common reasons for requesting that the court lift the stay are:

  • when a landlord is attempting to evict a tenant
  • when a mortgage lender is attempting to proceed with foreclosure activities, and
  • when a lender on a car note is seeking to repossess the car because of non-payment.

As a general rule the bankruptcy court will lift the stay as to a particular creditor when the bankruptcy filer (the debtor) has no equity in the property (for instance when premises are being rented) or when the creditor will suffer economic harm regarding the property at issue if the stay is not lifted (as in the case of a foreclosure or car repossession).

Change in How Courts Treat Motions to Lift the Stay in Foreclosures

Until recently, courts routinely granted motions to lift the automatic stay and there wasn’t any reason for the bankruptcy debtor to show up at the scheduled hearing. However, in the last year or so, bankruptcy attorneys are having some degree of success in fighting motions brought by mortgage lenders on the ground that the lender can’t establish who owns the mortgage and therefore has no legal right to ask the bankruptcy court for relief (this is called “lack of standing.”). The main reason why ownership can’t be established is that during the housing boom many mortgages were transformed into securities that could be sold on the bond market and then sold and resold so many times that proof of ownership became lost or unavailable.

What Happens if the Motion is Denied?

In a Chapter 7 bankruptcy, success in fighting a motion to lift the stay would typically mean a one or two month extra delay in implementing foreclosure proceedings (which without the stay being lifted couldn’t proceed until you received your discharge). In a Chapter 13 bankruptcy, however, successfully fighting a motion to lift the stay might mean that the mortgage may not be enforceable at all–although the more common outcome is for the lender and homeowner to settle the dispute on terms greatly favorable to the homeowner. 

Other Ways to Raise Ownership Issues and Fight the Foreclosure

The ownership issues that can be raised in a hearing on the motion to lift the stay can also be raised in state court after you receive your Chapter 7 discharge. That is, if you are in a state where the foreclosures go through state court, you can use the failure to prove ownership as a defense that may stall your foreclosure indefinitely–or produce a favorable settlement. And if you live in a state where foreclosures occur outside of court (as in California and about half of the other states), you can file an action in the state court challenging the foreclosure on the same grounds, and with the same outcome. (To learn more about challenging foreclosure in state court, see Nolo’s article .)

Because bankruptcy is a federal court, and because federal courts often have different “standing” rules than state courts, you may not have as much success in the state court as would be true in federal court.

Get Help From a Lawyer

Obviously this can all get pretty complex in a hurry and you would be well advised to shop for a lawyer who knows this stuff inside and out. But beware paying a lawyer (or anyone else) very much money up front to fight your foreclosure in state court. At the very least, negotiate a fee agreement with the lawyer that will give you a healthy refund if the case is not successful. And make sure the lawyer you choose knows the likelihood of your case being successful, however success is defined.

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