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Glossary of Terms

Assets -  any item of economic value owned by an individual or corporation, especially that which could be converted to cash. Examples are cash, securities, accounts receivable, inventory, office equipment, real estate, a car, and other property. On a balance sheet, assets are equal to the sum of liabilities, common stock, preferred stock, and retained earnings. From an accounting perspective, assets are divided into the following categories: current assets (cash and other liquid items), long-term assets (real estate, plant, equipment), prepaid and deferred assets (expenditures for future costs such as insurance, rent, interest), and intangible assets (trademarks, patents, copyrights, goodwill).

Bankruptcy - a proceeding in a federal court in which an insolvent debtor's assets are liquidated and the debtor is relieved of further liability. Chapter 7 of the Bankruptcy Reform Act deals with liquidation, while Chapter 11 deals with reorganization.

Borrower - a person that has applied, met specific requirements, and received a monetary loan from a lender. The individual initiating the request signs a promissory note agreeing to pay the lien holder back during a specified timeframe for the entire loan amount plus any additional fees. The borrower is legally responsible for repayment of the loan and is subject to any penalties for not repaying the loan back based on the lending terms agreed upon.

Foreclosure Defense

Posted by: jed

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As the number of foreclosure cases in the United States reaches record levels, we are finding many consumers being sued who have meritorious defenses to these suits.  The purpose of this article is to explain a few of the steps you can take to ensure that your rights as a mortgagee are protected.

No-one can file a foreclosure in Kentucky unless they have the right to do so.  Many consumers have had their mortgages sold to third parties with whom they never actually signed any agreement.  This is perfectly legal, but it can create some problems when the homeowner falls behind.
Many times these sales are done with only minimal paperwork.  Files are not always transferred properly and documents which are required to file suit being sold are frequently overlooked.  As such, it is not uncommon for a foreclosure to be filed without the requisite authority.
Another aspect of a foreclosure that many distressed consumers aren’t aware of is their right to defend themselves and force the plaintiff to provide proof of its right to sue and other relevant information.  Obviously, if a mortgage is in default, a foreclosure is a legitimate recourse for the lender. But the we have found that many such plaintiffs attempt to push foreclosures through as quickly as possible, leaving little opportunity for frightened and confused consumers to protect themselves.
Any homeowner has the right, if foreclosed upon, to demand that the plaintiff provide them with proof of the default and the plaintiff’s authority to sue over it.  If the plaintiff cannot do so, it is possible to get the case dismissed entirely.  
If you have been foreclosed upon, you owe it to yourself to ensure that your rights in court are protected and asserted.  Oftentimes, simply slowing down the process gives a homeowner time to gather resources and qualify for a workout or other modification.  One thing is certain: Ignoring a foreclosure and doing nothing will not help but asserting your rights in court can at least give you some breathing room to consider your options.

Is Online Bankruptcy Filing Correct?

Posted by: jed

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It is imperative for all to be equipped with the basics of personal bankruptcy rules and all information related to federal bankruptcy as it is also an important financial decision
The word itself spells devastation and something which everyone would rather avoid. The decision to file for bankruptcy is the last resort and has the harshest consequences both mentally and financially. Filing for bankruptcy and specially a personal bankruptcy is a tough decision but it needs personal grit to face the situation and experts like to understand the rules and the frame work. A positive approach and professional help of bankruptcy attorneys better the chances of benefits and avoiding situation like foreclosure and repossession. These companies understand the state of affairs and then decide on the course of action. When one is facing financial distress of acute nature then it’s not always the time for chapter 13 bankruptcy rules. The experts help one identify the appropriate chapter that minimizes the damage and bankruptcy filing may not be the solution always.

The social stigma attached to personal bankruptcy has prevented many from realizing the true benefits or taking correct steps before, after or while filing for bankruptcy. This is a decision that affects many other aspects over the next 7 or 10 years. It is imperative for all to be equipped with the basics even when they filing bankruptcy online since it is such an important financial decision. Ideally it is something that should be avoided unless there is no other alternative. Not everyone would consider it to be a smooth process and an opportunity to start at zero. It is one of the most impactful negative aspects that have altered many lives. It’s most devastating thing to go through and something similar to divorce or severe illness or disability. It affects both the mental peace and the credit rating of an individual.

Federal bankruptcy has various options as chapter 7 bankruptcy where the person’s debts are totally wiped out and this remains on the credit report for 7 to 10 years. Chapter 13 bankruptcy is a repayment plan and remains on the credit report for 7 years. The impact on the psyche remains for life though. There will be questions about bankruptcy during job applications or loan applications and it is not correct to hide or lie about it and may amount to a criminal fraud. Bankruptcy advice from professional bankruptcy firms as can help you chart out a proper course of action for unmanageable debts. It is important to take rational and knowledge based decision in financial difficulties of this nature. It is better to be equipped and confront the issue rather than live on false hopes and miracles. Bankruptcy is very painful and traumatic experience and best avoided.

To file for bankruptcy is a tough decision. Experts are required to understand the rules, the frame work and the need. It need not be the best solution always though it may seem to be an easy way to get out of debts.

Bankruptcy's Effect on Utilities

Posted by: jed

Tagged in: Utilities , Louisville , Bankruptcy

A common question that our clients have is whether they will be able to continue their utilities if they have an arrearage that is included in a bankruptcy.  This may include electrical, gas, water, and other basic household utility services.  This can be particularly concerning if the client is seeking to surrender their current personal residence and obtain other lodging, as they will have to open accounts with the utility companies.   


If at the time of filing the client is behind in their payments, it is possible that a disruption in service may occur, however, under the Bankruptcy Code, a utility may not refuse or discontinue service because a customer has filed bankruptcy, but the utility may require that the client provide ìadequate assuranceî that they will be able to pay for their utility service in the future within 20 days of filing the bankruptcy petition.  ìAdequate assuranceî may mean a cash deposit, a letter of credit, a certificate of deposit, a surety bond, a prepayment for future utility consumption, or some other type of security. Generally, what is required is some sort of deposit, though the amount of the deposit, where that is considered acceptable, is open to debate and negotiation.

Additional Provisions to the Home Affordable Modification Program - Real Relief for Debtors?

Posted by: jed

Tagged in: Home Affordable Modification Program , Foreclosure , deed in lieu of foreclosure , Bankruptcy


Under the newly proposed additional provisions of the Home Affordable Modification Program (HAMP), additional resources will be provided to struggling homeowners, which may help avoid foreclosure or a bankruptcy filing.  The new provisions focus on temporary mortgage assistance to certain unemployed homeowners, encourage servicers to write-down mortgage debt as part of a HAMP modification, allow more borrowers to qualify for modification through HAMP, and help borrowers move to more affordable housing when modification is not possible. The changes will be implemented in the coming months. 


Fair Credit Reporting Act - How It Can Assist To Repair Your Credit

Posted by: jed

Tagged in: Fair Credit Reporting Act , Credit Scores

Under the Fair Credit Reporting Act (the Act), Congress intended to promote the accuracy and privacy of information in consumer credit reports.  The Act regulates consumer reporting agencies to maintain correct and complete files, but also mandates certain actions must be taken by the agencies in order to protect the consumer from falsely reported information.  

Although it is a good practice to review your credit reports at least once a year, it is an acute necessity for those facing financial difficulties or after emerging from a bankruptcy filing.  The Act can be utilized to clean the records and ensure that only correct information is reported.  Negative information on a person's credit report can dramatically decrease his or her credit score and continuously plague a borrower into the future.

According to the Act, you have a right to review your credit report and to have incorrect information corrected. Credit bureaus are required to maintain accurate information for the benefit of the creditor. Reports can be issued only to those with a legitimate business reason. These include creditors, employers, insurers, and government agencies reviewing the status for licensing or benefit purposes, or any third party for whom you request a report.

Difficulty Making Mortgage Payments? Short Sales as an Alternative to Foreclosure

As mortgage payments are becoming more and more difficult for borrowers to meet, alternatives to foreclosure are more pervasive.  As a foreclosure has more negative impact on credit scores, short sales have become an alternative in the real estate market.  A short sale is understood as when a lender accepts a lesser amount of money than what is currently owed by the borrower when the home is sold.  Hence, the home is sold at a price short of what is actually owed.  A short sale has its benefits in the real estate market because it can help a seller who is in financial trouble avoid foreclosure and possibly bankruptcy, the buyer purchases the home at a price more inline with the current market, and it removes a non-performing loan from the books of the financial institution.

When deciding whether to go through a short sale process, borrowers must carefully consider their current financial situation.  The analysis should consider if the mortgage payments can no longer be met, if the borrower has encountered a financial hardship such as extraordinary medical expenses or job loss, and if alternative housing can be secured.

The first step to a short sale is the seller decides to sell the home and lists it with an agent.  The price set by the agent and seller should be as close to the current market price as possible.  If not, the lender is unlikely to approve the short sale.  Then the property should be listed and within the sales contract a provision should state that the sale is subject to the lender's short sale approval.  The next step involves the seller completing a short sale package that can be provided by a short sale attorney.  This will include an extensive financial disclosure including tax returns, plus a hardship letter explaining the nature of and need for the short sale.  This short sale package can be quite detailed and must be completed accurately.  The package should be coordinated with a real estate agent and a short sale attorney. 

Under the Fair Debt Collection Practices Act (FDCPA),  debt collectors cannot conduct activity which is deemed abusive, unfair, or deceptive practices to collect outstanding amounts owed by debtors.  The FDCPA governs debt collectors who regularly collect debts owed to others and it covers personal, family, and household debts, including money owed on a personal credit card account, an auto loan, a medical bill, and a mortgage.

Certain actions are forbidden by the debt collectors including contacting the debtor at inconvenient times or places, such as early in the morning or after nine at night, unless agreed to by the debtor, and may not contact the debtor at work if they are told (orally or in writing) that it is not permitted to be contacted at work.  Other actions that may not be taken by collectors are use threats of violence, repeatedly use the phone to annoy someone, falsely claim that they are attorneys, misrepresent the amount owed, or take or threaten to take property unless it can be done legally. 

Every collector must send a written “validation notice” disclosing how much money is owed within five days after first contact with the debtor. This notice must also include the name of the creditor, and how to proceed if the debtor disputes owing the amount.  In order to stop a collector from contacting the debtor, certain actions should be taken.  The debtor can request the collector to stop making contact by sending a letter by certified mail and return receipt requested.  A copy of the letter should be retained in the debtor's records. Upon receipt of the letter, the collector can only contact such person again to inform the debtor that there will be no further contact or to let the debtor know that they or the creditor intend to take a specific action, like filing a lawsuit. Although this may stop the creditor contacting the debtor, it does not discharge the debt. 

The Credit Card Accountability and Responsibility and Disclosure Act of 2009

Posted by: jed

Tagged in: untagged

On May 22, 2009 the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the Act) was signed into law by President Obama.  It became effective on February 22, 2010 and is intended to protect consumers from changes to the terms of their credit cards that can destroy an unsuspecting consumer who was unaware. 

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