Loan Modifications During Bankruptcy

We are frequently asked whether a loan modification can be pursued during bankruptcy, especially if the borrower has been denied a loan modification prior to filing the bankruptcy.   Effective August 1, 2011, the United States Bankruptcy Court for the District of New Jersey approved a "General Order Adopting Loss Mitigation Program and Procedures" ("LMP").  The goal of the LMP program is to provide for a uniform, comprehensive, court-supervised loss mitigation program to facilitate consensual resolutions for individual debtors whose residential real property is at risk of loss to foreclosure.  When loan modifications are coupled with the global reorganization of debt, the success rate can be greatly improved.  Middlebrooks Shapiro, P.C. has been instrumental in securing loan modifications for clients who otherwise have been denied.  The loan modifications, coupled with the restructuring of all other debt, can allow the borrower to remain in their home while adjusting their debt service.  For more information regarding the loss mitigation program with the United States Bankruptcy Court for the District of New Jersey, please follow this link:  http://www.njb.uscourts.gov/content/loss-mitigation-program-and-procedures-0

Joint Bankruptcy May Soon Be Available to Married Same-Sex Couples

It's been reported that the federal government will soon treat married same-sex couples the same as heterosexual couples, ensuring equal federal privileges, protections and rights.  In the bankruptcy world, this means that married same-sex couples may soon be able to file a joint bankruptcy petition, rather than being required to file separate petition, regardless of underlying state law.  A joint bankruptcy petition is both less expensive and more efficient than filing separate bankruptcy petitions.  The complete New York Times article is available here.

Fallout from the Expiration of the Mortgage Debt Forgiveness Tax Exemption

The New York Times published an article called Welcome Relief for Homeowners, Until the Tax Bill Arrives that discusses the serious tax implications of big banks' mortgage debt forgiveness programs.  These programs are part of the big banks' strategy to settle with the Federal government for fines they incurred for their involvement in the sub-prime mortgage crisis.  These banks, such as JPMorgan Chase who was featured in this article, get credit under settlements with the Federal government for "writing off" mortgages.

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In our Firm's experience, mortgages which are "forgiven" in this manner are generally second mortgages which are already undersecured (underwater) any clearly not worth much from an investor's perspective.  Congress failed to extend the tax exemption that previously protected homeowners from having these "forgiven" mortgage taxed as income by the IRS.  The exemption lapsed on December 31, 2013.  This will create serious trouble for homeowners, as outlined by this article.  It's important for homeowners to be aware of these issues.

Understanding Bankruptcy Reaffirmation Agreements

The New York City Bar has published a guide to reaffirmation agreements in bankruptcy called Bankruptcy: Understanding Reaffirmation Agreements.  Reaffirming a debt in bankruptcy can be tricky, and it's helpful to have a reference guide available on the subject.  Issues such as the timing for the filing of a reaffirmation agreement, or the cancellation of a filed agreement, can be crucial to the success of a case.