In bankruptcy cases, the law generally provides a higher payment priority to secured creditors.  By removing liens through a procedure known as lien stripping, a Chapter 13 debtor is empowered to turn secured creditors into unsecured ones.

Stripping a lien can only be applied to mortgage debt.  If a debtor owns a home and its value is less than the liens on it, the procedure will “strip” the second and any other subsequent mortgages, literally removing them from public records.  The subordinate debt must be wholly unsecured to strip the lien.  The remaining first mortgage will remain a secured debt, but the other mortgages transform into unsecured debt, which reduces the likelihood of their being paid in full.  There are many conditions, or hoops, the debtor must get through to strip a lien.

There are measures in place to protect creditors against lien stripping.  Working with an experienced and knowledgeable Arizona creditor’s attorney can be a tremendous help.  If you would like more information about lien stripping in bankruptcy, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

A property is foreclosed upon by a lender, but the property remains unsold after a foreclosure auction or Trustee’s sale. The lender still retains the property, which is now classified as an REO – “Real Estate Owned.”

The original term from which REO is derived is OREO –“Other Real Estate Owned.” This is a term found on a financial institution’s financial statement to describe real property that is owned by, but that does not materially relate to the business of, that institution.

Holding a portfolio of REO properties may not offer tremendous value to a financial institution.  They may not even have the potential to recoup what is owed on a loan.

REO disposition refers to the business of handling, selling and otherwise managing REO properties.  As unattractive as these distressed assets may be to lenders, REOs have assumed a substantial position in the portfolio holdings of some real estate managers.

Working with an experienced, knowledgeable Arizona creditor’s attorney can help tremendously when evaluating creditor options.  If you would like more information about bankruptcy filings, REO properties, foreclosures, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

Readers of this blog may be learning about how bankruptcy and creditor actions may impact a debtor’s property.  Now, let’s consider a less-common entity that is also subject to Arizona laws regarding creditors and personal property:  self-storage facilities.  There are occasions when liens may be placed against a debtor’s storage locker and its contents.

Suppose a storage facility tenant who was behind on rent for a long time files for bankruptcy.  An automatic stay then goes into effect. Can the storage facility owner proceed to place a lien against the locker contents and sell them to recoup the lost rent? Or should the facility owner file as a creditor in the bankruptcy proceedings, and request the court’s permission to conduct a lien sale?

Actually, until the Bankruptcy court lifts the automatic stay (or rules in favor of a motion against the stay) a creditor may not proceed with any action against a debtor. Should the court dismiss the bankruptcy filing, a creditor may proceed with a lien sale.  If the court discharges the debt, however, the debtor is no longer required to pay the rent owed on the storage unit.

Perhaps the best way a storage facility owner/creditor can protect his/her interests is to act quickly when any tenant becomes delinquent on rent, and upon doing so exercise their legal rights prior to any indication of bankruptcy.  This same proactive thinking can help creditors in other situations as well.  Engaging an experienced creditors attorney will help navigate the legal process.

Most standard rental agreements in Arizona ought to include some form of remedy authorizing the owner to sell the contents should delinquency occur.  The contract rights and remedies must conform to Arizona statutes.  Should the bankruptcy filing take place before the contract can be enforced, however, the owner/creditor should enlist the help of a skilled bankruptcy attorney to assert the claim for unpaid rent.

Working with an experienced and knowledgeable Arizona creditor’s attorney can be a tremendous help.  If you would like more information about personal property and bankruptcy, possessory liens, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

 

A typical contract may contain a clause allowing one party to terminate the contract should the other party encounter financial trouble such as insolvency or bankruptcy. This type of provision is known as a “Termination Upon Bankruptcy” clause.  The specific contract language in such a provision is known as an ipso facto (i.e. “by the fact itself”) clause, meaning that the existence of a bankruptcy filing is reason enough to terminate the contract.

Termination clauses are often found in different types of contracts:

• Licenses
• Leases
• Development agreements

Factors that may trigger the termination clause may include:

• Filing for bankruptcy by contract party
• Having an involuntary bankruptcy filed against the party
• Becoming insolvent
• Written statement of insolvency by the party
• Making a general assignment for the benefit of creditors
• Invoking the contract’s financial condition covenant

According to Section 541(c) of the US Bankruptcy Code, a contract that terminates because of the financial condition of the debtor will be unenforceable once a bankruptcy case has been filed. Section 365(e)(1) pertains to termination- type ipso facto clauses in executory contracts – stating that such a contract may not be enforced, terminated or modified based on the financial condition of the debtor/party.

Whichever side of a contract or bankruptcy is in question, a knowledgeable attorney is best qualified to address the complexity of interpreting contract language.

Working with an experienced, knowledgeable Arizona creditor’s attorney can help tremendously when evaluating a bankruptcy filing.  If you would like more information about termination-upon-bankruptcy contracts, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

Recently, news outlets across the country reported that government mortgage lenders Fannie Mae (FNMA) and Freddie Mac (FDMC) may soon be taking more aggressive legal steps against debtors who carry out a strategic default on their mortgage loans.

Strategic default can be defined as what occurs when a borrower/debtor intentionally defaults on a loan, even if s/he is capable of making payments.

The Federal Housing Finance Agency, which oversees FNMA and FDMC, experienced billions of dollars in losses on bad loans during the recent economic downturn.  In 2014, this agency may be pursuing litigation against strategic defaulters at an increasing rate.  This proactive approach may aid in recouping losses suffered over the past few years; ideally, it may also serve as a deterrent to those who do not intend to honor their loan commitments. This step toward greater debtor accountability may prove to be significant in the category of creditors’ rights, both inside and outside of bankruptcy.

Working with an experienced, knowledgeable Arizona creditor’s attorney can help tremendously if you are facing litigation resulting from a strategic default.  If you would like more information about creditors’ rights or defending claims, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We represent creditors enforcing loan documents and debtors that have been sued by creditors.  If you need assistance with your collection matters, please contact us at (480) 584-5660.