Black & LoBello on AM720 KDWN

Tune in as Black & LoBello offers free legal advice on a wide range of topics

Click here to listen to the Legal Hour on KDWN AM720 from June 20th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., hosts special guest, Randy M. Creighton, Esq., a bankruptcy attorney practicing at Black & LoBello.  Mrs. Black Chernine and Mr. Creighton discuss the meeting of the creditors or 341 meeting (2:30), documents required at the 341 meeting (8:30), qualifying for chapter 7 based on income (9:00), whether a debtor can plead the 5th amendment (10:40), modifying an FHA loan (14:00), what happens to creditors after bankruptcy (21:45), will bankruptcy stop a foreclosure (24:30), how to stop a bankruptcy process (26:24), what happens after the 341 meeting (28:15)(35:05), wage garnishment and bankruptcy (29:12) and bankruptcy and credit history (38:03).

Please tune in to AM720 KDWN’s “Legal Hour,” every Wednesday, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

To listen to past shows, visit our Media page.

How To File Bankruptcy: The Series - Part 12

What Will Replace Fannie and Freddie?

With the recent election results and the increase in Republican politicians promising to abolish Fannie Mae and Freddie Mac, the topic of what will replace these government sponsored entities is being discussed now more than ever.   Fannie and Freddie have been in a state of uncertainty since the government seizure but a recent Wall Street Journal article appropriately asked what would replace them.

Fannie and Freddie played key roles in the prevalence of 30-year fixed rate mortgages by purchasing these loans from banks who liked to have them off their books.  Fannie and Freddie guaranteed the loans the loans they purchased and sold them to investors as securities.  According to a recent report by Standard & Poor’s, however, the cost to rescue Fannie and Freddie could reach $280 billion.  The cash necessary to keep Fannie and Freddie active does not compare to the projected $400 billion in capitalization that would be required for any entities replacing these two failing entities.

Mortgage investors, industry groups, and academics are currently putting their support behind government insurance for mortgages.  Treasury Secretary Geithner supports a limited, but explicit, guarantee.  Conversely, Representative Jeb Hensarling (R., Texas), disagrees stating that he did not see the reason for continued government guarantees and the use of 30-year fixed mortgages.  Furthermore, Hensarling pointed out that other countries have succeeded in producing high-homeownership rates without government guarantees.  Many other Republicans call for complete privatization of the housing-finance industry.

Joshua D. Carlson, Esq.

As part of an asset protection plan, people may place certain assets into a single member limited liability company (LLC) with the belief that these assets are protected from individual creditors. However, in the bankruptcy context, a single member LLC will not provide any asset protection for a person from their individual creditors.  In multiple jurisdictions, bankruptcy courts held that, where the debtor was the sole member and manager of the subject LLC, the Chapter 7 Trustee could seize control of the LLC and may cause the LLC to sell the assets of the LLC.

Nevertheless, in each of these cases, the bankruptcy court treated the single member LLC differently than an LLC with multiple members.  In cases where a single member files for bankruptcy while other members of a multi-member LLC do not, and where the non-debtor members do not consent to a substitute member status for a member interest transferee, the bankruptcy estate is only entitled to receive the share of profits or other compensation by way of income and the return of contributions to which that member would otherwise be entitled.

However, before adding a second member to an LLC, be aware of the “peppercorn” membership interest.  A “peppercorn” membership interest is when the LLC owner gives a third party a small interest in the LLC for the sole purpose of avoiding or hindering a creditor from collecting.  In this context, a bankruptcy court will avoid the transfer of any ownership interest in the LLC to the third party, which would create a single member LLC again, and then subsequently allow the Chapter 7 Trustee to seize control of the LLC and liquidate its assets.

In closing, before transferring all personal assets to an LLC, make sure the LLC has more than one member and that all members acquired their membership interests for equitable consideration. If these steps are followed, then even in bankruptcy, an LLC can shield personal assets from individual creditors.

Randy M. Creighton, Esq.

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A joint investigation by every state and the District of Columbia could force mortgage companies to settle allegations that they used flawed documents to foreclose on hundreds of thousands of homeowners.  To read the full article please click this link.

Don’t miss this weekend’s FREE Town Hall meeting hosted by Prudential Americana features experts from various fields related to the Real Estate market to answer YOUR questions. This meeting will be on September 25, 2010 at 10:00 AM located at Green Valley Ranch, Conference Room La Sirena IV. Please submit any questions you would like to have answered at this very important meeting through Twitter or our Facebook Discussions Tab.

Directions and Map:

Click here for a MAP of the Green Valley Ranch ground floor.  Take the I-215 to Green Valley Parkway.  Exit South and turn right at Paseo Verde.  Turn right at Carnegie and follow the signs to Hotel Registration (Valet Parking).  Once parked, simply ask a valet attendant to direct you to the La Sirena IV ballroom.

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At the end of August, Lender Processing Services (LPS) reported that mortgages on 4,947,000 properties nationwide were at least 30 days past due but NOT in foreclosure. Of those, 2,374,000 were 90 or more days delinquent.   The good news is that the delinquency rate of loans that are 30 days or more past due have declined one percent since last month and 5.1 percent since this time last year.

Even with the high number of delinquencies, the number of bank-owned properties has fallen steadily over the past year.  There are several possible reasons for the lack of bank-owned properties even with the near record-high delinquency rates.  First, a portion of the delinquent loans ends up being permanently modified.  Second, banks are approving short sales with greater regularity even though the short sale process is still filled with frustration and confusion.  Lastly, when foreclosures do occur, more investors are buying properties at foreclosure sales preventing these properties from ending up as REO.

Currently, Fannie Mae and Freddie Mac make up a large majority of foreclosure listings.  Fannie and Freddie have already taken back nearly as many homes in the first half of the year as they did all of last year. As of June 2010, they owned more than 191,000 homes which is nearly double the total from 2009.

Joshua D. Carlson, Esq.

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The phrase “Delinquent Mortgage,” once a foreign concept for many Americans, has now become part of our everyday vernacular. When nearly 4 million homeowners are currently 60 or more days behind on their mortgages, it is actually no surprise that citizens nationwide are buzzing about the housing crisis.  That crisis is worse here in Las Vegas than it is in many other areas of the country and Las Vegas citizens are certainly feeling the economic pinch.

More than 60 percent of homeowners nationwide who have seriously delinquent loans are still not involved in any form of loss mitigation with their lenders, probably due to the frustration with the processes available.  In fact, a recent performance report indicates that nearly half of the property owners approved for trial loan modifications have fallen out of the program.  By the end of July 2010, approximately 616,839 out of the total of 1,307,489 HAMP three-month trial plans have been cancelled since the program began.  This tremendous dropout rate may be due to the lengthy process of obtaining a permanent modification.  For instance, as a result of the backlog, only 36,695 HAMP restructurings were converted to permanent status during the month of July.

For those who are already involved in loan modifications or short sales, the process may soon become even more difficult and time consuming as Fannie Mae and Freddie Mac have become more aggressive in forcing originating lenders to buy back bad loans.  A report by Fitch Ratings illustrates that, in a worst-case scenario, the buybacks may result in a combined loss of between $17 billion and $42 billion for the nation’s four largest banks – Bank of America, JPMorgan Chase, Wells Fargo, and Citi.  Considering these numbers, it is safe to assume that the process will become even more tedious.

Despite homeowners’ understandable frustrations with the short sale and loan modification processes, these avenues may preserve some homeowners’ rights down the road.  For example, if a lender tries to pursue a deficiency judgment following a foreclosure, the homeowner has the ability to demonstrate efforts to work with the lender to mitigate losses.  It is hopeful that the courts will not turn a blind eye to these whole-hearted attempts.  As such, underwater homeowners should become informed, seek assistance from a legitimate source, and do their best to stay patient.

Kelle L. Kuebler, Attorney*

*Licensed only in New York and Connecticut

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How To Choose The Right Bankruptcy Lawyer

When facing the decision whether or not to file for bankruptcy you want to make sure you have an experienced attorney who will handle your case the way you want.  The following is a list of key issues you need to address and ask about when you are searching for a bankruptcy attorney:

Have you asked around?

The number one rule in choosing a lawyer is to ask others who have filed bankruptcy how their attorney treated them.  Some attorneys run a “mill” practice that focus on getting as many people in and out of their office doors as possible.  These attorneys charge typically charge lower fees but also give the least amount of service.  By asking friends and family, you can avoid falling into a “mill”.  Find an experienced attorney who will take the time to sit down and answer your questions.  Remember, no matter how much an attorney may be well-regarded, unless he or she is experienced in BANKRUPTCY law issues you don’t need them.

Does the attorney have the right experience?

Any attorney you consider using for your bankruptcy must have BANKRUPTCY experience. You don’t want to be some newbie lawyer’s guinea pig.  By “newbie” I just don’t mean a new lawyer but also a new bankruptcy lawyer.  As I mentioned before, no matter how much an attorney may be well-regarded, unless he or she is experienced in BANKRUPTCY law issues you don’t need them.

Are there communication issues?

Does the attorney explain the bankruptcy process in a way you can understand? Blogging and online publishing is more important now than ever before since professionals share information and educate the public about issues that concern them. Bankruptcy lawyers who maintain their own blogs prove they are knowledgeable enough to help others understand this field of law.

Who will be handling your case?

You must ask which lawyer will be handling your file. The attorney you interview may not necessarily be the one who will handle your bankruptcy issue.  Make sure to ask who WILL be doing the day-to-day work on your file.  In some firms, a paralegal might be handling the majority of your case so you should make sure you know this as well.

How much will it cost?

You have enough money trouble without worrying about what the fees will be for your bankruptcy.  Ask the lawyer for the most detailed estimate he can give as to how much your case will cost.

Don’t make a fee-based decision.

The cheapest lawyer is not always the best lawyer.  Hopefully, bankruptcy is a once-in-a-lifetime event. As such, you want to make sure you are getting a bankruptcy attorney who can do the best job for YOU.  You want an attorney who will take the time to answer your questions, concerns, and any other fears you may have.  An attorney who has his paralegal or assistant returning his phone calls might not be paying attention to your case. Always remember that you hired the attorney to work for you.  Don’t settle for anyone else but THAT lawyer to do the work.

Randy M. Creighton, Esq.

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The Automatic Stay In Bankruptcy

The instant bankruptcy is filed, for either Chapter 7 or Chapter 13, a protective umbrella called the automatic stay is triggered which protects the debtor and the debtor’s property against the continuance of any action by any creditor.  For example, the automatic stay would protect and STOP a pending foreclosure. Additionally, when filing a Chapter 13 bankruptcy, that injunction extends to anyone else who is obligated to repay your debts.

However, the automatic stay is not absolute in that a creditor may restart collection proceedings by asking the court for permission.

Further, there are limits on how long the automatic stay lasts. For example:

  • If you had a prior bankruptcy case pending in the last year which was dismissed then the automatic stay lasts for only the first thirty (30) days after your case is filed unless you or your lawyer gets a court order extending the automatic stay; or
  • If you had two or more prior bankruptcy cases pending in the last year which were dismissed then the automatic stay does not take effect at all unless you or your lawyer gets a court order extending the automatic stay.

What The Automatic Stay Covers

As long as the automatic stay remains in place, the following actions are prohibited:

  • Beginning or continuing law suits;
  • Collection calls;
  • Repossessions;
  • Foreclosure sales;
  • Income executions (“garnishees”); and
  • Bank account restraints.

In other words, the automatic stay is a central and very powerful tool a debtor can take advantage of once the bankruptcy is filed.  The goal of any bankruptcy proceeding is to give the debtor a fresh start.  The automatic stay allows for the debtor to be protected from all creditor claims while he gets his finances back in order.

What The Automatic Stay Does Not Cover

Unfortunately, not all actions and debts are covered by the automatic stay.  The automatic stay does not stop:

  • Criminal proceedings;
  • Actions for a family support order or the modification of such order;
  • Actions to collect support from property that is not property of the estate; and
  • Tax audits or demands by a taxing authority to file tax returns or assessments of taxes due.

If you are thinking of filing for bankruptcy it is always best to talk with an experienced attorney to discuss your individual case.  The beauty of bankruptcy is that a debtor has many options to help resolve individual problems.  Only an experienced bankruptcy lawyer can help guide you through this difficult and confusing process.

Randy M. Creighton, Esq.

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The Chapter 7 Discharge

The goal of any bankruptcy proceeding is to obtain a discharge of debts.  A discharge releases the debtor from personal liability from most debts and prevents creditors from taking any collection action against you.  Nonetheless, there are many exceptions to receiving a discharge in a bankruptcy proceeding.  Therefore, debtors should consult competent legal counsel before filing to discuss the scope of the discharge.  Not to worry, over 99% of all debtors who file for bankruptcy receive a discharge.  An order of discharge is usually granted very early in the case, within 60-90 days after the date first set for the meeting of creditors.

Randy M. Creighton, Esq.

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FHA Program for Underwater Homeowners

Beginning September 7th, the Federal Housing Authority (FHA) will offer FHA-insured mortgages to qualifying borrowers who have a non-FHA mortgage.  To be eligible, the borrower must owe more on the mortgage than the home is worth, be current on the mortgage, occupy the property as a primary residence, qualify for the new loan under standard FHA underwriting requirements, and have a credit score of at least 500.  Similar to the under-performing Home Affordable Refinance Program (HARP), the FHA program will have limited affect on the current housing situation because so many borrowers are behind in their payments and lenders are reluctant to write off a portion of the principal.

Lenders are hesitant to write-off mortgage principals because then they would have to pay the investors for the amount of debt forgiven and it might establish a precedent that loan contracts can be changed due to market fluctuations. HUD recommends that borrowers contact their lenders to inquire about eligibility and whether the lenders will write down a portion of the mortgage.

Joshua D. Carlson, Esq.

As Nevada continues to lead the country in per capita bankruptcy filings, many Las Vegans are concerned they might be fired or face other retaliation by their employers if they file bankruptcy.

Nevada, like most states, considers employees “at will” which means that employees can be fired for any reason or even no reason as long as it is not done in violation of certain public policy protections such as race or gender. However,  bankruptcy code specifically states that employees may not be fired simply because they filed for bankruptcy. The Bankruptcy Code, at 11 U.S.C. sec. 525(b), states that “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt.”  Employees terminated unlawfully based on filing for bankruptcy may receive back pay including fringe benefits and reinstatement, and may also recover damages for emotional distress.

However, it is highly unlikely that employers or anyone else will ever know who files for bankruptcy unless the employee discloses that information.  The only parties that will know are creditors and any co-debtors (co-signers).  No one stands outside the court house to read off the names of those who filed for bankruptcy that day and the names of people who have filed for bankruptcy are not published in local newspapers or community newsletters.

In summary, employers will only know if an employee files for bankruptcy protection if that employee tells them. Furthermore, if an employer does somehow learn of the filing and attempts to retaliate against the employee because of the bankruptcy, the employee can turn to the protections provided by the bankruptcy code.

Randy M. Creighton, Esq.

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Reasons for Initiating Probate

The probate process begins after a family member dies and someone, either the executor of the will or a family member, initiates proceedings in probate court.  There are certain reasons why an estate would need to be probated.  First, property that is owned solely in an individual’s name must always be probated.   This applies even when the deceased created a will that leaves property to another person because, when property is titled only in the name of the deceased, no one else is able to sign documents relating to that asset.  The probate court will name a person who has the ability to sign any necessary documents.

Second, if a family member has passed away with outstanding debt, the creditors have a certain time period to initiate probate proceedings and file a claim against the existing estate in order to get paid. 

Third, probate proceedings are always initiated when both parents of a minor child pass away.  Usually, the probate process names a legal guardian of the child to protect that child’s financial assets. 

Finally, probate proceedings are most commonly initiated when family members disagree on the distribution of their loved one’s assets.  When family members fights over the division of the estate, the process can become both costly and emotional.  Therefore, have a reputable attorney draft estate planning documents and ensure those documents are always updated and accurate.

Amy M. Friedlander, Esq.

Keep Creditors At Bay

business docsNow, more than ever, business owners should ensure that the documentation and other legal mandates of corporations and limited liability companies are met. The failure to do so could jeopardize the business ability to stay personally clear of the debt obligation. Nevada state law requires each corporation and limited liability company to keep annual corporate minutes and to conduct annual meetings. More importantly, and more often the problem, is that small business sometimes co-mingle business funds with personal funds, a certain step in giving a creditor a good claim to pursue you personally for a business debt.

The failure to maintain proper records and to properly account for and separate business finances could pierce the veil of protection provided by legally recognized entities. However, documentation and finances are not the only concern. Business owners who have closed the doors should also be careful to file the certificates and other documentation required by Nevada state statutes. Regardless of whether or not personal liability for a business debt was incurred at the inception of the debt, failure to file proper documentation and keep separate accounts may leave business owners liable for business debts that they would have otherwise been shielded from.

Tisha Black-Chernine, Esq.