Bankruptcy – 5 Myths Debunked
The Key Ins and Outs of Bankruptcy




                                     1
Agenda

•   Bankruptcy – an Overview of the 5 Myths
          p y                          y
•   Q&A – It’s Your Time to G...
Bankruptcy



1. Myth #1 – it can happen anytime

2. Myth #2 – it can “kill” a deal

3. Myth #3 – it takes “forever”

4. M...
Bankruptcy Basics

Chapter 7: the bankruptcy trustee sells all nonexempt
and unencumbered assets and distributes the proce...
Bankruptcy Basics
33.4% of all consumer bankruptcy filings are Chap 13
66.6% are Chap 7




                              ...
Bankruptcy Basics
Increasing steadily since 2005 BK Law




                                        6
Myth #1 – BK can happen “anytime”

•   95% of bankruptcies take p
                 p           place in final 48 hours of
...
Myth #1 – BK can happen “anytime”

•   … five to six years after their bankruptcy filing 72 1%
                           ...
Myth #2 – it can “kill” a deal

•   First of all, great information – almost always better
             all
    than you c...
Myth #3: BK takes “forever”

     p
It depends.
Pro Se vs Represented by Attorney
Chapter 7 (
C         (with mortgage deb...
Myth #4: A judge can restructure any loan anytime

 Not true. In simple terms, BK distinguishes between:
                 ...
Myth #4: A judge can restructure any loan anytime

 An “undersecured” creditor has two claims in a
     undersecured
 bank...
So what’s a “Stripdown or Cramdown”?

•   Distinction between secured vs. unsecured …
    “stripping off” from the secured...
M th #5: Th
Myth #5 There’s nothing you can do about a
             ’    thi           d b t
Bankruptcy

•   Make sure the...
H tS t X2
Hot Seats

Your opportunity for One-on-One coaching
Y         t it f O          O       hi
   •   Landmark Educa...
N tW k
Next Week

 Th “Dreaded” B
 The “D d d” Borrower
    •   Ins and Outs of Dealing with the Most
        Important Pe...
Upcoming SlideShare
Loading in …5
×

Buying Defaulted Mortgages - Bankruptcy NoteBuyingProfits.com

1,905 views

Published on

http://www.NoteBuyingProfits.com No-nonsense Note Buying Information. Up-to-date! Hours of FREE Note Buying Training Videos, Free 1-on-1 Coaching Session! Click or Call 718-783-7605

0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,905
On SlideShare
0
From Embeds
0
Number of Embeds
12
Actions
Shares
0
Downloads
36
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Buying Defaulted Mortgages - Bankruptcy NoteBuyingProfits.com

  1. 1. Bankruptcy – 5 Myths Debunked The Key Ins and Outs of Bankruptcy 1
  2. 2. Agenda • Bankruptcy – an Overview of the 5 Myths p y y • Q&A – It’s Your Time to Get Answers • Hot Seats X 2 H S 2
  3. 3. Bankruptcy 1. Myth #1 – it can happen anytime 2. Myth #2 – it can “kill” a deal 3. Myth #3 – it takes “forever” 4. Myth #4 – a judge can restructure any loan anytime 5. Myth #5 – there’s nothing you can do about a bankruptcy 3
  4. 4. Bankruptcy Basics Chapter 7: the bankruptcy trustee sells all nonexempt and unencumbered assets and distributes the proceeds to creditors, and the debtor receives a fresh start. Chapter 13: the debtor devotes all of his or her di disposable i to bl income t payment of creditors over a 3 or 5 t f dit 3- 5- year plan, and any unpaid portions of the debts are discharged. discharged Chapter 13: more effective at protecting current assets assets, like a home Chapter 7: more effective at protecting future income 4
  5. 5. Bankruptcy Basics 33.4% of all consumer bankruptcy filings are Chap 13 66.6% are Chap 7 5
  6. 6. Bankruptcy Basics Increasing steadily since 2005 BK Law 6
  7. 7. Myth #1 – BK can happen “anytime” • 95% of bankruptcies take p p place in final 48 hours of foreclosure • What’s the lesson here? • Pain stimulates action … use “pain” (e g foreclosure) pain (e.g. wisely. Key intervention is at point of greatest pain • If BK is a disease, then Communication is the antidote • And … so what? Does it help to file BK? 7
  8. 8. Myth #1 – BK can happen “anytime” • … five to six years after their bankruptcy filing 72 1% filing, 72.1% of families still owned their homes. The remaining 27.9% lost their houses.” houses. Sarah Carroll & Wenli Li, “The Homeownership E Experience of Households i B k t ” ( small DE i fH h ld in Bankruptcy” (a ll study based on 2002 BK filers) • No really good temporal studies to track BK filing and its impact on homeownership 8
  9. 9. Myth #2 – it can “kill” a deal • First of all, great information – almost always better all than you can get from your seller • PACER - let’s take a test drive • For Case Law – references, use Westlaw • Second – what’s the “context” (job credit overall what s context (job, credit, situation) • Third – can serve as a proxy for loan underwriting (why I’m a proponent of BK cram down legislation). Implication being – the judge “qualifies” the borrower qualifies 9
  10. 10. Myth #3: BK takes “forever” p It depends. Pro Se vs Represented by Attorney Chapter 7 ( C (with mortgage debt) vs C ) Chapter 13 1. Filing – all forms and requirements (e.g. credit counseling, SSN verification, etc.) 2. 45 days later = 341 (Creditors’) Meeting (Creditors ) 3. Plan submission and review 4. Amended Plan(s) 5. 5 Trustee then recommends dismissal / approval 6. Judge Orders the Plan or the Dismissal 10
  11. 11. Myth #4: A judge can restructure any loan anytime Not true. In simple terms, BK distinguishes between: p , g Oversecured Creditor: $100,000 mortgage, $200,000 house Undersecured Creditor: $100,000 mortgage, $50,000 $100 000 mortgage $50 000 house What BK distinguishes between here: Secured claim is $50,000 Unsecured claim is $50 000 $50,000 www.creditslips.org – Bob Lawless, Mortgages in Bankruptcy 101 11
  12. 12. Myth #4: A judge can restructure any loan anytime An “undersecured” creditor has two claims in a undersecured bankruptcy case: • a secured claim up to the value of the collateral • an unsecured claim for the excess of the debt over the value of the collateral. l f th ll t l US bankruptcy law protects the full value of the secured claim ... The d l i l … Th unsecured claim only receives a proportional i ti l share of the debtor's remaining assets www.creditslips.org – Bob Lawless, Mortgages in Bankruptcy 101 12
  13. 13. So what’s a “Stripdown or Cramdown”? • Distinction between secured vs. unsecured … “stripping off” from the secured and making it unsecured • How does this happen? • Re-defining the collateral (house) value • pp g y Stripping away the secured p portion by negotiating, or y g g, agreeing to, a lower value for the collateral – and having the unsecured portion receive nothing • Exception: a Chapter 13 debtor cannot quot;strip downquot; the mortgage to equal the value of the residence – for debtor’s principal residence 13
  14. 14. M th #5: Th Myth #5 There’s nothing you can do about a ’ thi d b t Bankruptcy • Make sure the debtor follows every step they need to (don’t assume Trustee will ensure they follow all steps – e.g. credit counseling) t dit li ) • Track all documentation via PACER – see what’s happening • Can put 3rd party in communication with borrower p p y (e.g. mortgage broker) • Talk to th b T lk t the borrower’s attorney – would a refi h l ?! ’ tt ld fi help?! • Track payments carefully – file Relief from Stay as soon as you can – “stay on it” 14
  15. 15. H tS t X2 Hot Seats Your opportunity for One-on-One coaching Y t it f O O hi • Landmark Education: when you voice your desires to others then you truly “commit” to them commit • Learn from others • Work things out with a professional “sounding board” sounding board • Apply for a Hot Seat: See download link on the PAC home page => NoteBuyingProfits.com/privateaccessclub.html
  16. 16. N tW k Next Week Th “Dreaded” B The “D d d” Borrower • Ins and Outs of Dealing with the Most Important Person in Your Deal … EVER

×