When the states received tobacco settlement money years ago, many states elected to do the same thing. In this case, however, the issue is not one of compensating smokers. After all, paying smokers or the victims of deceased smokers would do little to stop smoking or solve the outbreak of cancer and other health concerns that smoking caused. Paying homeowners, however, or writing down principal on mortgages to reflect the fair value of properties would absolutely have done more for the economy.

Instead of suddenly becoming tight-fisted, allowing homeowners to break even on homes instead of remaining underwater would arguably do more to stimulate spending and restore consumer confidence in homebuying. Instead, the foreclosure crisis will most likely lead to more lost houses and depressed home values until the market bottoms out. This could take years. This certainly won’t be good news for homeowners looking to refinance, to borrow from home equity, or to sell their homes (rental, vacation, or homestead) in the next few years.

Will other states follow Wisconsin’s lead and funnel the money into fixing a budget deficit or attack the foreclosure problem directly by paying down principal and encouraging modifications to stop foreclosures and save the homes of their residents? What role will this have in the upcoming recall elections? Stay tuned for more.

What this means for homeowners who are still suing these lenders and servicers is unclear. The settlement terms supposedly allow lawsuits against the servicers and the mysterious MERS Corp., allow criminal actions against the servicers, send some money to foreclosed borrowers from January 1, 2008 through December 31, 2011, and provide money to the states for principal reductions on first and second mortgages.

What are your thoughts? Is the $25 billion received in the settlement enough? Will the nationwide servicing standards actually be enforced against the servicers if they continue to improperly foreclose? Will homeowners who lost their houses due to unethical and possibly illegal activity ever get compensated? Will the money to help write down some mortgages slow or stop the ongoing foreclosure crisis? Only time will tell. But don’t let this news stop you from calling us at (866) LAKELAW or (262) 694-7300 in Wisconsin if you are still facing foreclosure or have questions about your mortgage and other debts.

Dear Friends:

Lakelaw wishes to extend our sincerest thanks this Holiday season to the colleagues, clients, staff, and administrators who make our jobs so rewarding. So often we hear complaints – about sloppy attorneys, rude judges, untrustworthy clients – and there is much that needs to be done to fix the justice system and make it accessible for everyone. But we are fortunate here to have a fine legal system with dedicated professionals helping to ensure the processes run smoothly. The staff, judges, clients, and others we’ve encountered have been helpful and dedicated to public service, and we appreciate this.

Bankruptcy and foreclosure defense in particular are areas of law that deal with very sensitive concerns – the loss of a home, the loss of a lifestyle, threats from creditors. We recognize the need to be sensitive and compassionate and hope that we meet the high standards we hold for ourselves. The genuine thanks of our clients and the opportunity to see consumers obtain a fresh start and relief from debts are two of the benefits we enjoy above all.

So thank you all again and we will be here to help in 2012 and beyond.

While each bankruptcy case is different we attorneys at Lakelaw see a common theme among many bankruptcy filers: the threat of losing a home in foreclosure. This post tries to explain some of the options debtors have when facing foreclosure.

The first question anyone must answer is whether or not to try and save the home. Someone wishing to walk away from their home without a final foreclosure could have two options: Attempting a Deed in Lieu of Foreclosure or agreeing to a Short Sale

In a Deed-in-Lieu, the offer is to give the home back to the bank to stop the foreclosure. However, mortgage defense attorneys have not seen much success with this lately. Due to so many homes already foreclosed (and those that are still going to be foreclosed on any day now), banks are often refusing to accept a Deed in Lieu of Foreclosure.

A second is a short sale. A short sale involves a homeowner, with the help of a realtor, finding a buyer who is willing to buy the home at a reduced value. The bank would then have to agree to waive the difference between what the home sold for and what was owed—the deficiency—or the homeowner would have to bring money to pay the difference at closing. Banks like the idea of having a waiting buyer instead of waiting through months of foreclosure, but they do not like the idea of walking away from the deficiency amount.

What if you want to try and keep your home? If you and your bank are working well with each other, a home modification could be an option. The bank would be willing to work with the borrower and try to find a payment plan that works. It should be noted that the Wisconsin branch of Lakelaw has seen some promise in mortgage modification within the Chapter 13 modification program set up in the Eastern District of Wisconsin bankruptcy court).

Another option is Chapter 13 Bankruptcy. This may be the best option a debtor has to save their home. When the debtor files a Chapter 13 bankruptcy an automatic stay goes into place. This means the bank must stop the foreclosure and the borrower can stay in the house as long as they are making payments to the trustee and a payment to the mortgage company after the bankruptcy filing. The goal is to find a way to cover the regular monthly mortgage payment plus an additional amount to catch up on the arrearage. A Chapter 13 bankruptcy is a difficult process and is different for each person, so it is always best to speak with an attorney about your particular situation.

If you have questions about saving your home, the professionals at Lakelaw are here to help. We serve our clients with Care, Kindness, Courtesy, Respect, Professionalism and Dedication. We can be reached at 1-800-LAKELAW in Illinois and 262.694.7300 in Wisconsin. Give us a call so we can help you with your finances and your home.

This post was drafted by Attorney Nicholas Strom

Sometimes a basic bankruptcy attorney is all you need. Some people can even file simple bankruptcies “pro se”, without an attorney. This is fine if the bankruptcy is easy and there aren’t any problems or unusual issues that appear. However, if problems do arise or the bankruptcy is complex, a low cost, quick fix attorney is probably not qualified. We have had clients walk into our office after hiring a low cost bankruptcy attorney and see the consequences of their choices.

One couple came in to see us after hiring a cheap bankruptcy attorney who knew nothing about mortgage foreclosures. Because of the attorney’s lack of training, the clients are in a much worse position and will probably not be able to keep their house now. Another person came into our office after hiring a low cost attorney and asked why they were still getting mortgage payments in the mail at a high rate. The answer was simple: the quick fix attorney never took the proper steps to inform the mortgage company that the debtors and the mortgage company reached a deal reducing the rate. A third consulted us after failing to tell the courts in her bankruptcy papers that she had a personal injury lawsuit pending when she filed. Now she runs the risk of losing control over the settlement of the case and having the creditors take more than what they would have been entitled to if she had had an attorney tell her that she is responsible for listing any possible lawsuits or claims against anyone.

The professionals at Lakelaw know bankruptcy inside and out and are willing to take the time to work with you all the way through the bankruptcy and other matters that may arise. We offer a free initial consultation and will give you the chance to discuss your personal situation and what you must do to stay strong. Lakelaw will treat you with Care, Kindness, Courtesy, Respect, Professionalism and Dedication. Call us at 1-800-LAKELAW or (262) 694-7300 in Wisconsin.

Attorney Nicholas Strom contributed to this post

There are two important things to keep in mind. First, creditors can still collect against non-exempt assets. This means that creditors who have judgments can take property not shielded by the laws of the debtor’s state. After the creditor takes the property, it can sell it in order to pay off the debt. If that process does not completely pay off the debt with the sale, the creditor can keep taking non-exempt property until the debt is paid in full. It is important to remember that creditors cannot come after ALL of your property, only property not protected by statute.

The second thing to remember is that there is nothing preventing a creditor from asking for a payment. Often, a creditor will ask a Social Security recipient if he or she would be willing to continue making payments. There is nothing preventing a debtor on Social Security from agreeing to an arrangement. That said, a debtor should remember that Social Security payments are off-limits to creditors and the creditor will not be able to take Social Security payments without the debtor’s consent.

If you have questions about Social Security payments and debt, or any other consumer matters, please feel free to contact the professionals at Lakelaw (866-LAKELAW, or 262-694-7300 in Wisconsin). We specialize in helping people get their financial houses in order while treating clients with Care, Kindness, Courtesy, Respect, Professionalism and Dedication.

This post was drafted by Nicholas Strom, Lakelaw attorney

1. Fix your payment history by paying as many bills as possible on time, responding immediately to collection agencies when they call or write about a debt, and paying certain debts in full so they no longer have a balance owed.

2. Avoid excessive balances on credit cards and loans that are simply too expensive (or have too high an interest rate) to repay in full. That includes loans for furniture and other items where “no money down!” is promised, but interest rates immediately become outrageous the moment the promotional period ends.

3. If you have a credit or charge card you pay every month on time, keep it open. Positive payments are your friends. Also, start early if you can by taking out very small limits on credit cards when you are young (but not going overboard with using them) to establish a good history from an early age.

4. Check your credit report periodically (our firm recommends Annual Credit Report because it is free) and avoid paying to view the reports. There is no need to pay $20 per month or more for a company to “monitor” your credit report and send you the same reports you can get for no cost every year. 

The bottom line is that credit is a statistic, a figure or number you can help manipulate and stay strong to help you when you need it. Beyond the obvious advice to pay everything on time, you can manage which debts are outstanding, which are closed and which carry large balances to be a smarter, strong consumer.   For more information, contact Lakelaw at 866-LAKELAW ((262) 694-7300 in Wisconsin), or a trusted financial advisor.