My client called and was frantic.  “The bank took all the money from my account – I can’t make payroll and my checks are bouncing.  Can they do that?

This is called “set-off”.  And yes, the bank can do that.  

Here’s the idea.  If you have money in the bank, it is money that the bank owes you.  But suppose you also owe money to the same bank.  This typically happens to businesses which have loans with a bank and naturally maintain their checking account with the bank.  So the debt you owe the bank – say a business loan – may be offset by a debt that the bank owes you – your money in the bank.

If you are in default with your bank under your loan agreement, even if you simply haven’t abided by various covenants or agreements in your loan agreement with the bank, the bank has the right to enforce its agreement with you.

For example, the bank has the right to set off the money in your checking account against the debt you owe the bank.  This can be mighty inconvenient.  Your employees won’t get paid and your checks will bounce.  The bank also would have the right to enforce its security agreements with you – for example collect accounts receivable directly from your customers or even sell your assets at auction.

Chapter 11 of the bankruptcy code is your strongest response to these actions.

You’ll need a plan.  You’ll need financing to operate while you are in reorganization.  And you’ll need good legal counsel – like Lakelaw – to represent you in your chapter 11 case.

If your business can recover, you owe it to yourself to try.  Otherwise, your business and life work will face liquidation and a rapid demise.

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What is projected monthly income?  And why do we care?  It tells us your monthly payment in a chapter 13 case.

If you are a debtor in a chapter 13 case, you need to know the amount of your projected monthly income because that is the amount of money you have to pay to the chapter 13 trustee during your applicable commitment period.  

What’s an applicable commitment period?  That’s the time a debtor must remain in chapter 13 case – 3 years for someone who made less than the median income for the six months before banrkuptcy and 5 years for everyone else.

But what is projected monthly income?  We really don’t know because this term is not defined in the Bankruptcy Code.  We know that current monthly income is the average income you made from all sources during the six months prior to your bankruptcy case.  But we don’t know whether what you made before is what you are likely to earn in the future.  Nor do we know whether your present budget is going to be the same in the future.  You may have a new job.  Or you may be threatened with layoff or furlough.  And your expenses might change.  So current monthly income isn’t necessarily the same as projected monthly income.

We have 11 different judges in Illinois and another 6 judges in Wisconsin.  There is no uniformity yet among these judges.  So when we know the judge who will oversee your case, we will know how to calculate your responsibilities under a chapter 13 plan.  

And soon, we hope that the Seventh Circuit Court of Appeals, which oversees all federal courts in Illinois, Indiana and Wisconsin, will give us some clarity on how to deal with these issues in a case called In re Johnson. 

So keep up with Lakeblawg and we’ll keep up on the latest developments in chapter 13 cases for you.

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Clients frequently ask “Can bankruptcy eliminate student loans?”  It’s a good question.  If you don’t pay a student loan, the lender can garnish your wages.  The lender can intercept your income tax refund.  You are treated very harshly.

The simple answer is that you can’t get rid of a student loan in bankruptcy unless paying the student loan is an “undue hardship.”  That doesn’t sound so bad.  But it is.  Your idea of what “undue hardship is” and the courts’ idea are different.

Most bankruptcy courts adopt the so-called Brunner standard – named after a case from New York.  In this case, the court decided that the student-loan borrower had to prove three things to prove “undue hardship” and get a discharge of the student loan: 

• If forced to repay the loans, the debtor could not maintain a “minimal” standard of living for himself and his dependents
• Circumstances show that this “state of affairs” is likely to continue for a very long time
• Debtor has made good faith efforts to repay the loans

This is a very difficult standard to prove.  You have a better chance if many years have passed since your education and you’ve been unable to get work.  You have a better chance if you have some sort of permanent disability. You have a better chance if you’ve tried hard to pay this loan off over a period of time.

If you seek a discharge of a student loan, you need to be prepared to file a separate lawsuit in addition to your bankruptcy.  Ironically, this costs money – and you probably don’t have very much money to begin with if you are considering bankrutpcy and struggling over paying a student loan.

Catch 22 is alive and well.

People don’t always realize that you don’t have to be a student to be liable on a student loan.  For example, if you are a parent who assumed personal liability on a student loan, you are subject to the same limitations and restrictions as you would have been as a student liable on a student loan.

These are difficult questions.  Lakelaw helps debtors with student loans.  Call us at 1 866 LAKELAW.

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It’s not easy to contact a mortgage servicer.  They say they want to help you get a loan modification agreement.  But first, you have to find them.  Here’s a handy list of phone numbers.  Hopefully, this will help you on your way.  And if you need more help, call Lakelaw at 1 866 LAKELAW instead of the mortgage modification company scammers that the United States Department of Justice and Attorneys General around the company are trying to shut down

HOW TO REACH YOUR MORTGAGE COMPANY

• ABN Amro Mortgage Loss Mitigation:
  Customer Service: 800-793-8900
  Web: http://www.mortgage.com
  
• Accredited Home Lenders          (877) 683-4446
• AMC Mortgage Services (Ameriquest and Argent)          (800) 211-6926
• America’s Servicing Company     800-662-3806
  866-674-1430
  866-567-8439
  800-842-7654
  866-567-8440
  866-426-5569
  800-304-3100
• American General       770-614-6005
• American Home Mortgage Servicing. (877) 304-3100
• Aurora Loan Services Home Retention Dept.: 866-519-1456 – 800-550-0508
• AmTrust (888) 696-4444
• Avelo Mortgage LLC 866 992 8356
• Bank of America:
   Loss Mitigation: 800-846-2222 or 716-635-2000
  Authorization Fax: 716-635-7265
  Short Sale Package Fax: 716-635-7255
• Bank of New York Loss Mitigation:
  Phone: 212-495-1784
  Fax: 212-415-2035
  
• BB&T  Mortgage  800-827 3722
• Benefical (800) 333-5848
• Carrington Mortgage Services – 800 477 0192 (option 2) or 800 561 4567
• Cendant Loss Mitigation:
  Phone: 800-750-2518
  Fax: 856-917-8334 
• Central Pacific Bank (800) 342-8422
• Charter One
  CCO Mortgage
  Citizens Bank      (800) 234-6002 0r 877 745 7355
• Chase (800) 446-8939
  Homeowners Assistance Department (foreclosure)
   800-446-8939
  Fax: 614-422-7259
  Additional numbers
  Phone: 800-981-3792
  Fax: 858-605-3006
  Phone: 800-526-0072
  Phone: 800-527-3040 ext. 533 

  Phone: 800-848-9136 (Mortgage)
  Phone: 800-836-5656 (Home Equity)
  Phone: 510-652-0401
  Web: https://chaseonline.chase.com 

• Chevy Chase  Bank   866 391 8688
• Citi Financial Mortgage (800) 753-3673
  Foreclosure: 800-424-3562
   800-423-8158
  800-848-7491
  Dial by extension: 800-888-600 
• Citimortgage (800) 283-7918
  Loss Mitigation: 800-682-2286
  Foreclosure: 877-202-3846
  Loss Mitigation: 866-357-6015
  Loss Mitigation Fax: 248-488-7727
  Workout Fax: 248-488-8357
  Loss Mitigation: 866-357-0614
  First American: 800-511-1278
  Workout Fax: 636-256-2884 
• Citi – all entities – Loss Mitigation:  800-422-1498
• Countrywide (800) 262-4218 or 800 669 6607
• Ditech (800) 852-0656
• Downey Financial Corp. (800) 824-6902
• EMC (800) 723-3004 0r 888 577 4011 (Loss mitigation)
• Equity One (866) 361-3460|
• Fairbanks Loss Mitigation:
  Phone: 888-818-6032
  801-270-7713
  Fax: 904-232-4607 
• Fifth/Third Bank  800-375-1745 (option 3) Loss Mitigation
• First Franklin (Home Loan Services/NationPoint) 800 622 5035 (Loss mitigation)
• First Horizon Home Loans  – Loss Mitigation 1st Mortgage – 800 707-9988 x 33805
  Loss Mitigation:
  Phone: 800-707-0139 — ext. 17305 
• First Horizon Home Loans -
  Loss Mitigation 2nd Mortgage - 800 396 6184 
• Flagstar Bank    800 968 7700 ext 9780
• Fremont Investment & Loan  866 484 2901
• GMAC Mortgage  (800) 850-4622
• GMAC ResCAp (GMAC Mortgage,
  Homecomings, GMAC Bank)   800 799 9240 option 5 ext 8743285
  Phone 1: 800-206-2901
  Phone 2: 858-874-7417 
• GreenPoint Mortgage (Serviced by Countrywide) 800 669 6650
• Green Tree    (877) 816-9125
• HSBC all entities -  800 395 3489
  Collection Counselors (if short term problem)
   Phone: 800-338-6441
  Default Resolution Team (if long term problem)
   Phone: 888-648-3124
   Fax: 732-352-7519
  Web: http://www.us.hsbc.com 
• Home Loan Services, Inc (First Franklin
  Nation Point, National City Bank) 800-622-5035 ext 24267
• HomEq    877 -867 -7378
• Home Side Loss Mitigation:
  Phone: 904-281-3900
  
• Household Finance (800) 333-4489
• Huntington National Bank (800) 323-4695
• Huntington Mortgage Group – 800-323-9865
• Indymac Federal Bank (877) 736-5556
• Irwin Mortgage Corporation
  Phone: 888-444-6446
  Pre-Foreclosure: 888-218-1988
  Web: http://www.irwinmortgage.com
  
• JP Morgan Chase   800-446-8939
• Litton Loan Servicing (800) 247-9727 – default counseling  (800) 999-8501
  Phone 1: 800-548-8665
  Phone 2: 713-966-8803
  Fax: 713-966-8820
  Web: http://www.littonloan.com 
• MERS (not really a servicer but you may need to contact them) (800) 646-6377 – fax (703) 748-0183
• National City (800) 367-9305 or 800 622 5035
  Phone 1: 800-523-8654
  Phone 2: 937-910-3563
  Web: http://www.nationalcitymortgage.com 
• Nation Star Mortgage   888-850-9398
• Nationwide Advantage Mortgage Company (800) 3563442
• New Century Financial (800) 790-9502|
  Phone: 877.206.9904
  Web: http://www.newcentury.com 
• Ocwen Federal Bank (800) 746-2936 or loss mitigation 877-596-8580
• Ohio Savings Bank (Now Amtrust) 800 860 2025 ext 8917
• Option One Mortgage Company  888-275-2648
  Web: http://www.oomc.com 
• PHH Mortgage (Delinquency ) 800 330 0423 (Foreclosure) 800-750-2518
  Phone: 800-257-0460
  Web: http://www.phhmortgage.com 
• Popular Mortgage Servicing 800 383 2292
• Prodovis Mortgage Company 888-878-0522 option 5home retention department
• ResMae Mortgage Corp.   866 794 80444 ext 5944
• Saxon Mortgage Services  – 888-325-3502 (Delinquent) 800-594-8422 (not delinquent)
  Phone 1: 262-502-6724
  Phone 2: 817-665-6537
  Phone 3: 414-278-8068  

   

• Select Portfolio Services  888-349-8968
  Loan Resolution Department: 888-818-6032
  Fax: 801-293-3936
  Web: http://www.spservicing.com 
• Sun Trust Mortgage (800) 634-7928
• US Bank (800) 365-7900
• Wachovia Bank (866) 642-8608
• Washington Mutual (JP Morgan Chase) (866) 926-8937
• Washington Mutual Bank – loss mitigation – prime 888 926 8937
• Washington Mutual Bank – loss mitigation – subprime – 888-708-4696 option 2
• Wells Fargo (800) 766-0987 – loss mitigation 800-275-9254 05 800 416 1472
  Wells Fargo – Loss Mitigation
  Phone: 888-231-0757
  Loss Mitigation: 877-216-8448
  Borrower Assistance: 800-551-9808
  Homeowners in Foreclosure: 800-868-0043 or800-352-7654
   
• Wendover Financial Services Loss Mitigation:
  Phone: 888-934-1081
  Phone: 800-436-1022
  Web: http://www.wendover.com
  
• Wilshire Credit Corporation 888-917-1050 
• Whitney National Bank – Loss Mitigation. Phone: 800-347-7272

These numbers and the identities of the banks and mortgage companies are changing every day.  If you find out any updates, please let us know and we will post them here.

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The Servicemembers Civil Relief Act protects our soldiers, sailors and airmen.  Lakelaw supports our troops.  We offer our servicemen and servicewomen bankruptcy and other legal services at substantial discounts.  We always have and always will.

Recently, Lakelaw heard from an Army medic in Afghanistan who was threatened with foreclosure.  I told him not to worry so much.  The Servicemembers Civil Relief Act gives a lot of protection to our active duty servicemen and servicewomen.

Here are some of the most important features:

1. Nobody can get a judgment againt you by default – just because you didn’t answer a complaint.  Instead, the court has to appoint an attorney to act on your behalf
2. The court has to stop proceedings against you for at least 90 days while your attorney determines if you have any defenses to the claim
3. Interest on any debts against you is limited to 6% while you are on active duty.  Any difference between 6% and the contract interest can never be collected.
4. You can’t be evicted from your residence (rented for less than $2400/month, adjusted for inflation) while you are on active duty for at least 90 days after the eviction order.  

Service connected life insurance is increased while you are on active duty.  There are other provisions which are all more fully explained in this link:  Servicemembers Civil Relief Act

If you are on active duty and came anywhere from the Chicago metropolitan area or Southeast Wisconsin – call on Lakelaw.  We support our troops.  We’ve got your back.

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