Updates on the ResCap/GMAC Mortgage Chapter 11 Bankruptcy Filing
Posted on Jul 17, 2012 in Bankruptcy, Bankruptcy Information, Chapter 11, Chapter 13, Chapter 7, Illinois, Real Estate, Wisconsin
When Residential Capital LLC (or “ResCap”) filed for Chapter 11 Bankruptcy relief a few months ago, it left a lot of bankruptcy attorneys confused. Because GMAC held many debts, including a substantial number of mortgages, the company was the subject of a large number of bankruptcy lawsuits or “adversaries”. The company would file proofs of claim in Chapter 11, 12 and 13 cases and debtors would try to remove their mortgages through “lien-stripping”. But because of the automatic stay in bankruptcy, lawyers didn’t know how far they could go with these actions.
Fortunately, the National Association of Consumer Bankruptcy Attorneys negotiated with the attorneys for ResCap and the Chapter 11 Bankruptcy Judge in New York signed an order allowing limited relief, including the right to object to a proof of claim or file a lien stripping action or other adversary.
Now this doesn’t mean that we can file actions in the Chapter 11 or get involved in the reorganization process, but it means that our day to day work representing borrowers in bankruptcy has become a little easier, thanks to NACBA’s work.