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Protect yourself and your home by understanding the changed redemption law now in effect

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The 2013 Changes to the Redemption Period in Michigan after a Foreclosure or Sheriff’s Sale are now in effect.

Michigan Gov. Rick Snyder signed a series of bills in 2013 that made significant changes to a homeowner’s redemption period rights after a foreclosure sale occurs.  Most homeowners have come to rely on the six month redemption period after a foreclosure sale (aka sheriff’s sale).

Although the new Michigan law appears to retain the six month redemption period, the matter is not so sure any longer.  After a residential property is foreclosed the mortgage company may now demand the right to come on site (into your home) and inspect.

If the inspection shows the property is damaged or faces a reasonable risk of damage, then the foreclosure sale purchaser may be able to begin eviction proceedings almost immediately.  This totally flies in the face of Michigan’s historic protection of homeowners.

The new law ignores the fact that in almost every case a homeowner losing their home is not intentionally malicious but rather faces some sort of horrible event (divorce, job loss, devastating disease or even some combination).  The new law is another form of “guilty until proven innocent” that our government seems to apply in every area of life.

Previously under Michigan law almost everyone was entitled to at least a 6-month “redemption period” following a foreclosure sheriff’s sale.  During this time one could continue to reside in their house as they always had.  It was a period of time that Michigan law granted foreclosed homeowners in order that they might be able to obtain financing necessary to “redeem” their home, or at least to set a little money aside in order to move on with some dignity left (“Redeem” means a time to buy back the property from the sheriff’s sale purchaser).

[Also note that although the normal redemption period is 6 months, if your home is on acreage of 3 acres or more, the redemption period is 12 months rather than 6. If your home is empty or abandoned, the redemption period is only 30 days.]

Even worse, up until this new law, foreclosed homeowners had no duty to allow entry to their home of any employee or contractor of the foreclosing party, or of anyone else. The home remained theirs until required to vacate at the end of the redemption period.  The new law is a major reversal of this important protection for homeowners.

Now, effective January 10, 2014, the law has changed.

As of January 2014, purchasers at sheriff’s sale will have the right to inspect not only the exterior of the foreclosed home—but also the interior of the home, and any additional structure on the property.

If the inspection is “unreasonably” refused or if it appears that the property has been damaged or that damage is “imminent,” the purchaser can begin an eviction proceeding immediately, without waiting any time at all.

If this happens, one needs to move quickly because a judgment for possession (the eviction judgment) will not be entered by the court if the homeowner repairs the damage in question.  However, note that such an eviction proceeding can triggered by something as incidental or small as accumulated rubbish or trash.

This opens a serious window for harassment of homeowners.  How much trash can accumulate before the purchaser throws a homeowner and his or her children onto the street? What is meant by “debris”?  Is “refusal” triggered if the homeowner is working two jobs and finds it difficult to meet with the buyer during the daytime?  Is it reasonable for a purchaser to demand entry, when you’re trying to put your kids to bed?

The statutory change guarantees only one thing – homeowners who have suffered a hardship can look forward to high pressure and harassment from the agents hired by foreclosure purchasers.

The bottom line regarding Michigan’s foreclosure redemption period continues to be that you can’t take the redemption period for granted any longer.

Our response is that now more than ever a Michigan homeowner facing foreclosure should come in and visit us for a free consultation to explore your rights as well as options to prevent such action.  Note, however, that a chapter 13 must be filed before the actual foreclosure or sheriff’s sale if one hopes to retain the home.

If you would like to explore your options to save your home (chapter 13) or at least hold off such behavior for some additional period of time (chapter 7) then contact Kerry Hettinger at 269-344-0700 for a free consultation as soon as possible.

 

Qualification for a Chapter 13 Bankruptcy

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Many of our clients find a Chapter 13 bankruptcy filing is by far the most powerful and effective strategy for a person struggling with non-cooperative creditors.

Chapter 13 isn’t even really “bankruptcy” in the traditional sense of the word but is more of a “Wage Earner’s Repayment Plan.”

In order to qualify a client for chapter 13 we only need to show the client has minimal income after the payment of secured debts (mortgages, car payments, etc.) and basic lifestyle needs ( food, utilities, etc.).  The payment to unsecured creditors can be as little as $20 a month and still qualify.

Further good news is that you don’t have to figure this all out on your own.  Kerry Hettinger, PLC works with you to create a repayment plan that saves you the most money possible.

Among the most common reasons for filing a Chapter 13 rather than a Chapter 7 (full bankruptcy) are the following:

1. Ch 7 would result in loss of something one really needs to keep (house, car, business, farm, etc.).

2. Client makes too much money to file a Ch 7 but not enough to pay off their debt.

3. Client filed a Ch 7 less than 8 years ago (only 4 years for a Ch 13).

4. Certain debt not dischargeable in a Ch 7 can be discharged or managed much better in a Ch 13 (tax, student loan, fraud, etc.).

Because of the many advantages of a Chapter 13 over other ways to deal with debt, Congress created additional qualification tests.  The two primary tests have to do with who can file a Chapter 13 and how much debt they can have.  First, only a person can file a chapter 13 (no Corps or LLCs).  Second, because it is inexpensive to file and very convenient, a Chapter 13 Debtor can only have so much debt ($360,475 unsecured, $1,081,400 secured).

Call today to have any questions answered and see if you qualify for this powerful form of debt management.

 

Additional advantages to filing a Chapter 13 (in addition to preventing a home foreclosure)

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  • Stop creditor attempts to repossess your car, and even force a recently repossessed car to be returned to you (generally a 10 day window).

 

  • Stop your wages, bank accounts and tax refunds from being garnished, and even force the return of previously garnished funds to you (if over $600 taken within 90 days).

 

  • Stop harassment by your creditors. No more phone calls or letters.  Kerry Hettinger, PLC is happy to help you take care of everything.

 

  • Pay off your credit cards, medical debts and other unsecured debts  “in part” or “in full” (with no interest).  It all depends on what you can actually afford to pay, not on what the creditors want.

 

  • Stop further obligations to creditors whose services you have not yet fully received, such as health clubs, dance studios, time share fees, leases, etc.

 

  • Void certain liens against your possessions and other personal items.  In some cases we can even void out second mortgages.

 

  • Manage tax bills and repayment.  Older income taxes are actually dischargeable.  Recent taxes can be managed through stretching out the payment, as well as applying only reasonable interest and no more penalties.

 

  • Student loan obligations- while not generally dischargeable- are managed through getting back on track with affordable payments and then resetting when the ch 13 is complete.

 

  • No need to wait 8 years from an earlier chapter 7 bankruptcy filing (can file and obtain a new discharge after only 4 years).

 

  • Call to schedule a free consultation to see which of these benefits, and possibly even others, will apply in your situation.

Save Your Home in a Chapter 13 Bankruptcy Case

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Chapter 13 Bankruptcy Saves a Lot of Homes- It could Save Yours

HERE IS HOW IT WORKS:

When you file a Chapter 13 bankruptcy petition, all foreclosure proceedings must stop regardless of what stage of foreclosure you home or real property may face.   This is my hands down my favorite type of bankruptcy to file.

This rule is true right up to the date and time of the Sheriff’s Sale (which is the foreclosure event).  The case must be filed before the Sheriff’s Sale as you lose title to the home after that event.

The halting of the foreclosure and any collection activity is a result of what’s known as the “automatic stay,” which arises from section 362 of the bankruptcy code.

In Chapter 13, we will prepare a “repayment plan” for your unique situation.  The plan is sort of like a trust agreement.  It lays out what you intend to do in the case.

The foreclosure is halted at the filing of your case (the petition) and that “stay of proceedings” becomes permanent if  the repayment plan we prepare for you promises that you will now begin making regular payments as well as for pay off the mortgage arrears within 36 to 60 months.   There are generally a few tweaks we need to make with that, but most of our cases confirm (are signed by the judge) if you can meet these few basic requirements.

A SIMPLE EXAMPLE:

As an example, if your mortgage payment is $800 and you are $5000 behind in your payments, the plan will offer to pay $800 a month plus about $100 extra so that it can pay those arrears over 60 months with a little interest (60 x $100 = $6,000).  So that’s about $900 a month.  Attorney fees and trustee fees will take that payment to about $1000 a month.  You will need to pay at least a little to your other creditors as well (this depends on whether your budget is tight).

PRIOR BANKRUPTCY CASES:

About the only exception to the rules stated above is when you’ve filed prior bankruptcies in recent years.  If so, then be sure to discuss with us so we can take the appropriate steps so that you also get to enjoy the automatic stay.

JUNIOR MORTGAGES AND LIENS:

In many cases, we find a huge benefit in Chapter 13 for those homeowners whose homes are now worth less than owed on the primary mortgage.  Any second or third mortgages and liens can be crammed down and treated the same as credit cards or medical bills (meaning it may be possible to pay them very little).

NON-RESIDENTIAL REAL PROPERTY:

The options may be even better with non-residential real property (vacant land, business property, rental property).  If you own such property we may even be able to modify the primary mortgage.

HOW MUCH DOES IT COST TO FILE:

The good news is that the Court sets the basic attorney fee in a chapter 13 case.  In most situations that fee simply lowers what your various unsecured creditors would otherwise receive (so they in effect pay your attorney fee).  Because of this we can file your case for very little money down.

WHAT TO DO NEXT:

Don’t wait any longer, call us today at (269) 344-0700 for a free consultation.   We assist people with all forms of debt concerns.

Although based in Kalamazoo, the local bankruptcy court operates on the federal system and we serve clients living throughout Southwestern Michigan, including Van Buren, Berrien, Cass, Allegan, Kalamazoo, St. Joseph, Calhoun, Branch, and Hillsdale counties.