Bankruptcy Procedures and Processes : SBS Trust Deed Network

Bankruptcy

Bankruptcy laws exist to allow borrowers the opportunity to reorganize and work to get out from under their debt by liquidating assets to pay off creditors, or to obtain additional time to pay existing debts without having to liquidate their assets.

The bankruptcy code is divided into several ‘Chapters’ and with regards to real estate, the bankruptcy process is typically covered under Chapter 7 and Chapter 13. Bankruptcy courts, under the supervision of U.S. District courts, administer the bankruptcy petitions and then will appoint a trustee to handle the bankruptcy. Each bankruptcy is set up for a specific kind of relief and are structured very differently.

Effect of the ‘Automatic Stay’

In both cases there is one important The moment a bankruptcy petition is filed, an ‘automatic stay’ goes into effect, and is a measure that protects the petitioner from any collection or foreclosure proceedings.

Relief from the ‘Automatic Stay’

Secured creditors may petition the court for relief from the stay in order to proceed with the bankruptcy and foreclosure proceedings, if they can show good cause. Some of the most common causes for relief of the stay are:

For cause, including the lack of adequate protection (i.e., failure to make post petition maintenance payments)
The debtor does not have any equity in the property.
The property is not necessary to an effective reorganization

How we can help?

We have the ability to obtain relief from the automatic stay for you on all Chapter 7 matters as well as Chapter 13 matters where a post-petition default has arisen. We will also prepare and file your Proof of Claim and objection to Confirmation of Chapter 13 plan, when necessary. Utilizing our in-house Bankruptcy service will relieve you from finding an attorney to handle the Relief from Stay action, and it guarantees you expeditious and efficient service.

Chapter 7

A Chapter 7 bankruptcy is a commonly used type of bankruptcy for individuals to file, and it is designed to allow the debtor to get out from under their debt and discharge it completely.

Purpose

The purpose of a Chapter 7 bankruptcy is to liquidate the debtor’s assets in order to pay off their creditors. Smaller creditors are paid off first because the larger creditors are backed by collateral, such as a mortgage or trust deed. Large liens such as trust deeds and mortgages can usually survive in a Chapter 7. A Chapter 7 bankruptcy, once complete, stays on the debtors credit report for ten years.

In a Chapter 7 Bankruptcy, the debtor will first file a bankruptcy petition with the court, then a trustee is appointed to handle the bankruptcy proceedings. The automatic stay to prevent foreclosure goes into effect as soon as the petition is filed. A relief from the automatic stay must then be obtained before foreclosure any proceedings can begin. We can obtain a relief from the automatic stay on a Chapter 7 Bankruptcy.

Grounds for Relief in Chapter 7

No equity or marginal equity
Lack of adequate protection

Other issues

Court Trustee's interest in debtor's equity.
"Drop Dead" date, (date property can be sold or foreclosure continued).
Proof of claim (not necessary in no asset cases).
Stipulations are entered into to define debtor's obligations to secured creditor, often providing for ex parte relief from stay.

Chapter 13

In a Chapter 13 Bankruptcy, often called a wage-earner plan, the debtor agrees to a court approved and coordinated payment plan that reorganizes their debt and makes a five-year payment plan to pay off and get caught up and current with their debtors.

Purpose of a Chapter 13 Bankruptcy

The purpose of a Chapter 13 bankruptcy is to allow the debtor an opportunity to reorganize their debt, establish a payment plan that will allow them to pay off creditors with five years, avoid foreclosure, and get a new financial start. The advantage to the debtor is there is no liquidation of assets and upon completion of the payment plan, all of their debts are discharged. Chapter 13 Bankruptcy is only for people that have a regular income and will be able to meet the terms of the repayment plan.

As with a Chapter 7 bankruptcy, an automatic stay goes into effect as soon as the petition is filed. We can assist you in obtaining relief from the stay in order to proceed with foreclosure proceedings.

Effect on the Foreclosing Creditor

Automatic stay prevents foreclosure.
Relief from stay must be obtained.

Grounds for Relief

Failure to make post-petition payments.
Debtor's lack of equity in property.

Other Issues:

Court Trustee's interest in debtor's equity.
"Drop Dead" date, (date property can be sold or foreclosure continued).
Proof of claim (not necessary in no asset cases).
Stipulations are entered into to define debtor's obligations to secured creditor, often providing for ex parte relief from stay.

For expert assistance and uncompromising service at a competitive price, please don’t hesitate to contact us. SBS Trust Deed Network has been in business since 1978 and our staff of professionals are ready to serve you.

Network of Services

Foreclosure Processing
After Sale Packages
Reconveyance Services
Monitor and Bid
Bankruptcy Relief
Evictions
Deeds in Lieu of Foreclosure
Forbearance Agreements
24-48 Hour Recordings
Monthly/Weekly Statements and reports
Automated Document Processing
Customized Reports
Notary Public Service
Document Courier Service
On-site Training and Consulting
800 Hotline Number
Errors and Omissions Insurance (1,000,000)

For expert assistance and uncompromising service at a competitive price, please don’t hesitate to contact us.
SBS Trust Deed Network has been in business since 1978 and our staff of professionals are ready to serve you.

Foreclosure Bankruptcy Eviction Monitor & Bid Downloadable Forms SB-1137 Are You Ready? REO Listings HOA Collections