JANUARY 2010 CLIENT BULLETIN- “STRIP OFF” A MORTGAGE?

January 1, 2010

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Dear Friends and Colleagues:

“STRIP-OFF” A MORTGAGE? SOUNDS KINDA KINKY!

wHAT IS A STRIP-OFF? In my nearly 28 years of practice, I’ve rarely had the opportunity to “strip off” a mortgage. Then this month, we stripped off second mortgages in two bankruptcy cases, saving my clients many thousands of dollars.

What the heck is a “strip off”? Well, let’s say that you have two mortgages on your house. When you bought the house, you used “80-20″ financing that was prevalent in recent years past (not anymore).

Let’s also say that the first mortgage is $80,000, and the second is $20,000. When you bought the house, it was $100,000 purchase price, so you financed 100% of the purchase price.

After buying the house, the value of your house fell. And fell a lot, to where it was only worth $75,000. If you file Chapter 13 bankruptcy, it is possible to “strip off” the second mortgage, by filing an Adversary Proceeding or lawsuit in Bankruptcy Court, and having the Bankruptcy Judge declare that there is “absolutely no” equity to support it. If there is even $1 of equity to support the lien, this does not work.

This turns the second mortgage into an “unsecured debt” which is usually paid very little and discharged or cancelled, when you complete your Chapter 13 plan.

So now, instead of owing $100,000 on a $75,000 house, and being tempted to walk away (hurting home prices even more), you owe only $80,000 on it, and will more likely stay. Your other creditors would also likely receive a larger distribution during your Chapter 13 case because of the strip off; that is the real reason it is permitted.

We have also been able to strip-off the liens of Homeowner’s Associations, when a Chapter 13 is filed and there is absolutely no equity to support their lien. This turns their claim into an unsecured claim, instead of a secured claim that has to be paid in full with interest.

So, if you live in the Houston metropolitan area or surrounding counties, are having financial troubles, and think you may qualify for a strip off, make an appointment to see me by calling 713-772-8037. ■

Spin failure onto a constructive path

Failure can be one more step on your road to success–you just have to turn it around in a positive direction. Here are some creative ways to view failure:

–Failure can push you harder to succeed.

– Failure can strengthen your deterrmination to overcome obstacles.

– Failure can make you braver in the face of opposition.

– Failure can help you learn what you need to do in order to succeed.

– Failure can teach you what your limitations are-and your strengths.

– Failure can encourage you to change your strategy. ■

One reason so few of us achieve what we truly want is that we never direct our focus; we never concentrate our power. Most people dabble their way through life, never deciding to master anything in particular.
-Tony Robbins

You can get everything in life you want if you will just help enough other people get what they want.
-Zig Ziglar

The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward.
-Amelia Earhart

Property Taxes DUE NOW! Very Important for Everyone: If you owe property (“ad valorem”) taxes in Texas, pay them now, before January 31 or you will pay a stiff penalty.

Also, Homeowner’s Association dues are due now. If you are in Chapter 13, and we have included your delinquent Homeowner’s Association dues, you are still responsible for paying your current Homeowner’s Association dues, as they come due. For example, if you filed Chapter 13 in 2009, and we included $1500 in delinquent Homeowner’s Association dues to be paid in your plan, you still must pay 2010 and later years’ Homeowner’s Association dues yourself. ■

A little humor –

I resolve to make some resolutions

Time for some New Year’s resolutions? Here are some silly ones:

- Stop sitting in my living room all day in my pajamas. Instead, I will move my computer into the bedroom.

- Figure out why I really need 12 e-mail addresses.

- Think of a computer password other than “password.”

- Stop sending e-mail, text messages, and instant messages to people when I’m already on the phone with them.

- Spend more time with neglected children-my own. ■

Is your mortgage company charging you fees and costs that are not due? Are you just overwhelmed with debt? If any of these situations describes you, contact Mr. Black at 713-772-8037 or send him an email at tom@jthomasblack.com.■

Many of my clients ask us for help with tax return preparation. Beginning this year, we will be offering income tax preparation services for a limited number of clients. If you need your tax return prepared, call 713-772-8037 and ask for Rob Heinly.

ARE YOU IN CHAPTER 13 NOW? Always keep the law office updated with your current address, telephone numbers, and email address. We may need to reach you quickly. 24 hours/7 days a week, you can check on the status of your Trustee payments, how much you still owe on your case, etc., by going to www.13datacenter.com to set up your user ID and password. Lose job or overtime? Expenses increase? Want to give up property to lower payments? Go to www.jthomasblack.com , click on – Current Clients Click Here- on home page, and fill out the Motion to Modify worksheet. Fax to office at 713-772-5058. We’ll review it and contact you if a change to your plan is possible.

J. Thomas Black was licensed as an attorney in Texas by the Texas Supreme Court in May, 1982. Mr. Black is Board Certified in Consumer Bankruptcy law by the Texas Board of Legal Specialization.

January 2010 Client Bulletin- “Strip Off” A Mortgage?