Illinois Bankruptcy Lawyer Blog

Yes Virginia, it is possible to both discharge unsecured debts forever (Chapter 7) and strip down secondary mortgages (Chapter 13). The result is a so-called "Chapter 20." But should Debtors file two cases when it's hard enough to put themselves through one? Read on and find out.

When Is Chapter 20 a Good Idea?

There are situations that fairly cry out for Chapter 20 treatment:

Situation #1: Debtor is burdened with priority unsecured obligations like IRS debt, that must be completely retired in Chapter 13. But that would yield unsustainably high monthly payments. By contrast, once the Debtor's unsecured obligations are discharged, the resulting Chapter 13 plan payments become downright manageable. Chapter 20 is the solution.

Situation #2: Debtor's mortgage exceeds the value of the Debtor's home (i.e. the property is "underwater"). Chapter 7 cannot help the Debtor ameliorate their high payments or deal with their delinquent second mortgage. All Chapter 7 can do is give the Debtor an opportunity to reaffirm the mortgage(s) on the same outrageous terms. Chapter 20 is the solution because it permits the Debtor to treat its second mortgage like an unsecured debt and pay only pennies on the dollar to retire it.

How Does Chapter 20 Help, Exactly?
Chapter 20 works by reducing the overall amount of debt to be paid, then stretches that smaller sum over as many as 60 months. Practically speaking, Chapter 13 plan payments are determined by 2 factors:

• The Means Test imposed by the 2005 BAPCPA Amendment to the Code; and
• The amount of secured claims, arrears, and priority debts the Debtor must pay
  

This is where Chapter 13 Debtors may take advantage of the lien strip - an option not available in Chapter 7 - that allows them to treat secured loans on owner-occupied property as unsecured, and pay down those loans at far less than face value.

What is Lien Stripping, Again?

Lien stripping is the process of treating some "secured" loans as unsecured: it applies only when the property in question is "underwater" - i.e. its market value is exceeded by the face value of the primary mortgage. In that case the 2nd mortgage or home equity line of credit (HELoC) is really unsecured and may be paid under the plan of reorganization at the same rate as other unsecured debt - $.10 on the dollar, $.50 on the dollar, etc. And Boom! goes the dynamite.

Are People Using Chapter 20 Successfully?

In re Davis, 4^th Cir., slip opinion 12-1184 (2013), the latest case to discuss the legitimacy of Chapter 20 lien strips, points out that Chapter 7 eliminates personal liability but leaves in rem interests like mortgage liens undisturbed. It goes on to point out that an interest is "secured" only to the extent of the creditor's interest in the underlying real estate. See Code §506. Thus, if a house is worth less than its primary mortgage then 2nd and 3rd liens are unsecured by definition. And since §1322  of the Code permits the modification of the rights of unsecured creditors, a lien strip is both warranted by the facts and supported by the law. Finally, the Davis Court points out that while not every circuit has explicitly ruled on lien stripping, the 2nd, 3rd, 4th, 5th, 6th, 9th, and 11th Circuits have, and all have permitted it. (Id. at 7). 

Last But Not Least...

The only remaining question is whether a Debtor must receive a discharge at the end of its Chapter 13 case in order to complete a lien strip; or if the mere completion of its plan of reorganization is sufficient. The issue arises here because the BAPCPA mandates that once  a discharge is received in a Chapter 7 case the Debtor must wait 4 years to file Chapter 13 and obtain another discharge. Realistically however, a Debtor that has received a Chapter 7 discharge does not need a Chapter 13 discharge on top of it. Unfortunately, there is no consensus in this area.  Even in the Northern District of Illinois the answer may depend on your Judge (cf In re Fenn, 428 B.R. 494 (Bankr. ND Ill. 2010) with In re Anderson, 10-B-45294 (unreported)).

Conclusion

Bankruptcy discharges affect only personal ("in personam") liability: a discharge does not simply cause liens on property to disappear. As set forth in Sec.1322(b)(2) of the Bankruptcy Code, a plan of reorganization may only modify the rights of unsecured creditors. A lien strip exposes the wholly-unsecured lien on real property and, under the auspices of Code Section 506, allows the Debtor to pay off that "secured" interest for pennies on the dollar, as if it were merely an unsecured interest (which it really is).

In the 7th Circuit Case of In re Porayko, appealed from the Bankruptcy Court for the Northern District of Illinois, a Citation to Discover Assets was served on a year before the Debtor filed bankruptcy, while a 3rd Party Citation was served on his bank the month he filed. The creditor moved for relief from the Automatic Stay to seize the $10,000 in the Debtor's bank account and the Trustee objected on the basis that the initial citation had not created a lien, while the 3rd Party Citation was avoidable pursuant to 11 USC 547.

The Law
Citations to Discover Assets are addressed in Illinois Statutes, Section 5/2-1402. According to Sec. 1402(m) a Citation to Discover Assets creates a lien on all

"nonexempt personal property including money, choses in action and effects of judgment debtor" as well as "personal property belonging to the judgment debtor in the possession or control of the judgment debtor or which may thereafter be acquired or come due..."

Illinois cases support the concept that a checking account is personal property to which a lien may attach. See Chicago v. Air Auto Leasing Co., 297 Ill. App. 3d 873, 878 (1st Dist. 1998), a problem for the Trustee.

The Argument
The Trustee in Porayko tried to distinguish Air Auto Leasing by pointing out that other Illinois Courts treated bank accounts as mere promises to pay rather than items of personal property that could be subject to a lien. The leading case of its kind, Citizens Bank of Maryland v. Strumpf, 515 US 16 (1995), dealt with whether a bank could offset a payment while the Debtor was in Bankruptcy. But the Porayko Court found the situation before it to be quite different, and concluded that the creditor's citation had created a secured interest in the checking account, so the relief from the Automatic Stay granted by the Bankruptcy Court was proper. 

Surprisingly, this meant that under the proper circumstances the lien of a pre-filing creditor could trump the interest of a Bankruptcy Trustee: a notion that would appear to stand the law of insolvency on its head.

The Takeaway
The takeaway from the Porayko case is that Debtors are wise to address debts before their creditors secure judgments that turn into liens. At a minimum, a Debtors ought to file soon enough so that creditors cannot perfect their judgment liens and trump the case Trustee.

Everything Was Going Fine Until...

Your customer or borrower has been paying like clockwork and you, the creditor or vendor, have been dispensing goods and services as promised. Then your customer starts to pay a little later, then later still. Why not? Times are tough. So you do the decent thing and take their payments without complaining. Next thing you know, your customer seeks bankruptcy protection, leaving you holding the bag for thousands, tens of thousands, even hundreds of thousands of dollars worth of goods and services. Money you'll never see again. 

The Worst Part Is (Not) Over

You're out a lot of material, and now you'll never get paid. Sure that's tough to take, but at least the worst part is over, right? Wrong.

All sums paid by customers or clients in the 90 days before a bankruptcy is filed are de facto preferences. In other words, sums paid in the 3 months before a bankruptcy case is filed can be recouped by the Bankruptcy Estate without a guaranty of ever getting that money, or any portion of it, back.

Most creditors think that once a payment is received, all is good and they can move on. This is not the case if a customer filed bankruptcy. Sections 547 and 550 of the Bankruptcy Code allow a Trustee (in Chapter 7 cases) or Debtor in Possession (DIP) in Chapter 13 or 11 cases to recover preferential transfers. 

Will you have this problem? Was your customer's payment a preferential transfer? Short answer: "Yes it was" if

• payment was for the creditor's benefit    See 547(b)(1)
• on account of antecedent debt   (i.e. bought on credit)
• for goods or services that were received  See 547(b)(2)
• while a Debtor was insolvent as defined  See 547(b)(3)
• within 90 days before a bankruptcy filing See 547(b)(4)

Note: It is immaterial whether the vendor or creditor knew, had reason to know, or suspected a borrower or customer was about to file for bankruptcy or was insolvent. Once the case is filed the 90-day look-back is automatic. See 547(f)

Taken literally these rules mean creditors ought to stop lending, and vendors stop selling, if there is any concern about the financial health of the borrower or customer. Of course if that happened creditors and vendors could fail themselves. So what should creditors really do? While there is no one-size-fits-all answer, here is a list of 3 Don'ts and 1 Do If a Customer or Borrower Files Bankruptcy:

Don't 

• Volunteer to return sums paid by your Customer or Borrower. The case Trustee or DIP must first calculate what is due, decide whether to attempt to recoup it, and file a motion with the Court. 

• Contact your customer and raise hell - that will only make things worse.

• Represent your own interests in Bankruptcy Court. You wouldn't perform brain surgery on yourself, would you?

Do 

• HIRE A LAWYER 

Why only a single "Do?" And why put it in all caps? Because Bankruptcy Courts already favor the Trustee or DIP. Failing to hire a good lawyer to argue on your behalf if like bringing a knife to a gunfight, partner.

Defenses to a Preference Action

All doom and gloom aside, there are defenses that creditors can use when confronted with a motion to recover preferential transfers.The 2 most common defenses are 

• Contemporaneous Exchange for Value; and 
• Payment in the Ordinary Course of Business

A so-called Contemporaneous Exchange is essentially a COD arrangement. The creditor will supply goods and is paid on delivery or within a few days thereafter - functionally at the same time. These payments can be defended as non-preferential transfers.

The Ordinary Course of Business defense is more subjective: it relies on the way the parties treat each other. For instance if a vendor supplies goods to the buyer on a standard basis like Net-30, and the buyer pays as envisioned, then the payments made according to those terms can be defended as non-preferential transfers.

The Limits of the Ordinary Course Defense

Several recent cases have weighed in on the Ordinary Course of Business defense and shed light on the limits of this theory. 

In In re Universal Marketing, 481 B.R. 318 (Penn. E.D. 2012) the Chapter 7 Trustee sought to recover two $25,000 payments made to the Debtor's financial advisor. An Engagement Letter had been executed before the bankruptcy providing for 7 months worth of service at the rate of $25,000. The Debtor had made its monthly payments, but some had been late: opening the door for for the claim that no ordinary course defense existed. The Court disagreed, and found that the subject payments were made in the ordinary course of business. In its Opinion, the Universal Marketing Court considered the following facts:

• the existence of an agreement (the engagement letter)
• the services offered were of the type the debtor needed
• the creditor was in the business of providing such services
• length of time during which the arrangement was in place
• that the payments were typical for such an arrangement
• that the creditor did not exert undue influence to get paid.

The Court found the payments under consideration to be consistent and proportional to fees charged by the creditor for like services to other customers. This only left the occasional late payment. But the Court noted that this amounted to just a few days: too small of a divergence to transform them into preferential transfers. 

In re Mainline Contracting, 2012 WL 5247173 (N.C. BK 2012) was a Chapter 7 case involving not only late payments by the Debtor but lax collection tactics by the vendor. To begin with, Invoices clearly labeled "Net 30" had seldom been paid within 30 days by the Debtor. What's more, in the year leading up to the bankruptcy filing the Debtor took an average of 79 days to pay, with the number creeping up as the Debtor neared its bankruptcy filing date. Then there was testimony that the Debtor actually never paid before 90 days, unless the creditor called or emailed to inquire. There had also been a number of instances in which the Creditor put the Debtor on a COD basis due to its poor payment history, the Debtor would catch up, and the whole process started over. Eventually the Debtor filed for bankruptcy and the Trustee sought to recover certain payments.

The Marine Contracting Court found that the payments in question were not preferences, and thus not avoidable. In reaching its decision the Court noted that

• although the invoices read "Net 30," that was not the practice of the parties
• the creditor would continue to supply materials on credit even when not paid
• it was only after invoices were 60+ days overdue the creditor demanded payment
• it was only after invoices were 90+ days overdue that the creditor switched to COD
• such behavior was consistent over both the baseline period and the preference period 

The weightiest factor in the Court's analysis was the behavior of the parties during and before the the 90-day preference period.The consistency of that treatment indicated that these were truly payments made in the ordinary course of business.

Take-Away:What Does It All Mean?

The takeaway from this discussion is that creditors should strive to be consistent in the way they treat customers. Talk to cistp,ers about past-due payments. Follow up consistently and in a timely fashion. If payment terms are "Net 30" for instance, send reminders at 45 and 60 days. And if a customer is a bad payer consider COD or a prepayment arrangement. After all, if credit is not extended there can be no preference action.

Okay nobody dies, but the case does address the long-overdue question:

What happens when the property taxes of a Chapter 13 Debtor, protected by the Automatic Stay, are sold at auction? 

Here the Bankruptcy Court for the Northern District of Illinois, Eastern Division, had to decide whether a Chapter 13 Plan of Reorganization affects the deadline for the Debtor to redeem sold taxes. 

The answer is, Yes. Who says tax sales + bankruptcy doesn't = fun?

The main issue was as follows: 11 USC 108(b)(2) provides that if a time frame established under applicable non-bankruptcy law determines when and where the debtor can cure a default, then that date is extended by 60 days from the entry of an order for bankruptcy relief. At the same time however, 11 USC 1322(b)(2) provides that a Chapter 13 debtor may take up to 60 months to pay liabilities such as past due real estate taxes. The question was, which section ought to prevail under the circumstances of the case?

As of the initiation of the case, there was a split within the Northern District of Illinois as to which section of the Code ought to win the day. Older opinions tended to take a rigid view of Section 108 and held that 60 days was it: no Plan of Reorganization could change that. See In re Murray, 276 BR 869 (Bankr. N.D.Ill 2002), and Smith v. Pheonix Bond, 288 BR 793 (N.D.Ill 2002). But newer cases had taken a more holistic view and concluded that since a primary driver of the decision to file Chapter 13 case is the debtor's determination to keep their primary residence and cure mortgage deficiencies over the life of the Plan of Reorganization, it was only natural to extend that logic to real estate taxes and other debts that affect how ownership. This line of reasoning is well demonstrated by Judge Wedoff's opinion in the matter of In re Bates, 270 BR 455 (Bankr. N.D.Ill 2007), as well as Judge Hollis' opinion in In re Kasco, 378 BR 207 (Bankr. N.D.Ill 2007).

A "tax buyer," i.e. one who purchases unpaid property taxes from the County, has no legal claim against a debtor but, rather, an in rem interest against the debtor's real property. So, as with any other party holding an in rem interest, the tax buyer can - and according to the opinion, should - file a claim in the debtor's Chapter 13 case. In bankruptcy, creditor's claims are often modified by the debtor's plan. Payment terms can be extended, interest rates can be modified, and in the case of a plan of reorganization in Chapter 13 or 11, claims can be paid off at a fraction of their face value. In other words, debtors who face this problem and file Chapter 13 as a means to deal with it are not counting on the ability to extend a non-bankruptcy deadline (by 60 days for instance), but rather the ability to pay off the underling debt within 60 months. 

If the above reasoning is correct, then as long as the tax buyer/creditor's claim is honored in the debtor's plan of reorganization, the creditor's interest is preserved throughout the case; and if the debtor fails to successfully complete the plan, the creditor can snap back into action. This is no different than the situation of a mortgagee that must refrain from taking action to foreclose so long as the debtor is making the payments the Trustee and Court consider reasonable. Those "reasonable" payments, combined with the underlying secured claim, constitute adequate protection Adequate for what, you ask? Adequate to assure the tax buyer/creditor that they are getting their money's worth, or at least that they are receiving no less than others of the same stature (secured creditors).

Put these pieces together and here is what they mean: so long as any creditor is adequately protected, they have no grounds to lift, modify, or annul the Automatic Stay and are effectively forced to wait out the debtor's plan like everyone else. As always, the lynchpin of this system is for debtors to complete their plan payments and earn the removal of the tax buyer's in rem interest in their property.

As an aside, the poor innocent tax buyer might think - Hey what about me, I only have a year to obtain a tax deed once the redemption period has expired. If the Debtor's plan goes for 5 years, I could blow the statute and never be able to collect. Illinois law provides for this. Under 35 ILCS 200/22-85, if the tax buyer is prohibited by court injunction from obtaining the deed, the one year period is tolled during this time. Since the automatic stay is an injunction, tax buyers are protected.

Written by Jonathan Trent and Mazyar Hedayat  Edited by Mazyar M. Hedayat, Esq.

Small business remains the backbone of the most vibrant economy in the world. America leads in innovation and hard work thanks in large part to small businesses and entrepreneurs. But despite the best intentions of their owners small businesses have a high failure rate; especially in the first few years of operation. 

But why the high failure rate? One of the most common reasons is that the business owner, entrepreneur, or manager of the business 

• underestimated the competition, or 
• overestimated the business itself. 

And that makes sense: often business owners, managers, and key employees convince themselves that they can ride out storms in the market or overcome the negative economy by squeezing themselves, their employees, and their company. But in lean times like these a single misstep can be fatal; and above-all responsible business owners are realistic. That's why Bankruptcy reorganization has been part of our law since the framing of the Constitution - at first among the States, and more recently through Federal Bankruptcy Code. And the institution of bankruptcy - whether liquidation or reorganization - exists for a good reason: sometimes you need to start over.

Additional Causes of Small Business Failure

Of course in addition to the 2 already mentioned, there are myriad reasons small businesses fall on hard times and become unable to recover. For instance, even in the best of times a small business can be plagued by inadequate bank financing and impatient trade-creditors: all it takes to knock over the balance sheet at that point is a stiff breeze. That's where the recession, the recent real estate crash and subprime mortgage debacle, and good old-fashioned overseas competition, come in. These structural economic problems make everybody nervous: customers, suppliers, employees, lenders, and management. All it takes is one non-paying customer or a saturated market to tip over the business and cause a vicious cycle.

Growing Smarter All The Time

Once problems begin to surface they must be dealt with quickly and efficiently. If not, then mounting debt, management panic, impatient creditors, employee confusion, dissatisfied customers, and a dwindling revenue stream will create the "perfect storm" for failure. But does that mean businesses should insulate themselves from debt by casting aside the opportunity to grow? Obviously not: saying "No" to growth is not a rational choice. Luckily, businesses in search of smart, lean ways to grow have more options now than ever:

Global Talent

Successful businesses are founded on the backs of effective and dedicated employees. You need a pool of talent and experience, but what happens when the most qualified people don't live anywhere near your location? You could settle for less-qualified employees, or you could try to convince them to relocate - both options could end up costing you more in the long run.
The more effective option, if it is possible in your line of work, would be to allow them to work remotely and communicate through teleconferences, video chats, instant messaging and a host of other options for keeping in touch. Documents can be sent through email, if you're a traditionalist, or they can be uploaded directly to a central depository where other members of the company can have instant access.

Careful budget control is a critical element of any business endeavor, and working with skilled employees in different locations is a cost effective way to recruit the talent you need without overspending. This is also a simpler way to scale the business according to demand - it's easier to bring in employees on an as-needed basis like this to complete projects rather than to try to acquire more space in-house for new employees.

Client Communication

Finding and working with new clients and customers is an ongoing process for any company. If you are providing consulting, legal, or financial services, it is possible to use those same communication tools to expand your client base and get beyond the local geographic restrictions. Again, this must be done with a careful strategy in mind, because it is easy to overreach here, as well.

Modern tools provide many opportunities for reliable and effective communications, but that may not be the source of your problems. These tools may open up some new channels, but if you are too far behind on your work, or trying to deal with too many clients at once, it won't make a lot of difference. Perhaps it is best to think of these solutions as a way to complement your business and make your services better. Just make sure that you can offer the same, quality experience to every one of your clients - wherever they are.

Growth With Security

The faster a company grows, the more prone it is to overlook or miss an important security element which can lead to a lot of problems in the future. Digital security is a major issues, and there have been many companies over the last few years that have suffered major breaches. As you add more people to your company - whether remotely or in-house - make sure that they all understand the proper security measure so that important company and client data is never lost.

In the end, it's about using all the tools at your disposal to create a strategy that will help you avoid bankruptcy. Define your goals, don't force growth for the sake of growing, and save money wherever you can. This will help you be more profitable in the long run and provide a convenient and effective working environment for employees.

Getting Good Advice Is The Key

Congratulations! If you've made it this far then you want to be prepared and, better yet, avoid such growing pains altogether. So here is the best advice you'll ever get along these lines: assemble your business SWAT Team before the worst happens. Your SWAT team consists of accessible, trustworthy, knowledgeable professionals you can turn to at a moment's notice:

• Attorney
• Accountant
• Insurance Agent

• Real Estate Agent
• Marketing Person

Begin putting your team together by talking to us. We have been providing advice and counsel to small businesses and their owners - from business law to bankruptcy reorganization - for nearly 20 years. In fact, I earned a Master's Degree in Business Administration even before I was a lawyer. 

Feel free to reach our office using the Contact Form on this page. To learn more about how small business can survive and thrive in the new (new) economy, download our Free Report. And thank you for your time.

About Jonathan Trent: Jonathan Trent is a web marketing specialist with NextUC, which provides audio, video and web conferencing solutions. He is a sports fanatic that enjoys writing about the internet and modern technology. He has written several respectable articles about the advancements and future of communication and technology.

About Mazy Hedayat: Learn more about Mazy Hedayat and M. Hedayat & Associates, PC on our Website.

By Andrew Jackson  Edited by Mazyar M. Hedayat, Esq.

In this post we will skim the surface of how the Automatic Stay, put into effect via Section 362 if Title 11 of the United States Code, helps clear the air for people and companies that file Bankruptcy; allowing them to repay their creditors the best they can.

What Is the Automatic Stay?

Bankruptcy is the Federal process by which an individual, a couples, or a business entity is permitted to shed liabilities and obtain a fresh start. This process can take the form of a one time liquidation or a reorganization that unfolds over time. But all forms of Bankruptcy have one thing in common: the Automatic Stay provision of 11 USC 362. So what is the Stay? It is

a self-executing, universal injunction that goes into effect the moment a case is filed and keeps most creditors from exercising control over the assets of the Bankruptcy Estate.

Why An Automatic Stay?

To ensure that similarly-situated creditors get treated equitably in a Bankruptcy, Congress wrote the Bankruptcy Code to ensure that nobody could get the advantage. The Automatic Stay ensures that there is enough to go around, and that no single Creditor gets too much; even if what is left to distribute is only pennies on the Dollar. Under the Code, fairness equals equitable distribution.To ensure fairness, Section 362 makes it a punishable offense for most creditors to take actions such as:

• Filing or pursuing a lawsuit to collect
• Garnishing wages or issuing a citation
• Filing or foreclosing a mortgage or lien
• Demanding payment orally or in writing

What if the Stay is Violated?

Because the intent of Congress in creating the Automatic Stay was to usher in a quiet period during which the Bankruptcy Trustee could take stock of assets and liabilities without having to fight the Debtor's battles, penalties for violation of the Stay are harsh. Any breach of the peace, with or without the creditors' knowledge, is considered contempt of Court punishable by injunctive, monetary, and in proper circumstances punitive, damages.

This is worth repeating:creditors can be punished even if they did not know  that they were violating the Automatic Stay. As long as the Stay is in effect - that is, a Bankruptcy case was filed - violation by a creditor is a civil offense. Note however; Congress considered some things too important even for the Automatic Stay. Thus, Criminal matters are not affected; nor are family law (i.e. Divorce) matters.

How is the Automatic Stay Put Into Effect?

Neither a Debtor, the Debtor's Lawyer, nor the Court needs to take any action to activate the Stay - it comes into existence by operation of law when the case is filed. How do creditors know? Every creditor listed in the Bankruptcy Petition is served notice by the Court Clerk.

What if My Creditors Say They Didn't Know?
All creditors identified in the Petition receive notice of the case from the Court Clerk, and all recipients are bound by the provisions of §362 whether or not they know they are violating it. You read that right: even if a creditor was unaware of the Stay when they violated it, they can nonetheless be punished by the Bankruptcy Court. In fact, the Automatic Stay is so powerful that it restrains not only creditors but the majority of Judges and Attorneys from exercising dominion or control over assets of the Bankruptcy Estate.

In practice, the Automatic Stay lasts for a relatively short time in the case of liquidation and much longer in the event of reorganization. In Chapter 7 the Automatic Stay protects all non-exempt property that can be administered by the Trustee for about 90 days (the length of most Chapter 7 cases). That is, until a discharge is issued, the Stay protects all items in the Bankruptcy Estate. In Chapter 11 and 13 the Stay remains in effect for as long as the Plan of Reorganization is active. In Chapter 13 that means a maximum of 5 years. In Chapter 11 that means a long as it takes to repay creditors according to the Plan approved by the Court and a majority of unsecured creditors.

Wrapping It All Up

After reading this article it should be evident that the Automatic Stay is a powerful tool. While we have discussed only a fraction of its ramifications here, you should now have a better understanding of this portion of the Bankruptcy Code.

Take advantage of your new appreciation for the law by contacting M.Hedayat & Associates to set up a free telephone or office consultation.

About the Author: Andrew Jackson writes for a number of financial communities, analyzing financial situations and offering advice. He also helps people manage budgets and financial plans.

Guest Post By Jonathan Trent
Edited by M. Hedayat, Esq.

It's that time of year again! As January winds down business owners are contemplating new projects, new ideas, and New Year's resolutions. Putting together resolutions can be an eye opening experience... or a chore. Sure, you want to continue improving what works, weed out what doesn't, and learn from the past to avoid making the same mistakes in the future. But when the rubber meets the road, how do you make that call?

Here's a simple method that has been used by small businesses for year.

(1) Review the significant business events of the past year - marketing, financial, etc.

(2) Ask yourself "What worked? What didn't? Could we have avoided that problem?"

(3) This is critical: repeat the process until you have turned over all events in detail

(4) Prepare these 3 distinct lists (be prepared to write and rewrite them as needed)

Things I Should Do Again: these worked and should be part of your workflow

Things Never To Do Again: these didn't work, or they hurt more than helped

Tweak and Try Again: With changes, these practices could work

Sounds easy, right? Too bad it's one of the hardest things you have to do as a business person. Not only is the self-reflection challenging, but the act of turning objective facts into recommendations and then seeing those recommendations through is... well, it's what distinguishes good businesses from great ones.

Until you really complete your own business evaluation and give yourself a business-practices audit (a more formal term for this process), here are 5 New Year's resolutions being put into effect by businesses right now!

Be More Earth-Friendly

There are several ways a business can go green. Using less power and less paper is a good start. Buy recycled materials. Install energy efficient lighting, heating, and cooling. This not only helps the environment but your business costs as well. You may be surprised how much a company can save after one year of saving energy and cutting costs.

Improve Communications

Install a new office communications network. Office phone systems can be built to suit your needs. Connect all your employees like never before. Get high-tech with voice activated phones, 3-way calling, and messaging services. Information is relayed quicker and clearer when all departments are better connected. Messaging and conference calls can help to bring in new clients and seal important deals.

Reevaluate Company Policies

Send out a new list of rules and standards and make sure all personnel know what is expected of them in any situation. What is the company's policy of on social media? What are the consequences if it is misused during work hours? What should employees do if there is an emergency, power outage, or natural disaster? Making everyone aware of what is expected of them leaves no gray areas or confusion.

Offer Achievement Incentives

Gather and showcase the best employees based on sales figures, leadership, or morale. You could also send top employees to leadership or group training seminars. It's amazing what this can do for your company. You may see a great change in your staff. Plan and implement team meetings, pep talks, or even parties. A lively, encouraged team will want to excel and work in a fun environment.

Financially Prepare for Next Year

Create a nest egg and be financially secure. You never know if certain laws may be passed and it means drastic company changes. You need to prepare long term. Be ready for possible problems that could result in company losses. Owning a business can be tough and you many need to take extra care to avoid paying more taxes, fees, or business owner penalties. Get business taxes done by a professional and keep perfect records.

And Finally...

Don't forget to secure a Legal Audit to ensure compliance with applicable laws, regulations, and industry best-practices. How? That's easy: contact M. Hedayat & Associates, P.C. for your Free Legal Audit. With over 18 years of legal experience under his belt, a string of start up companies to his credit, and an MBA in addition to his law degree Mazy Hedayat is ready to roll up his sleeves and tell you where your business stands from a legal perspective.

About the Author: Jonathan Trent is a web marketing specialist with NextUC, a provider of audio, video and web conferencing solutions. He is a sports fanatic that enjoys writing about the internet and modern technology. He has written several articles about the advancements and future of communication and technology.

Related Videos: Check out these videos from Foreclosure Alternatives, a presentation by Attorney Mazyar M. Hedayat in October 2012 at Rasmussen College, Romeoville.

You can find yourself in serious debt anytime, and suddenly. Reasons range from an upward adjustment in the interest rate on your ARM loan to systemic unemployment, the state of the housing market, failed ventures, even natural disasters like Hurricane Sandy. Let's say you're confronted by out of control debt, sudden illness, or job loss; could the resulting budget chaos threaten your home? Could the effect of a sudden, unexpected event nudge your budget over the edge and invite the possibility of foreclosure?

The short answer of course is "yes." The threat of foreclosure is real. But taking the right steps will help keep foreclosure at distance. Start by becoming familiar with government programs that offer help in troubled times, such as:

HAMP - the Home Affordable Modification Program is designed to support those Americans who are employed, but are struggling to make their monthly mortgage payments. Through this program, eligible home owners may be able to have their mortgage payments lowered (modified) to be more affordable in the long-term. While this program existed previously, President Obama made the group of people eligible for this program wider in June of 2012 by allowing debtors whose income to debt ratio is 31% or less, those who defaulted on their trial period payments or on their modified payments, and those who are applying for non-primary residences that they rent out or intend to rent to be eligible for applying for a mortgage modification.

HARP - even those who are currently able to make their mortgage payments may find themselves struggling to do so or find these payments are becoming more burdensome. In such a situation, the government has provided the HARP, Home Affordable Refinance Program, which allows those who are current on payments, but their home's value has decreased, to refinance their mortgage into one that is more affordable and stable.

UP - for those that meet eligibility requirements, which includes being unemployed and unable to meet mortgage payments, the Home Affordable Unemployment Program allows them to decrease their mortgage payments to 31% of their income or stop making payments for a year or longer.

Still other alternatives are also available under the rubric of the Federal Government's Making Home Affordable program.

Non-governmental Alternatives to Foreclosure include contacting the loss mitigation department of your lender to seek mortgage modification and taking matters into your own hands with the aid of a good Attorney. Such choices include:

Chapter 13 Reorganization - by filing for Chapter 13 bankruptcy with the support of a bankruptcy lawyer, a person not only receives an automatic stay, which stops creditors from seeking collection of debts including foreclosure proceedings until the bankruptcy filing is complete, but also allows a debtor to create a repayment plan for their debts that works better with their financial situation, making it easier for them to make monthly mortgage payments. Additionally, under certain circumstances, a second or third mortgage may be reclassified as unsecured debt, allowing it to be discharged at the end of the bankruptcy.

Truth in Lending Claim - according to the Truth in Lending Act, lenders must disclose, or tell, borrowers certain information, such as the amount that will be financed, potential penalty charges, number of payments that need to be made, and other vital information. Should they fail to follow the requirements of this Act, the lender may be in violation, allowing the borrower to file a claim and stop foreclosure.

Bankruptcy Exemptions - Chapter 7 bankruptcy exemptions may help a debtor to protect their real property, such as a home. However, in some cases the value of a person's mortgage may be greater than what these exemptions allow for, meaning that a person may not be able to use them to protect their home. Should the amount that is owed be less than the total amount of real property / home exemptions a debtor is allowed to claim, though, they may be able to prevent foreclosure.

Facing the prospect of foreclosure is frightening and stressful. Fortunately you are not without options to protect your home. By exploring these and other options more thoroughly and with professional help, there is a good chance that you can take action to save your home.

Donna Swanson, a writer interested in bankruptcy law and proceedings, regularly contributes to a number of online resources to help people considering bankruptcy to understand all their options. Ms. Swanson previously contributed to a variety of financial blogs but recently turned her attention to writing primarily for bankruptcy lawyers and sites due to an increased interest over the past few years. Donna works from home and spends free time raising awareness for children with disabilities.

How does a company with $69.8 million in assets and only $9.2 million in liabilities end up filing for Chapter 11 bankruptcy protection? The answer is crime doesn't pay, especially when you get caught hiring a hit man to make someone "stop breathing."

An Offer A Creditor Can't Refuse...Unless Someone's Wearing a Wire.
Daniel Dvorkin, a local developer who was formerly in charge of Dvorkin Holdings LLC, was arrested in July after telling a federal informant that he would pay $100,000 for the informant to find a hit man that would make sure one of his creditors would sleep with the fishes. The cooperating witness was wearing an audio and video recording device for several of the conversations with Dvorkin. The target was an attorney who owned a corporation that had recently won an $8.2 million judgment against Dvorkin.

As the allegations against Dvorkin spread, Dvorkin Holdings filed for Chapter 11 bankruptcy protection in August. Despite the apparently strong balance sheet indicators (almost 70 million in assets against just 9 million in liabilities), the venture's debts will almost surely rise as unsecured creditors will file foreclosure suits demanding what they are owed amidst Dvorkin's legal mess.

Dvorkin Holdings owns stakes in properties across Chicagoland, including a large medical office building in Palos Heights and a commercial building in Lakeview. One of the venture's largest projects, a 250-unit condominium building, was repossessed in 2010.

Back to (Bankruptcy) School
Chapter 11 bankruptcy protection is most commonly used by businesses, though individuals can also seek it under certain circumstances. A Chapter 11 is more advantageous than a Chapter 7 bankruptcy because the debtor can still operate the business under the supervision of the Bankruptcy Court, just with a reorganized payment plan to its creditors. Under the Bankruptcy Code, a trustee, normally the debtor, executes the Chapter 11 plan under the guidance of the Court. A Chapter 7 bankruptcy is a total liquidation of assets and means the business stops operating.

For Dvorkin Holdings LLC, the Chapter 11 buys the company time while Dvorkin's legal proceedings play out. The Court may allow the debtor company to cancel certain contracts, or most importantly litigation against the company can be put on hold. For Dvorkin Holdings, this is a considerable advantage as many unsecured creditors are demanding payment for what they are owed. The creditors are obviously concerned that Dvorkin's criminal proceedings will undermine the future of the LLC.

The Creditor Strikes Back
The company's creditors are not simply rolling over for the Chapter 11 however. One of the creditors, Ohio-based FirstMerit Corporation, is seeking a separate and independent trustee for Dvorkin Holdings. Alluding to Dvorkin's criminal charges, FirstMerit raised these concerns in their court appearance in conjunction with the Chapter 11. Under the Bankruptcy Code, all creditors are allowed to have their day in court to challenge the Chapter 11 plan.

A separate and independent trustee is someone who was not previously associated with the company. Considering the dastardly allegations against Dvorkin, FirstMerit has little faith that the company would act rationally if it were its own trustee, "(the creditors cannot) possibly be expected to have any confidence that (Dvorkin Holdings) is acting in their interests in light of these drastic allegations." Dvorkin Holdings is owned by Daniel Dvorkin, his wife Francine, and their children. Under the Bankruptcy Code, a separate and independent trustee can be appointed if a creditor shows cause, which is legalese for strong rationale that the debtor will not operate the business rationally if it is its own trustee.

Crime Doesn't Pay
While Daniel Dvorkin awaits trial, the future of Dvorkin Holdings and its Chapter 11 plan is murky. The Bankruptcy Court will have a challenge on its hands handling aggressive creditors hoping to get their money back before Dvorkin himself potentially heads to jail. Furthermore, whether Dvorkin is convicted or not, it would difficult to imagine the company's reputation and business prospects will not be unsullied by the ordeal. On top of those headaches, Dvorkin Holdings will try to gain the best deal possible in part by arguing that Dvorkin is still innocent until proven guilty. Dvorkin's lawyer has repeatedly stated his client's innocence.

Is your business struggling? Are you staying above water but simply need extra time for business to pick up? Contact M. Hedayat & Associates today-we have been Chicago experts in all forms of bankruptcy as well as real estate and business law for nearly two decades.

These are dark times in the galaxy....

Unemployment is stubbornly high. The recovery has nearly stalled. People's savings are low. The housing market's so-called rebound has been uneven. Since June 2011 almost a million and a half people have sought bankruptcy protection. The number of filers keeps growing (so much for the salutary effect of BAPCPA).  Is there hope? 

A New Hope

One effective feature of Bankruptcy is the lien strip. Traditionally Chapter 7 debtors could not take advantage of a lien strip, which permits a debtor to treat unsecured mortgages and lines of credit the same way as other unsecured debts such as credit cards. If they could, those debts - previously treated as a "secured loan" or "mortgage" would really be discharged at the end of the case like a credit card debt. 

Instead, Courts have permitted lien strips to be employed only in connection with Chapter 13 reorganizations. Ironically this meant that the Chapter 7 debtors least able to keep their 2nd mortgage or HELOC could not get relief. And Courts have adhered to the Chapter 7 v. Chapter 13 distinction right up to the present - even as real estate values have plummeted.

But in a recent decision the 11th Circuit Appellate Court held that a Chapter 7 debtor could avoid a junior lien, in essence giving millions of Americans a new hope.

The Empire Strikes Back

So what makes Chapter 13 and 7 so different when it comes to the treatment of unsecured mortgages and home equity loans? Why let the Chapter 13 debtor to pursue a lien strip but deny it to the Chapter 7 debtor?

Chapter 7 of course is reserved for those who make less than the median income in their State or can demonstrate that letting them liquidate despite having an above the median income isn't an abuse of the Code. Chapter 7 cases move quickly- assets are liquidated or abandoned by the case Trustee within a short time-frame. 

Chapter 13 by contrast is the adjustment of debts by those with regular income who can meet their living expenses, but have fallen behind. The theory is they just need to catch up. Chapter 13 debtors are even their own trustees or Debtor in Possession and their repayment plans take up to 5 years to administer. 

But are those really fair characterizations of Chapter 7 and 13 debtors?  These days a sudden job loss, illness, drop in property value, or plain old economic malaise can transform a wage earner into a deadbeat. So why not offer the same benefit to both types of debtors? Why not permit Chapter 7 lien strips?

Return of the Jedi

Speaking of lien strips, what is a lien exactly? Answer: it's a security interest in real property given or taken in return for value. Typically, a bank lends the money to buy your house and in return you grant a lien in the property. But not all liens are created equal, since only some are perfected. Holders of perfected liens get paid before the holders of unperfected liens. 

That's where McNeal v. GMAC Mortgage comes into play. In McNeal the 11th Circuit Court of Appeals concluded that Chapter 7 debtors had as much right as Chapter 13 debtors to strip unsecured junior liens. The Court's reasoning rested largely on a linguistic choice - "stripping down" versus "stripping off." In fact, policy considerations drove the decision and reversed a long line of precedent.

The facts were these: McNeal, a Chapter 7 debtor, had two mortgages. The amount due as to the first mortgage was $176,413, the amount due as to the second loan was $44,444 and the debtor's house was wroth only $141,416. This would have qualified the debtor to perform a lien strip in Chapter 13. But this was a Chapter 7. 

The Bankruptcy Court cited a long line of precedent, including a Supreme Court case, all of which pointed in a single direction: Chapter 7 debtors could not 'strip down' junior liens. But the 11th Circuit went a different way. It applied the U.S. Supreme Court case of Dewsnup v. Timm which concluded that a Chapter 7 debtor could "strip down" a partially unsecured lien even though the debtor could not 'strip it off' altogether. The result was essentially the same - the debtor got out of paying the entire value of the lien.

Boom goes the dynamite!

Epilogue: Yes, There is Hope

Okay, was the 11th Circuit really persuaded by the distinction between a "stripping down" and "stripping off?" Probably not. But for years consumer groups had called for a vehicle by which debtors could strip liens in Chapter 7 and escape crushing debt without losing their house and home. Many of the Circuits criticized Dewsnup too because it seemed to declare once and for all that only Chapter 13 debtors could employ lien strips then stopped just short of overturning the practice altogether. 

So is this an unconditional victory for Chapter 7 debtors? Not exactly. The rest of the Federal Circuits, including the 7th Circuit, have recently reaffirmed their allegiance to Dewsnup and the narrow reading of the practice of lien stripping. But the circuit split means the Supreme Court may yet have to address the issue in its next term. But until then, all bets are once again off.

Want to learn more about qualifying for a lien strip? Read about it on our website and feel free to reach us at 630-378-2200 or at mhedayat@mha-law.com.

444 North Northwest Hwy. LLC and Northbrook Bank & Trust were embroiled in a foreclosure action in the Illinois courts when 444 filed for Chapter 11 protection and became the Debtor in Possession.

The parties faced off over numerous issues in Bankruptcy Court; so the Judge consolidated the issues for trial. 3 days before the trial date however, the Debtor in Possession brought a motion to disqualify the lawyers for the bank, Much Shelist, based on "conflicts" arising from contact between a lawyer at Much Shelist and the principal of 444 North, John Heintz.

Of course neither the lawyer that spoke with Heintz, nor Much Shelist itself, had represented the Debtor. In fact, Heinz once stated on the record that he did not recognize that firm name. His memory had apparently failed right up until he swore out the affidavit days before trial.

In the Bankruptcy context Attorney disqualification means a lawyer or law firm can no longer serve the Client, period. The 444 Court described disqualification as "a drastic measure to be taken" only when "absolutely necessary." Meanwhile, tactically a motion to disqualify can be useful whether or not it succeeds. Either it throws off the opponent's momentum or it sows a seed of suspicion between the opposing party and it's lawyers 

But the Debtor in Possession argued that Much Shelist should be disqualified under the plain meaning of the Illinois rules of professional conduct. No dirty tricks - just the law. The Court did not agree. First, it went out of its way to note that the Federal District Court's local rules applied, not the Illinois rules. Then, it went on to apply Local Rules 83.51(9)(a) and 83.51.10.

Local Rule 83.51(9)(a) holds that a lawyer who previously represented a client may not represent another party in the same or substantially related matter in which that party's interest is adverse to that of the former client - without written consent.

Local Rule 83.51.10 is a follow-up: it holds that a lawyer who becomes aware that another lawyer from that firm is barred from taking a case due to 83.51.9(a) cannot avoid the conflict by stepping in and taking the case instead. 

At first blush the Local Rules mean Much Shelist is in hot water. There was no doubt a Much Shelist lawyer had discussed aspects of the foreclosure with the Debtor but now represented one of 444's creditors in the bankruptcy or that the rapidly approaching trial was substantially related to that advice. It looked like a case of foul play. 

Ultimately the Court emphasized the delay between Much Shelist's entry into the case for the bank and the Debtor's last-minute revelations. It then came down on the side of logic by holding that the Debtor waited too long to reveal its bombshell.The result left little or no time for the bank to find new lawyers and clearly the Debtor was gaming the system.

The Court classified the delay as extraordinary and noted that, considering the pace of the trial, the bank would probably not be able to find new counsel at all; let alone counsel that could prepare in time. Finally, the Court noted that granting the motion would unduly reward an obvious ploy and prejudiced the bank. 

The Court's Opinion never establishes whether the Debtor knowingly refrained from objecting to Much Shelist's involvement until the last minute. But reading between the lines, the Court didn't believe the Debtor.Once more the outcome was the logical one: that a business facing foreclosure doesn't suddenly forget the law firms and lawyers that it consults. Furthermore, it looks like the timing of the Debtor's revelation suggested a more nefarious intent.

Whether or not you believed the Debtor there were lessons here. Most importantly, it seems like a good idea to keep track of all lawyers and law firms contacted, even if via something as simple and informal as an e-mail or voice mail. A simple record of communications can repair even the most implausible story and satisfy the Court.

M. Hedayat & Associates, P.C.represents debtors in Chapter 11 and conducts trials in both State and Federal Court, including Bankruptcy Court. We represent small businesses as well as entrepreneurs. Call us at 630-378-2200 or reach us at mhedayat@mha-law.com for a no cost consultation.

Think bankruptcy could be just what you need to fend off over-reaching creditors and get that fresh start? You're right. But how to go about it? In this post we'll outline the steps you need to take.

Step 1: When to Seek Help

The typical individual debtor has been coping with challenging financial conditions for months or even years. But then why file bankruptcy? The reason is often sudden, unexpected events that make it impossible to keep up. Examples include:

• Chronic illness
• Medical emergency
• Job loss or layoff
• Divorce or litigation
• Savings exhausted

Of course small businesses are as vulnerable as individuals. In fact, as the current jobless "recovery" drags on, more people than ever are filling the income gap by opening their own businesses. Unfortunately these freshly-minted enterprises often fail at an even higher rate than other small businesses.

Step 2: Talk to a Professional

There is more information available about bankruptcy now than ever before; some of it is even true. But to really get answers and build a successful case, find a profession in your area and talk about  your financial picture - warts and all. Remember, a good lawyer will help you meet your goals without resorting to tricks or shortcuts.

Prepare for Your Meeting

There is no 1-size-fits-all list for what to bring to that first consultation with your lawyer, but it's a good idea to include:

• Credit card bills, loan statements
• Mortgage and HELOC statements
• Auto loan statements (all cars)
• Proof of monthly living expenses
• 6-months' proof of income
• 6-months' bank statements
• Kelly Blue Book auto values
• Recent appraisal of your home
• Lawsuits, citations, foreclosures
• Divorce decrees, marital settlement
• Leases, mortgages, contracts

If you own a small business then, in addition to items from the above list, you should also plan to bring:

• 2 years' tax returns
• Current balance sheet
• 1-year income statement
• List of trade creditors
• List of trade payables
• List of business loans
• List of business partners
• List of employees/payroll
• Accountant contact info
• Insurance agent contact

I've met with literally thousands of debtors over the years but I'm still surprised at what people expect from that initial meeting. If you've gone to the trouble of compiling financial information and assembling the items listed above, why wouldn't your lawyer to be ready too? Expect to pay the retainer then fill out and sign these critical forms before moving forward:

• Attorney Retainer Agreement
• Social Security # Verification
• Consent to Electronic Filing
• Request for Tax Transcripts

Step 3: Petition (and Plan) Preparation

Once you've hired your lawyer and provided the necessary documents and signatures, you'll receive drafts of the documents to be submitted on your behalf:

• Bankruptcy Petition and Schedules (all chapters)
• Plan of Reorganization (Chapter 13 and 11 cases) 

Most likely there will be at least one follow up meeting or telephone and e-mail exchange as you fill in gaps or provide necessary follow up information; and there's always something.

Step 3 1/2: Median Income, Credit Counseling, and Debtor Education

In 2004 massive changes were made to federal bankruptcy law via the so-called Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"). Two in particular were clearly designed to tamp down the number of people seeking bankruptcy protection:

The kind of bankruptcy relief available was now based on how actual household income stacked up to State median income; as calculated based on statistics compiled by the Census Bureau and the IRS. Kind of scary, right?

In addition, individuals would now be required to undergo so called pre-filing Credit Counseling and post-filing Debtor Education.

Both credit counseling and debtor education can be completed on the Web or by telephone or in person, and both take about 90 minutes. Credit counseling must be taken before filing while debtor education must be taken before receiving a discharge of debts. 

Step 4: Filing, Automatic Stay, and Creditors' Meeting

Since 2003 bankruptcy filings in the Northern District of Illinois, consistent with the practice of Bankruptcy Courts around the country, have been done online. Once a case is filed, a number of things take place:

First, an Automatic Stay goes into effect so that creditors must stop contacting you whether by telephone or letter. Moreover, all repossessions, foreclosures, lawsuits, garnishments, lien filings, and other attempts to collect must cease. Creditors must even give back certain items taken shortly before your filing. If in doubt, don't communicate with a creditor yourself: let your Attorney do that.

Second, 30 days or so after filing a Meeting of Creditors is held. Despite the ominous name however, this is primarily a chance for your Trustee to verify the details and integrity of your case. Creditors seldom turn up. In any case, you can relax: your Attorney will be with you. Besides, the environment is more that of a meeting than a courtroom.

Finally, if you filed a plan of reorganization there are a pair of additional events that take place: Confirmation and Fee Application hearings. You don't need to be present for either of those. 

Step 5: Get on with Your Life

Bankruptcy is complex, probably more complex than necessary. An experienced Bankruptcy Attorney should will help you understand the process, and maybe make it less intimidating. 

Now go out there and get your fresh start!

"It's not just a low-income problem. We're seeing folks who are middle and upper income as well... loss of employment has been the catalyst, or a family crisis or some other emergency has triggered the problem." -- Case Worker at NFP Mortgage Counseling Agency

Not-For Profits to the Rescue?
Millions have been put out of their homes by foreclosure, with millions more hurtling in that direction this year. The problem is ripping families apart. Meanwhile, programs such as NeighborWorks America and Housing Counseling Services have been cropping up around the country in response to the permanent housing underclass. Typically such not-for-profit enterprises are funded by Congress through the Department of Housing and Urban Development (HUD). But in 2012 HUD received just half its requested funding and a similar 2013 appropriation is on its way. Why isn't Washington sold on not-for-profit organizations offering counseling to homeowners? Do such organizations bring solutions, or peddle false hope?

Counselors Can Only Do So Much
If all goes well in working with a counseling agency, counselors can act as neutral go-betweens bridging the gap between homeowners and lenders: but there is only so much that can be done. At the Homeownership Preservation Foundation, 70% of clients are driven to counseling by unemployment; and it's hard to negotiate with your mortgage company if you cannot establish that you have steady income. Counselors repeatedly stress that clients should not be paying for help when HUD-approved services are free. Of course the fact remains, you get what you pay for and in order to justify its funding from HUD, counseling agencies must maintain a high caseload and open-door policy. Counselors can only do so much. Homeowners who want more tailored advice should consider speaking with a knowledgeable Attorney that can help them sort through their finances.

Don't Go It Alone: Get Advice
Regardless of whether homeowners look to Federally-funded housing counselors or reach out to a knowledge local Attorney, they should make the decision not to endure the foreclosure process alone. After all, trained professionals are available to help them through the process and the first call and appointment is inevitably free. If you've got questions, what have you got to lose?

For a no-cost telephone consultation and office visit, contact us at mhedayat@mha-law.com or call 630-378-2200 to set up an office visit. We have convenience payment plans available and work with both consumer and business clients throughout the Chicagoland area. If you believe that it is too early to speak with an Attorney, check out these agencies:

NeighborWorks America
Housing Counseling Services, Inc.
Homeownership Preservation Foundation