Led by Vincent Howard, our team frequently counsels clients on the option of filing for bankruptcy to avoid foreclosure. Because all bankruptcies come with an automatic stay of debt enforcement measures, a filing can buy borrowers at least a little bit of time. As the housing downturn continues, bankruptcy has become increasingly popular for borrowers who want to stave off foreclosure. However, it's not right for everyone; in some financial situations, bankruptcy will not stop a foreclosure in the long term. That's why it's vital for potential filers to get the advice of an experienced Riverside foreclosure defense lawyer before filing. That was one of the problems in In re Lee, a bankruptcy case from the Bankruptcy Appellate Panel of the Sixth U.S. Circuit Court of Appeals. The court upheld dismissal with prejudice against Martha Lee for alleged abuses of the process.
Lee owns 10 properties in Ohio and New Jersey, including a Cincinnati property at issue here. She lives off the rental income from those as well as operating a food truck. In 2008, she defaulted on the Cincinnati property, which Chase Home Finance then moved to foreclose later that year. In October of 2009, she filed for Chapter 13 bankruptcy, which stayed the foreclosure complaint. However, the bankruptcy was dismissed in March of 2010 because Lee failed to file a plan or schedules. Two months after that, Lee filed a Chapter 7 bankruptcy, acting as her own attorney. This was dismissed in October of 2010 because Lee failed to produce proper documentation at creditors' meetings. In April of 2011, Lee filed a third bankruptcy petition, this time under Chapter 11, which is the current case. Between each bankruptcy case, the foreclosure case was reactivated but then stayed again.
In the Chapter 11 case, Chase moved to dismiss for cause. It alleging Lee was acting in bad faith by filing three bankruptcy petitions in a row, abusing the bankruptcy process to avoid having the Cincinnati property foreclosed. It asked for a permanent or 180-day ban on future bankruptcy petitions from Lee, and in rem relief barring Lee or anyone with a property interest in the Cincinnati property from ever listing it in a future bankruptcy. Just before a scheduled hearing, Lee filed an unsuccessful motion to postpone it. At the hearing, the judge chastised her for not complying with requirements in her bankruptcy cases and suggested she was abusing the courts to avoid foreclosure. The court ultimately granted the 180-day bar and the permanent prohibition on listing the property in future bankruptcy petitions. Lee appealed.
The BAP ultimately upheld both orders. In this case, it said, the bankruptcy court had many reasons why it felt the filing was in bad faith, including multiple filings, failure to diligently pursue any of the cases and failure to pay fees in the instant case. All of this led the lower court to conclude that Lee had filed her cases to avoid foreclosure, and that her actions were not "honest... and forthright." Thus, the panel found no abuse of discretion in dismissing the case. Using the same set of facts, the panel found no abuse in the 180-day ban on new filings. Finally, it upheld the order barring Lee or anyone with a contractual relationship to her from listing the property in any future bankruptcy, noting that Lee's repeated filings have allowed her to avoid paying her mortgage since 2008. However, because the order incorporated language not ordered by the judge, which could follow the property rather than Lee and her associates, the panel remanded that order for amendment.
Vincent Howard and our Costa Mesa foreclosure defense attorneys wonder whether Lee could have gotten relief with the help of an experienced bankruptcy lawyer. Her circumstances may or may not have lent themselves to relief, but it appears from this record that she never made a serious attempt to find out. As a pro se filer, she may genuinely not have understood that the bankruptcy code can't be used in the way she used it; she may also have known it but not realized there could be serious consequences. An experienced attorney could also have counseled her on her realistic financial prospects or suggested another way to fight the foreclosure. This is why we recommend that you call the Los Angeles foreclosure defense lawyers at Howard Law, P.C., to discuss bankruptcy from the beginning, even if you're not sure you want a lawyer.
If you're headed for foreclosure and you'd lke to discuss the possibility with an experienced bankruptcy attorney, don't wait to call Vincent Howard and the team at Howard Law. For a consultation, send us a message through our website or call 1-800-872-5925.