Stipulated Orders With Drop Dead Clauses

It has been a hard week in the office. I know that money is still tight out there for many people. And don't even get me started on the 6-month mortgage increases that are putting so many houses into foreclosure. How do I know that money is tight? Well, clients have been ringing the phone off the hook begging for just one more chance to save their home from foreclosure. We have been lucky and smart . . . but we have not been able to help everyone. I hate that so much! I got into bankruptcy to help people and I want it to work as much as the clients do ... some times I think that I want it more ... I hate to lose.

This is how it goes: clients are behind in their mortgage payments and on the steps of foreclosure ... so they see us and because they did not wait until the last second to see us they file a Chapter 13 bankruptcy to save their home. We work our behinds off typing up just enough the case to stop the foreclosure ... we make it look too easy I think some times ... because we do it all the time. We call, fax and mail a copy of the bankrutpcy notice to the creditor's attorney ... we have had to have our clients stand on the Courthouse steps and hand the creditor's attorney a copy. And we win for our clients a chance to save their home! Yea!

I tell everyone make your house payments ... you may not get another bite of the apple ... and keep a copy of the payment because you have to prove that you made the payments! So, life goes on and my clients run into a bit a rough spot. Then, the next thing you know I get a motion to lift the stay on the house. We send our clients a copy of the motion and a letter telling them to get on the phone or in the office with proofs of payments and let us know what they want to do. Nine times out of ten, my clients want to keep the house. So, if we can't prove that they are current ... we agree to a 6 month repayment plan for the missed payments due the middle of the month. We try our hardest to not agree to a Drop Dead Clause .... A Drop Dead Clause means if you brake it you lose ... you are dead in the water. But as the Judges are allowing the stays to be lifted if the agreement is not signed ... we are doing more Drop Dead Agreements. Additionally, the Judges are clear, for the most part, that Debtors do not get an endless number of chances. (I have had the Judge tell me that they were sorry that my client was losing their house but ... only so many chances. My Judge did not have to tell me that because I knew that he wanted my client to be able stop their home going into foreclosure... but at some point the creditor has to be able to move forward and sell the property. I have great Judges, who work hard to apply all of the laws fairly.)

Then, life goes on and my clients get behind in their house payments for the 3rd time. I get a letter or notice from the creditor saying that my clients are in default. Because of these drop dead agreements, our clients have 10 days to get current or prove that they are current or the creditor's attorney sends an order to the court lifting the stay. We have only 10 days to file an objection -- and then only if we can show that the order should not have been entered. Or, I have filed a motion to reconsider ... if the facts were good. Last week, we disagreed with the creditor's attorneys to the point that we are sueing the mortgage company and their attorneys. More on that later ... with my client's permission of course.

So, we when get the notices, we write our clients. We also try to call them. I have to get more email addresses because I think that I will have the staff start writting them. (Problems with being sure that no one else can read it ... more later.) Yesterday, I was about to give up on my client being able to keep the house. As I was leaving to go to court, I asked Tom to get out the Order and look at it to see if there was any hope for our client. Creditors often change law firms, and the new firm may not have read the order carefully to see if the clause was there or not. Well, thank goodness, my client's order was lacking the part requiring them to make the on-going payments or face the drop dead clause ... so our clients dodged the bullet.

For my clients: I hate signing Drop Dead Agreements but I will:

(1) if it is to save your home;
(2) and you tell me that you understand.

But then understand that my hands will likely be tied if you fail to live up to the terms of the agreement. You have agreed in advance to what would/should happen it you don't make the payments on time.

So much for my soap box tonight. Bankruptcy Part II will be posted next week.

Take care,

Susan