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NO Mortgage 'CRAM DOWN' Relief for Real Estate Agents / Self Employed?!?!

By Randy Hooker

Real Estate Broker/Owner with Dreamcatcher Realty / Greater Phoenix Area

February 19, 2009 03:27 AM

I've been reading a lot lately about the possibility of new bankruptcy laws that would allow judges to adjust mortgage loan terms when a person files for Chapter 13 Bankruptcy. President Obama seems to be in favor of offering such 'Cram Down' power to bankruptcy judges.

Chapter 13 bankruptcy is often called "The Wage Earner's Bankruptcy" because a consistent, regular source of income must be available for repayment of debt ~~ and therein lies the rub!

What if you don't have a consistent, regular source of income?

I have no desire to debate the merits of 'Cram Down' power being given to judges. What I'm interested in is the issue of judicial 'Cram Down' relief being available to salaried or hourly individuals but NOT being available to those of us whose income is based on commissions and is at the very least irregular if not completely unpredictable!

It appears that it's very difficult for a commissioned person, such as a real estate agent, to be approved for Chapter 13 Bankruptcy. I don't know about you but I know quite a few agents who've had a rough couple of years.

So based on current law, my understanding is that 'Cram Downs' for us or the millions of other straight commissioned Americans will be impossible.

I'm not trying to throw my hat into the "Where's-My-Bailout?!" ring. And I'm definitely not wanting to debate the merits or dangers of anyone being allowed to obtain relief from a no-longer-affordable mortgage payment, but...

Shouldn't ALL of us ~ regardless of whether we draw a salary, work by the hour or are straight commission ~ have equal opportunities to judicial 'Cram Down' relief?

Randy Hooker - Dreamcatcher Realty - Arizona Real Estate

Arizona Homes - Chandler Homes - Gilbert Homes - Mesa Homes - Queen Creek Homes

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Kate Bourland

Marketing with Kate - Redding, CA

Onlilne Marketing Mobile Marketing

Randy, I think this is an excellen observation. The entire stimulus package is geared towards "salaried" employees and does nothing to address the millions of Americans who are making it happen in self employed capacity.

What about those who are now unemployed because of the economy?

It's clear that the legislature doesn't understand the complexity of the issue - it's all about media tiime and that 30 second sound spot.

Feb 19, 2009 04:03 AM

Chris Ann Cleland

Long and Foster Real Estate - Gainesville, VA

Associate Broker, Bristow, VA

Randy: I think I'll go to bed and not get out tomorrow. Everything revolving around this housing/mortgage/credit mess is such a CF that no one but the banks are ever helped anyway. I'm having one of those, "What's the point?" days. Our elected officials don't represent us anymore, so much as they represent the corporations that elect them, and the lobbyists that court them all day long.

Feb 19, 2009 04:03 AM

Susan Gonzalez Faux painting murals atlanta

Marietta Mural & Decorative Design - Atlanta, GA

There are so many complexities with all these bailout ideas, that what looks like it might help, is actually not fair to all. I'm afraid to look more closely at all the other stipulations.

Feb 19, 2009 04:19 AM

JL Boney, III

Coldwell Banker - Columbia, SC

Columbia, SC Real Estate

Well I guess that's just more motivation for us to work like hell so we don't have to file bankruptcy.

Feb 19, 2009 04:42 AM

Kari Battaglia

Veterans Realty Inc - Venice, FL

Who You Work With Matters!

I can see your point. I hope I never have to be in a situation like that.

Feb 19, 2009 05:45 AM

Celeste "SALLY" Cheeseman

Liberty Homes - Mililani, HI

(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

I'm with you...work my behind off....

Feb 19, 2009 06:54 AM

Jesse Clifton

Jesse Clifton & Associates - Fairbanks, AK

Randy, the whole package stinks to high heaven. It was put together by amateurs and precious few had a chance to even know what they were voting for. Ok, I'm off my soapbox now. :)

Feb 19, 2009 04:54 PM

Randy Hooker

Dreamcatcher Realty / Greater Phoenix Area - Gilbert, AZ

Gilbert, Chandler, Mesa, Queen Creek

Kate ~ I've always joked with my "salaried" friends that there's a very fine line between self-employed and un-employed. And in this economy, that line is blurred even more. It just fascinates the hell out of me how there is such a dominant prejudice against self-employed folks! And obviously our political leaders are clueless as well.

I hear ya loud and clear, Chris Ann! The CF Syndrome has now officially overtaken our country. I received this in an email today: "Members of Congress should be compelled to wear uniforms like NASCAR drivers, so we can identify their corporate sponsors."

Susan ~ I think you, me and about 200 million others are in the same place ~ everything is so complicated and confusing that nobody knows where to turn for clear answers. And yes, for every person that is "helped," there's at least 1 or 2 that are screwed.

JL ~ I used to think like that, JL. But in all honesty, the issue is really much more complicated. And none of us live on a deserted island, meaning that we are all still part of a culture and society. Sometimes, don't ya know, shit happens!

Kari ~ me too! But if I ever found myself in that situation, I would like to think that I wouldn't be treated prejudicially just because I had been self employed/commissioned.

I here ya, Sally! I'm certainly not on a soap box in support of slackers or free-loaders. And hopefully most of us will work hard AND do it smartly, and ultimately avoid the dreaded BK nightmare.

Hey Jesse ~ LOL! I actually agree with you buddy, and you can get on your soapbox any time you want! Hope your volcano is behaving itself. ;-)

Feb 19, 2009 05:42 PM

Elizabeth Weintraub Sacramento Broker

Elizabeth Anne Weintraub, Broker - Sacramento, CA

Put 40 years of experience to work for you

Don't you know, Randy, we're not employed. Nope. Nobody who earns a commission is employed. Identifying yourself as being self-employed to an employed person means you don't have a job. LOL.

Feb 21, 2009 07:17 AM

Randy Hooker

Dreamcatcher Realty / Greater Phoenix Area - Gilbert, AZ

Gilbert, Chandler, Mesa, Queen Creek

LOL, Elizabeth! I know exactly what you mean!! For most salaried folks (especially bankers), self-employed = un-employed?

Feb 21, 2009 12:29 PM

Not a real person

San Diego, CA

Hey, Randy.

The following is not legal advice. Should you, the reader, need legal advice, consult with an attorney in your state.

Since law is one of my avocations, I helped a friend last July file for bankruptcy. He was self-employed. Although I had no experience in bankruptcy law, it was just a matter of following the rules of the specific bankruptcy court, and his bankruptcy was successfully discharged last October. Of course, two days later he had all sorts of credit card and new car offers in the mail -- he had no debut, so it kind of made sense.

Anyway, Chapter 13 requires repayment over the next three to five years depending on certain factors. To arrive at whether or not you have the ability to pay, you'll be asked to do some careful evaluations and analyses of your expected income. If that expected income is acceptable, Chapter 13 can be done. If that expected income is below the threshholds, Chapter 7 would probably be more appropriate.

Trying to determine what a word means out of context of the sentence, the paragraph, the section, and even the bankruptcy code is not for the faint of heart. A qualified attorney specializing in bankrupty law, with many, many years of experience, is the best one to consult if one is seeking options with one's home, job, income, and bankruptcy.

Feb 23, 2009 09:41 AM

Anonymous

consult with an expert...

I believe you can always opt for a chapter 13, even though you qualify for a chapter 7. So long as your creditors are recovering more money through your chapter 13 than they wold if you file a 7... another way to look at it is, there is no chapter 13 or 7 or anything that would help you if you don't have income... if your income is unpredictable ,I think over the year it can be predictable (or normalized).... I think it would be difficult to get a loan with unpredictable monthly payments :-)

Again, there is a way... just consult a local competent BK specialist... you can find one here www.nacba.com

best of luck.

Mar 08, 2009 04:50 PM

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NO Mortgage 'CRAM DOWN' Relief for Real Estate Agents / Self Employed?!?!

I've been reading a lot lately about the possibility of new bankruptcy laws that would allow judges to adjust mortgage loan terms when a person files for Chapter 13 Bankruptcy. President Obama seems to be in favor of offering such 'Cram Down' power to bankruptcy judges.

Chapter 13 bankruptcy is often called "The Wage Earner's Bankruptcy" because a consistent, regular source of income must be available for repayment of debt ~~ and therein lies the rub!

What if you don't have a consistent, regular source of income?

It appears that it's very difficult for a commissioned person, such as a real estate agent, to be approved for Chapter 13 Bankruptcy. I don't know about you but I know quite a few agents who've had a rough couple of years.

So based on current law, my understanding is that 'Cram Downs' for us or the millions of other straight commissioned Americans will be impossible.

I'm not trying to throw my hat into the "Where's-My-Bailout?!" ring. And I'm definitely not wanting to debate the merits or dangers of anyone being allowed to obtain relief from a no-longer-affordable mortgage payment, but...

Shouldn't ALL of us ~ regardless of whether we draw a salary, work by the hour or are straight commission ~ have equal opportunities to judicial 'Cram Down' relief?

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