A cancer survivor with four school age children saves her Southern California home with little time to spare.
This story may sound unique and amazing, but many like it play out across America.
Kenny Cassuto, an Orange County process server who works for an attorney service company on the ground floor of the building, walked upstairs to the law office of Jack Leydin.
“May I ask you a question?” he addressed Leydin who sat behind his desk. “My friend is a third grade teacher who was laid off after being stricken with breast cancer. The school district laid her off, supposedly because of budget cuts, while tenured teachers were allowed to keep their jobs. After hiring a labor lawyer and wrangling with the district for eight months, she won her job back, but the loss of income has proven devastating. She’s a widow with four kids in school, and her cancer is in remission, but now she’s going to lose her home!”
“I’m sorry to hear that. What can I do for her?” Attorney Leydin inquired.
“Well, she has a house with $600,000 trust deed debt on it. It’s worth about $300,000 on the market now. She’s fallen way behind on her mortgage payments. The bank has already sent her two notices: One was a Notice of Default, the other a Notice of Trustee Sale. Her property will be auctioned off in two weeks. She’s desperate!”
Kenny continued. “They’re demanding $36,000 in the arrears to reinstate her loan, or else her house is going to foreclosure sale. The bank won’t even take her regular payments anymore, and there is no way she can raise a lump sum of $36,000!”
Leydin quickly offered: “We’ll immediately stop the sale with a bankruptcy filing! Kenny, looking forlorn, replied “I thought you might say that…it’s just that she filed Chapter 7 bankruptcy after her husband died.”
Leydin went on to explain his idea, “Even with a Chapter 7 bankruptcy within the last eight years, she can still file Chapter 13 bankruptcy. Once the bankruptcy is filed, an order is triggered from the federal bankruptcy law that automatically stops all foreclosure actions taken by the bank, at least for a while.”
“Your friend can propose a plan to pay off those arrears of $36,000 while maintaining her regular monthly mortgage payments that she can now afford. She stops the bank’s foreclosure and makes them accept a payment plan for the arrears under supervision of the bankruptcy court.
The bank may object to the proposed plan for repayment, but if your friend shows that she can make her proposed installments under the plan, regular mortgage payments, then the bankruptcy court will likely approve the Chapter 13 plan. Your friend can go on paying for up to five years to pay off the arrears through her bankruptcy plan. She can emerge from the bankruptcy, get her discharge, and live happily ever after raising her four children in their beloved home.”
“ Chapter 13 also gives your friend more options in the future. For example, she may wish to consider a short sale…..but we needn’t discuss that now.”