If you own a home, you should have a policy of homeowner’s insurance in place to protect you against certain disasters that could damage that home. Your mortgage carrier requires you to carry a policy to protect its interest. Chances are good that sometime during your ownership, some event will happen resulting in you filing a claim with your insurance company. If you’ve not yet had to use your insurance, you may wonder how that works. Or, if you have filed a claim and the insurance company is denying the coverage you expected, you may be wondering what you should do next.

Your primary contact with your insurance company is through your agent. An insurance “agent” is a person who has a contractual relationship with one or more insurance companies to sell and issue policies on their behalf. The agent’s job is to take your application and issue the policy. The agent is therefore considered to be a legal representative of the insurance company, which is then legally bound by its agent’s actions in obtaining and placing insurance coverage. This relationship between the agent and the company exists as a matter of Ohio law, even if the written language of the application or policy suggest otherwise. However, if you have a loss and you find that the coverage the company is willing to provide on your claim is not what you expected, it is unlikely that you will be successful suing the agent. The extent of the agent’s legal duty is to assess what coverage you need and to provide the best available policy. If the agent has discussed whether you’d be best off purchasing a policy that specifically details the risks that are covered rather than a slightly more expensive policy that covers all risks not specifically excluded, he has in all probability fulfilled his duty to you. [Read more…]

My most recent blogs have discussed bankruptcy topics that worry people looking into filing under either Chapter 7 or Chapter 13. I also have extensive experience with insurance policies, both in providing legal representation to people under the terms of their insurance policies, and also to people who have had to sue their own insurance companies for coverage. I have had considerable success in both types of litigation. In the process of both defending insureds faced with suits brought against them and in pursuing the rights of insureds who have not gotten fair treatment by their own insurance carriers, I have come across many issues that confuse the average policy holder.

One significant issue for a policy holder is the meaning of a “reservation of rights letter” received from their insurance company in regard to a claim. Basically, you purchase home and automobile insurance expecting that if you are ever sued or have a claim made against you for damages, your insurance company will represent you and pay on the claim, if warranted.   For example, if you accidently rear end another car, you expect that your insurance company will negotiate with the other driver and pay the claim. If the matter ultimately goes to a law suit, you expect under the terms of your automobile insurance policy that your insurer will supply you at no charge with an attorney to represent you.   And, in most instances, the claim works itself out in just that way.

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Suppose you’ve filed a bankruptcy in which you plan to surrender your home to the mortgage lender/bank. The bank may or may not have filed a foreclosure action to legally take it back yet. You are likely wondering if you have to move out immediately. The answer is that you do not. You should have, at the very least, several months where you can remain in your home mortgage-free, if not indefinitely. You have the right to live in your home until the property is sold. At that point, the deed will be taken out of your name and you will no longer own the home. You will be notified when that takes place and given a reasonable time to move out.

Keep in mind that the legal procedure by which a bank takes back real estate is through a foreclosure action filed in your county’s common pleas court. In that filing, they give notice not only to you, but also to any other creditor who may have an interest in the property, such as second mortgage holder or the county treasurer to see if real estate taxes are owing on the property. If the foreclosure action was filed before you filed your bankruptcy, it is temporarily “stayed” by the bankruptcy filing. The attorney for the bank will have to file a motion for “relief” from the automatic stay to go forward with the foreclosure action. Getting the relief order from the bankruptcy court takes about a month.

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You may decide that struggling to keep a house that is too expensive isn’t doing you or your family any good.  You may be sacrificing other benefits you’d like to provide for your family or yourself rather than put every dollar into your mortgage payments or worry about how you will make next month’s payment.  You may be at the point of wanting to let the bank/mortgage company take the house back. Unfortunately, you likely owe more on the mortgage than the house is worth on the market.  Over the past several years, we saw the values of real estate go way down.  Although those values are beginning to rise again, they are not where they were when you bought your home.  At the same time, you may be making less income from your employment or had some other life event where your income has been impacted, such as illness or divorce.

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The quick answer is that even if you overlook listing a creditor in your bankruptcy papers, you may be protected by your bankruptcy discharge from having any responsibility for paying that debt. Basically, it depends upon whether or not you have to pay any money in to the Trustee, or surrender any property for the Bankruptcy Trustee to sell and distribute among your creditors.

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Most of my clients desperately want to keep their homes, even if the payments are very burdensome on their incomes.  Most people are strongly attached to the house where they are raising their families, their neighborhood where their kids go to school, and their place of shelter from the outside world.  I understand that.  I feel the same way about my home.  On the other hand, sometimes life makes it hard enough to just keep food on the table, clothes on the kids, and utilities running.  You may have medical bills due to an injury or illness, or you may have recently become divorced.  You may be trying to get by on less money because your work hours were cut, or you might have your own business that’s struggling. For reasons you could not have predicted, you find yourself going month after month without any money left over to pay your mortgage.  You have what’s referred to as an “arrearage”, meaning you owe for one or more months in addition to your normal monthly mortgage payment.  There are ways in which a bankruptcy, either a 7 or 13, can help keep you and your family in your home.

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I’m impressed by how many people actually get copies of their credit reports every so often to check on the debts that are recorded on them.  There are three many credit reporting agencies:  Equifax, TransUnion, and Experian.  If you have a long-term debt with a creditor that remains unpaid, that creditor will likely report it to at least one of these reporting agencies.  If someone should request your credit report, it will show:

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This blogpost is Part 2 of 2 of our series addressing Subprime Auto Loans.

You are probably aware that if you can’t make your car payments, the lender can repossess the car.  It is then taken to auction, and sold for the best bid.  The sale of the car doesn’t get you off the hook with the lender, unless somehow the sale price equals what you owe on the loan, and most times it’s not even close.  The lender can still hold you responsible for the deficiency between what you owed on the car and what it sold for, plus the costs of picking the car up and the sale itself.  Once that sale is completed, the deficiency balance will be reported to the credit reporting agencies, and it will show up should you try to finance another vehicle.  So your effort to provide yourself with a new vehicle using a subprime loan might end up with you owing on that car and still having no vehicle in your possession.

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Do you remember just a few years ago, when people with very questionable credit were able to get home loans with zero down payment?   Many of those people were unable to make their monthly mortgage payments, and the houses ended up going into foreclosure.  It ended in a national mortgage crisis.  We’re still seeing the results of that crisis.  In many neighborhoods, especially in the inner-cities, there are several abandoned houses that are lowering the sales prices for the remaining owner-occupied houses.  That crisis also led to the downfall of many lending institutions, who were no longer getting a return on the investment they had made when making these loans.  And it’s led to a large percentage of these houses that are resold going to investors who rent them or attempt to “flip” them rather than to owners who are looking to put down roots and live the American dream.

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I have been a bankruptcy attorney since 1994. It has always been my practice to interview my clients myself, talk with them directly to get the information I need, and explain what documents I need. I prepare the necessary schedules and other pleadings based upon my notes and the documents they provide me. Once the paperwork is completed to my satisfaction, I meet with my clients to review it, make any changes necessary, and sign it. If any issues come up, I am in personal contact with my clients to do whatever necessary to resolve these concerns. I meet with the clients before the meeting with the Trustee (the “341” meeting), and again if a hearing is set before the judge. I have never used the services of a paralegal/legal assistant to take on any of these tasks.

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