Category Archives: Creditor’s Rights

Reverse mortgages first became popular in the 1990s.  They may regain their popularity as Baby Boomers reach retirement and seek out sources of ready cash to supplement their incomes.

In a reverse mortgage, a borrower has access to a line of credit based on the amount of the principal of the loan as well as on the unpaid interest of that loan. Borrowers can access money discretionally; however, once the maximum allowed for the line of credit has been reached, monthly payments are required and the unpaid amount is recapitalized and deducted from the total amount of available credit.

A lien on a reverse mortgaged property is often secured by a home or other real property, just as it is with a conventional mortgage.  If a borrower cannot make regular payments, the mortgage lender may proceed to legal remedies such as foreclosure.

Occasionally, property increases in value after a reverse mortgage is issued, and second or even third reverse mortgages may subsequently be taken out.  However, since the balance due in a reverse mortgage tends to increase over time, most lenders prefer not to make such loans or take such subordinated positions.

If you would like more information about reverse mortgages, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

 The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

A lien on real property is created when a deed of trust is properly recorded.  “Foreclosure” is the term for the legal process by which a creditor attempts to recover the loan balance from a borrower by forcing the sale of the asset used as collateral for the loan.

The deed of trust foreclosure process and requirements vary from state to state.  In some states,a purchase money promissory note secured by a deed of trust may be an anti-deficiency loan. An anti-deficiency loan is secured by the lien on the collateral, but the borrower is not obligated to repay any deficiency balance between the value of collateral and the amount of the debt. If the borrower defaults, the lender can seize the collateral, but the lender’s recovery is limited to that collateral. In some jurisdictions, first purchase money mortgages are classified as anti-deficiency loans, but any second or subsequent mortgages on the same property are not anti-deficiency loans.  In the event of a default, the creditor may seek repayment of any monies owed on recourse loans via deficiency judgments.

In Arizona, a trustee’s sale can take place no earlier than the 91st day after recording a Notice of Sale.

If you would like more information about lien foreclosures, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

Once a judgment is entered against a debtor, the creditor becomes known as a judgment creditor and the debtor, a judgment debtor.  Judgment creditors have several legal remedies available for use in enforcing the judgment – in other words, to collect what is owed. Limits vary from state to state as to what kinds of property a creditor can take, how much, and for how long a judgment or a judgment remedy is valid.  An Arizona judgment is valid for five (5) years, and can be renewed every five (5) years. Three of the most common collection options are:

Bank Garnishment.  As long as a judgment creditor has a valid judgment, that judgment can be used to garnish a bank where the judgment debtor is keeping money.  The bank will “freeze” the account and, subject to certain exceptions, the money frozen may be paid to the judgment creditor as a payment toward the judgment.

Wage Garnishment.  Commonly, judgment creditors will obtain from the court a writ of garnishment in order to place a wage garnishment on the judgment debtor’s earnings.  The law allows the judgment creditor to take up to 25% of net earnings, which the employer will be directed to withhold from the debtor’s pay.  Certain debts, such as child support, allow even higher attachment amounts.

Property Liens.  Another collection method allows judgment creditors in some states to automatically create a lien on the judgment debtor’s real property, such as a house.  In Arizona, the creditor must record the judgment with the county in order to create such a lien.

In addition to these options, Arizona law offers judgment creditors a number of other rights and collection mechanisms.  If you have a judgment against a debtor who resides in Arizona, you may want to contact an experienced attorney to help you collect.  Experienced creditors’ rights attorneys are well versed in the applicable statutes, processes, and remedies available to creditors.  If you would like more information about judgment enforcement, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

When any party to a legal contract does not fulfill any aspect of that agreement, the result is known as a breach of contract.  When a party breaches a loan contract, the resulting consequences affect both parties to that contract.

Every loan contract contains language pertaining to breaching that agreement, as well as specifying the rights of the non-breaching party. Sometimes the agreements contain an arbitration clause.  The arbitration clause requires the parties to try and resolve differences through arbitration.  Should the arbitration not achieve satisfactory results, the party may pursue a legal remedy.

Full disclosure in a loan agreement is required.  The terms, conditions, and fees must be clearly delineated in the loan documentation, including:

• Names of the parties
• Loan amount
• Interest rate
• Expiration date
• Details of any special considerations (e.g. fees)

By definition, loan contracts include an implied covenant of dealing fairly and in good faith.  The determination of breach of loan commitments, however, is entirely based upon the written contract, not upon personal relationships or handshakes.  In most cases, the loan documents “over disclose” rather than “under disclose.”  This is why loan documents tend to be lengthy.

If you would like more information about breach of loan agreements, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

When a debtor files bankruptcy, creditors can anticipate attending what is called the Meeting of Creditors.  This is also known as a 341 hearing, named for the corresponding section of the Bankruptcy Code. The meeting generally takes place about one month after the bankruptcy filing. The debtor is required to attend this meeting and respond under oath to questions from the bankruptcy trustee, the United States trustee, and often, to questions posed by the creditors as well.

Chapter 7 Cases

At a Chapter 7 Meeting of Creditors, the bankruptcy trustee will verify the information contained in the bankruptcy documents.  Creditors may also question a debtor about the debtor’s other financial affairs.  Creditors who attend these meetings often do so for a number of reasons.

Once the trustee and creditors are satisfied, the hearing is concluded, the debts proceed towards becoming discharged, and no further 341 hearings take place.  It is not usually necessary for a Chapter 7 debtor to appear before a judge unless there is an objection to discharge of debt, or if there is a reaffirmation of a debt.

Chapter 13 Cases

At a Chapter 13 Meeting of Creditors, the trustee may evaluate the debtor’s repayment plan and will ask many of the same questions a Chapter 7 trustee would ask. Secured creditors will most often attend the hearing to determine whether the debtor will surrender the collateral or property associated with those debts.

Once the Chapter 13 trustee is satisfied with the repayment plan and the requisite documentation, the hearing will be over, but the debtor or their attorney may still need to appear before a Federal Bankruptcy judge to confirm the plan.

If you would like more information about creditors’ rights, particularly in relation to the Meeting of Creditors, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

When a debtor about to declare bankruptcy makes a transfer or a payment to someone they owe money, that creditor may later find themselves in the unenviable position of having to return that payment.  Why?  The debtor’s bankruptcy trustee may decide to claw back the payment for the benefit of the bankruptcy estate.  This type of legal action brought by the trustee is known as preference litigation, or avoidable preference litigation, and is enumerated in the Federal Bankruptcy Code.

Preference litigation helps to insure that a debtor’s assets are distributed as prescribed by the Bankruptcy Code.  No single creditor should receive preference, or be able to get more than a fair share of the debtor’s available assets in repayment of that creditor’s claim, especially if it means that other creditors will be short-changed as a result.

A bankruptcy trustee bringing an avoidable preference lawsuit must satisfy all of the five conditions below:

• The transfer was made to/for the benefit of one of the debtor’s creditors
• The transfer was made in payment of a prior debt of the debtor
• The transfer was made while the debtor was insolvent
• The transfer was made 90 days or less before the debtor filed for bankruptcy, or within one year of the filing if the creditor in question is a business partner or family member of the debtor
• The transfer in question paid the creditor an amount greater than the appropriately pro-rated amount determined in a Chapter 7 bankruptcy case

It is entirely understandable that a creditor would want to steer clear of avoidable preference litigation and its associated costs.  An experienced bankruptcy attorney can be a creditor’s best resource when a debtor’s actions turn out to disrupt the orderly progress of bankruptcy debt collection.

If you would like more information about preference litigation, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

 The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

When a debtor files for bankruptcy, the automatic stay brings an instant halt to actions taken by creditors against that debtor.  Legal proceedings of many kinds that may be in progress against the debtor must cease immediately.

Federal law punishes creditors for violating the automatic stay.  There are, however, instances in which the creditor may file a motion for relief from the stay.  The court may lift the stay, depending on the circumstances delineated in the motion.

Who may bring a motion for relief?  Certain creditors claiming that the bankruptcy filing does not grant them “adequate protection” and to whom the debtor owes payment, such as:

• Mortgage lenders — file to proceed to foreclosure
• Automobile lenders — file to proceed to repossession
• Landlords — file to proceed to eviction
• Creditors in Chapter 13 bankruptcy proceedings — file to assure payment of post-petition obligations

Many creditors will file a motion for relief as quickly as possible. Once a motion for relief is brought, the debtor is given the chance to defend.  Matters proceed on different timelines depending on the type of bankruptcy filing.

Some jurisdictions do not require creditors to appear personally to file their motion for relief; they may be granted relief by filing a Notice of Presentment.  Arizona law requires a creditor to appear at the motion hearing.

Generally speaking, the sooner a creditor teams with an experienced creditor’s rights attorney, and files a motion for relief, the sooner the creditor’s claim against the debtor can be successfully asserted.

If you would like more information about motions for relief from automatic stay in bankruptcy, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

 The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

In bankruptcy law, an automatic stay is an injunction that impacts both debtors and creditors:  it halts actions by creditors to collect from a debtor who has declared bankruptcy.

Under Federal Bankruptcy Code section 362, the stay begins at the moment the bankruptcy petition is filed. The stay protects the debtor against certain actions by creditors, including:

• Actions to obtain debtor’s property
• Actions to create, perfect, or enforce a lien against a debtor’s property
• Reduction or discharge of debts owed to the debtor before bankruptcy proceeding began
• Judicial proceedings against the debtor such as:
  • Foreclosures
  • Evictions
  • Repossessions
  • Collections
  • Garnishments
  • Lawsuits

There can be exceptions to an automatic stay.  The court may give a secured creditor relief from the stay, if the creditor can show that the stay does not give the creditor “adequate protection”, or if the stay jeopardizes the creditor’s secured interest in certain property.  Relief also may take the form of cash payments or an additional or replacement lien on the property in question.  Other exceptions to an automatic stay allow landlords’ eviction proceedings to move forward if a judgment of possession was obtained before the bankruptcy petition was filed, or if the proceeding involves evicting tenants believed to be endangering the property.

For creditors, timing is everything.  The sooner a creditor retains an experienced bankruptcy lawyer who can file the relevant motions to lift the automatic stay, the sooner the creditor’s rights can be protected and enforced. However, if a creditor pursues actions against a debtor that violate the automatic stay, and without filing the proper motions, the court may choose to sanction the creditor by assigning damages and attorneys’ fees.

If you would like more information about automatic stay of enforcement in bankruptcy, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

Many companies that file for Chapter 11 bankruptcy protection do not end up in a rapid liquidation.  Some, after a successful reorganization period, emerge from the bankruptcy process still viable and financially healthy.  Other Chapter 11 companies opt to sell their assets via an auction known as a “363 Sale,” named for Section 363 of the Federal Bankruptcy Code.

To pursue either of these objectives, however, companies in bankruptcy require interim financing.  This special form of financing is known as Debtor-In-Possession (DIP) financing.  DIP financing has priority over a company’s existing debt, equity, and other claims, but it can help give the debtor or company a fresh start under Chapter 11 bankruptcy protection.  Regardless, the company is still required to fulfill all obligations under its reorganization plan.

DIP financing requires Bankruptcy court approval as well as the assent or consent of all entities involved in the bankruptcy proceedings, including:

• The debtor
• The lender
• The official creditors’ committee
• The United States Trustee

The “possession” in DIP financing refers to over what the debtor retains control in its post-petition Chapter 11 situation.  The debtor controls, and remains responsible for:

• Assets
• Business operations
• Reorganization efforts

DIP financing transactions are complex in nature, generally involving a combination of secured commercial loans and bankruptcy litigation elements.  To ensure the best possible outcomes for all those involved, these transactions necessitate the participation of experienced lawyers specializing in commercial finance, insolvency, and creditors’ rights.

If you would like more information about debtor-in-possession financing, Chapter 11 bankruptcy, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.

A deed of trust is a contract that, once properly recorded, creates a lien on real property securing repayment, usually of a promissory note.  A trustee’s sale refers to the trustee under the deed of trust exercising the power of sale.

Who’s Selling?  The trustee often is an attorney acting on behalf of the lender to mitigate losses by foreclosing on the property.

Who’s Buying?  The property may be sold to a third party bidder or even back to the lender.

State laws vary as to the time period in which a trustee’s sale must be held.  In Arizona, the sale can take place no sooner than 90 days after the Notice of Trustee Sale is recorded.  Also specified by state law are the acceptable methods of notifying the public of the sale date and time, as well as strict requirements for notifying the property’s tenants.  Newspapers are the primary means of publicizing the sale, and listing services can make sale information available to prospective buyers.

Arizona state law mandates that trustee’s sales take place at the county courthouse – literally, on the courthouse steps, at the property itself, or at the trustee’s office. Before the sale takes place, the lender will assign an opening bid. Trustee’s sales, because of the quick turnaround of the transaction, are cash sales only. Once the trustee sale is conducted, the person who purchases the property at auction will receive a trustee deed making them the new owner of the property.

The attorneys at Windtberg & Zdancewicz have acted as trustees under deeds of trust and represented both buyers and lenders.  If you would like more information about trustee’s sales, creditors’ rights, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.

 The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters.  We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases.  If you need assistance with your collection matters, please contact us at (480) 584-5660.