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Cincinnati Bankruptcy Law Blog

Banks around the nation increase action against bad home loans

For several quarters, the rate of foreclosure around the nation, including states with a high share of institutional investors, such as Ohio, decreased overall. The most recent quarter has seen a dramatic increase of 66 percent of homes that face foreclosure action due to the default of a loan repayment. This means that families who are already facing financial hardship might face the very real threat of losing their home.

Most properties that are seized by banks have been in default for an extended period. They are often even vacant, but others are the only home that many families have. Foreclosure offers a way for the banks to gain back some monetary assets on a loan that was previously financed, then neglected to be repaid. Single family properties such as these are sought after by eager investors. 

Out-of-state abusive debt collectors targeted by Ohio AG

Federal and Ohio laws against abusive debt collection practices have been in place for long enough that you might think that anyone tempted to engage in such activity would be deterred by them, but as recent news events demonstrate such a belief would be wishful thinking. In fact, the problem remains serious enough that the U.S. Federal Trade Commission has teamed up with both state and local law enforcement agencies in Ohio and elsewhere to combat it under the aegis of "Operation Collection Protection."

The news item at hand concerns a debt collection firm based in New York that was the subject of more than 30 complaints by Ohio residents for classic abusive debt collection practices, including the use of abusive and profane language during telephone calls, threats of civil legal actions and even insinuations that the people being contacted could be sent to jail, harassment of family members, employers and co-workers, and refusal to stop telephone calls even when informed by the victims of the harassing tactics informed them that they did not owe upon the claimed debt.

Federal foreclosure assistance was too slow for some Ohio victims

If you were one of the unfortunate victims of the foreclosure crisis in Ohio, this “news” may not be news to you. But the trickle-down effect throughout the Ohio economy could have affected many others and may continue to do so. While help was on the way, the waiting was the hardest part.

The “Hardest Hit Fund,” offered from the federal government under the Troubled Asset Relief Program to homeowners going through foreclosure, was designed to help unemployed homeowners avoid foreclosure by providing loan-modification help among other assistance. The funds were offered to states with the highest foreclosure rates which included Ohio. But according to statistics from the Treasury Department, which administered the program, Ohio took longer to provide assistance to homeowners than any of the other states in the program.

"I'm being sued by a creditor: what should I do?"

Debts, creditors and collection agencies have one thing in common: ignoring them is not a sound strategy to make them go away. A frustrated creditor may turn to a collection agency; and a frustrated collection agency may turn to litigation in an attempt to make you pay a debt. Sometimes you may receive a warning that a lawsuit is imminent, or sometimes your first inkling of it may be when you are served with a summons and complaint. Regardless of how you discover that you are being sued over a debt, there are some things that you need to take into account in order to deal with it properly.

First, just as ignoring the debt or the creditor does not make them go away, ignoring a summons and complaint will not make the lawsuit go away. Under Ohio law you will have 28 days after receiving the summons and complaint to file a legal answer with the court. If you fail to do so, then the creditor or collection agency that filed a lawsuit against you can make a motion to the court for a default judgment, which would if unchallenged result in the plaintiff getting everything it wants. Once it has a judgment in hand, a creditor or collection agency can then take action to collect the debt through legal means such as garnishment of your wages or bank account.

What happens if I try to avoid my creditors by ignoring them?

As a general rule it is not advisable to attempt to “hide” from your creditors if you are experiencing financial difficulties, because Ohio law provides them with mechanisms to seek out what money you do have on hand or in the form of wages to recover what they are owed even if you refuse to acknowledge them. A frequently-used tool in this regard is garnishment.

Ohio’s garnishment law lays out the process that a creditor must follow to initiate the process of garnishment against you, This begins with the creditor obtaining a court judgment against you for amounts owed, which the law then allows to be converted into garnishment against any bank accounts you may have or your wages if you are employed. Note that it does no good to avoid the debt collection court action against you; if you fail to defend yourself against such a lawsuit, the creditor can obtain a default judgment against you.

Zombie foreclosures on the decline in central Ohio

When a home is foreclosed upon, the homeowner will often vacate the premises. After all, the house is being taken back by the bank, whether the owner likes it or not. They take the opportunity to move on with their life and leave the house behind. But if the bank does not officially repossess the home, the owners are still responsible for taxes and other costs. This is called a zombie foreclosure.

These kinds of foreclosures are on the decline in Ohio. Across the nation, about 20,000 homes fit into this category at the end of last month. This is a drop of over 40 percent from last year. One such reason is that it has become more fiscally beneficial for the banks to actually repossess the homes and put them on the market, with the rise in house prices.

Hedge funds moving aggressively into home foreclosures

Many homeowners who encounter difficulty keeping up with their mortgages will seek to use any of a variety of ways to try to stay in their home. These will frequently involve some form of an attempt to modify the terms of their mortgage, lowering the payments and interest sufficiently to allow them to keep up with their payment schedule and to remain in the house.

As the remnants of the implosion of the "housing bubble" continue to be cleared up, though, new players are entering the mortgage market for distressed homeowners: hedge funds, and some of them are proving to be less than sympathetic to homeowners who want to avoid foreclosure.

Ohio small business bankruptcy risk caused by unsound loans

Small business owners in Hamilton County could be at risk of a national trend involving business loans. Unless you own a business with a strong, consistent cash flow and years of financial statements to offer to lenders, getting a business loan from a bank can be a daunting experience that frequently ends with a rejection.

Businesses across the country have been brought to the brink of financial ruin by creditors who at first came to them with offers of loans to help them. Whether to improve cash flow or to expand market share, an infusion of money into a small business can look like a great opportunity. The problem is that too much debt or debt with high interest rates and unfavorable credit terms can leave a business struggling.

Are you facing foreclosure?

Those who are in enough financial trouble to be contemplating bankruptcy will, if they are homeowners, often also find themselves having to think about the prospect of what it would be like to lose their homes to foreclosure. Your mortgage payment is typically the largest of your bills, and when you are already juggling bills it can be like trying to juggle a bowling ball.

There is a saying that, "Desperate times call for desperate measures." But the trouble is, when you feel like your back is against the wall, that does not put you into an empowered frame of mind when you are making critical choices about your finances that can have ripple effects on your job and your loved ones. What you need is a chance to consider your options in a calm and orderly manner, so you can make the best possible decisions based on all of the options available to you – some of which you may not even be aware of.

Types of bankruptcy for small businesses

The decision to file for bankruptcy is a difficult one, particularly for small business owners. When a business owner does make the decision to declare bankruptcy, the owner must then choose the type of bankruptcy to file. There are a few different types of bankruptcy for businesses, and each type has pros and cons.

Chapter 7 bankruptcy, or liquidation bankruptcy, is the most common. It is best for businesses that do not have substantial assets and that have no hope of repaying the debts. Through Chapter 7 bankruptcy, your business assets will be liquidated or sold to pay off outstanding debts. Any debts that are not covered by the assets will then be discharged. 

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