Starting The Debt Collection Process

So you provided the goods or services, and not been paid. What next?
In order to begin the procedure, the business to which money is owed must show each of the following

• Evidence of Debt – any and all paperwork to show that a service was performed the customer, but the payment for said goods or services was not rendered. This can include a contract, invoices, proposal for services, or an estimate that later lead to work being done.
• Invoices and Bills – to show that the debt incurred by your customer has not been satisfied. Include an interest provisions as well
• Payments already received – history of records from past transactions with the debtor in question, showing that tou have given credit for any payments recieved
• Contract for Goods or Services – Any sort of written agreement or oral agreements made between your business and a customer that show an agreement to pay money for goods of services received
• Every case and situation is different. If you would like a consultation, contact Pak & Moring to discuss your business situation, and see if we can help you recover the money owed to you.

Attorney’s Fees: An Important Note

If you are owed money by a client, and feel the need to hire legal council as means of recovering that debt, then you may be entitled to have your attorney’s fees paid by the opposing party. Thus, if your business was to hire legal council and win your contract litigation process, there is a strong possibility that the debtor could also pay your legal expenses incurred in collecting the debt (§12-341.01).

(Please note: while informative, these posts are not intended to be formal legal advice and are not completely authoritative and should not be solely relied on as a primary basis for legal action.)

Contract Litigation – Collecting Debts

Many businesses in today’s market are finding themselves endlessly waiting for payment from their clients. This all-too-common scenario results when customers refuse to pay for work that has already been completed. For service providers who find themselves tangled up in collecting money owed to them, legal help is available. If a customer has an obligation to pay you and has not done so despite your best attempt to remedy that situation, the firm of Pak & Moring can help. Our experienced attorneys understand the needs of small business. They can help guide you in the collection of debt, and assist in managing accounts receivable.

Elements of Debt Collection

A business with both suppliers and clients faces a unique stet of problems as it manages its balance sheets. However, with the recessionary condition of the market, it is becoming more and more common that your business may be having trouble getting paid from its clients. Of course, the failure of your customers to pay you makes it difficult to pay your suppliers and other veners. Often, they may bring legal action againast you, leaving you stuck in the middle. Employing legal counsel helps explore all of the various avenues of debt collection and aid you in determine the right course of action for our company. Please contact Pak & Moring to discuss your situation, and see if we can help you recover the money owed to you. We may also be able to work with your creditors to provide you the room you need to pay their bills.

In a time when goods and service providers need all earned income as quickly as possible – it may be worthwhile to look into managing accounts receivable though contract litigation. However, knowledge is the most important tool in deciding the proper course of action for your business. This is the first in a weeklong series of posts form the Pak & Moring law firm aimed at educating and empowering Arizona businesses about the debt collection options available to them.

Arizona Foreclosure Timetable

Are you an Arizona homeowner who has been having trouble with your mortgage payments? Have you suddenly been faced with letters from your lender saying you are in default of your mortgage? If so, without a proper course of action, you may be in danger of losing your home. The following is a sequence of steps in the Arizona non-judicial foreclosure process:

• Day 1: a Notice of Default recorded by your lender. The defaulting property owner has 3 calendar months to cure, or payback the default amount, either by paying off the lien, or by negotiating a payment plan
• Within 10 days: the first Notice of Default mailed to you from your lender.
• Within 1 month: another Notice of Default mailed.
• Within 1 month: Your lender schedules a Trustee’s Sale (auction) for at least 90 days after your default.
• Three months later: On the date of sale, trustee sells the property to the highest bidder and you no longer have any claim to your property.

Do you find yourself already entangled with your lender somewhere along this timeline? If so contact Pak & Moring to discuss your situation, and see if we can help you through this process.

Additional Homeowner Resources

• Making Home Affordable – a push by the new Presidential Administration – help in refinancing and loan modification http://makinghomeaffordable.gov/index.html
• LoanSafe – a Forum and Community – featuring advice of other homeowners http://www.loansafe.org/
• US Dept of Housing and Urban Development – http://www.hud.gov/
• Veterans Affairs – Phoenix load administration and help hotlines – http://www.vba.va.gov/ro/phoenixlgy/index.htm
• Arizona Housing Counseling Agencies – approved by HUD – http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=AZ
• Fannie Mae – http://www.fanniemae.com/
• Freddie Mac – http://www.freddiemac.com/

Loan Modification

Are you a homeowner who is having trouble making your mortgage payments? Would you like to avoid foreclosure and stay in your home? If so, loan modification is a viable solution that should be explored. This process is the renegotiation of your mortgage loan in order to change the terms of your loan and enable you to afford monthly payment and avoid foreclosure. Some typical options are lowering your interest rate and extending the term of the loan. However, loan modification is only available to homeowners whose lender are willing to work with them based on hardships or financial issues that have ensued for said owners. This means that if you have experienced a loss of employment, death of a spouse, disability expenses, or sharply rising everyday expenses, the mortgage company would likely be willing to renegotiate the terms of your loan in order to keep you on track and help both parties avoid the foreclosure process. Do you think loan modification could be an option for you and your mortgage? If so, do not hesitate to contact Pak & Moring to discuss your situation, and see if their experienced firm can help you through this process.

Deed in Lieu

If a property owner does not qualify for the anti-deficiency laws under Arizona statutes, a deficiency judgment against the owner can sometimes be avoided by deeding the property back to the lender prior to foreclosure. This is known as a deed-in-lieu of foreclosure, and the homeowner is giving the property back to the lender in order to avoid foreclosure.  By accepting the deed, the lender is agreeing to accept the property for the amount that the person owes, thus eliminating any potential deficiency. However, it is also important to mention that should a homeowner deed the property back to the lender, he or she may be taxed on the amount of the deficiency that was forgiven by the lender. Help navigating these intricacies may be provided by an experienced attorney. Contact Pak & Moring to discuss your situation and see if we can aid you in the nuances of this process.

Anti-Deficiency Statute

Homeowners who choose short sales as alternatives to foreclosure often wonder if they will be held responsible for the difference between the amount their house sold for and the amount owed on the mortgage. In most cases, the Arizona Anti-Deficiency Statute will protect homeowners from having to financially answer for the deficiency between the selling price and the amount owed on the mortgage. To further explain this process, the Pak & Moring law firm has published an article regarding this state-specific statute.

Arizona’s Anti-Deficiency Statute

When a homeowner defaults on their mortgage, the lender will generally begin the foreclosure process to “repossess and sell” the house with the expectation (or hope) that it can turn around and sell the home to pay off the mortgage that has not been paid by homeowner.  This amount will generally include the amount of the mortgage, as well as any late payments, lawyers’ fees, and administrative costs incurred during the foreclosure process.  In some cases, particularly in today’s real estate market, a lender may only be able to sell the property at a fraction of the outstanding mortgage obligation.  The lender generally loses money on the foreclosure.

An example:

A mortgage company loans a home buyer $150,000 to purchase a home.  Two years later, the homeowner fails to make the payments and the lender is forced to foreclose.  When the lender sells the property, it is only able to sell it for $100,000.  This results in a $50,000 loss for the lender.

In some states, the lender may be entitled to sue the ex-homeowner for the difference ($50,000 in the example above) and receive a deficiency judgment through the courts.  Thankfully, in Arizona, there are limitations to a deficiency incurred during foreclosure.

According to Arizona law, there exists an “Anti-Deficiency” statute that essentially prevents a lender from suing the homeowner for any losses on a home after foreclosure provided certain criteria are met. Generally, a homeowner may not be sued by his or her lender if the property in question is located on 2.5 acres or less and is a single family residence or duplex.  However, this statute only applies if the decrease in value is not due to the homeowner’s neglect. (Source: Title 33, Chapter 6.1)

Does my property qualify for the anti-deficiency statute?

1. Is your home located on 2.5 acres of land or less?
2. Is your home fully built and is a dwelling for one or two families?
3. If your home occupied (at least occasionally) by you or a tenant?
4. Was the decrease to the value of your property the fault of the market (as opposed to neglect on your behalf)?
5. Was the mortgage(s) used for the original purchase of the home, or at the very least, for improvements made to the property?

If you answered yes to all of the above questions, it is likely that your property IS protected by Arizona’s anti-deficiency statute – and your lender may be prevented from pursuing you for its losses from the foreclosure . However, this may not be the case in all situations even if you meet the above criteria. Your individual factors may affect the outcome and qualification under Arizona’s anti-deficiency statute.

If you are in the foreclosure process or soon will be, you should seek the advice of an attorney in order to make sure your foreclosure does not leave you responsible for a mortgage deficiency. Contact Pak & Moring to look into all of your legal options and discuss your pending or possible foreclosure.

Foreclosures and Short Sales

Many homeowners are wondering whether a short sale is the right course of action for them in today’s market. This is the third article in a series of posts regarding Arizona foreclosure from the Pak & Moring law firm.

Judicial Foreclosures

This is a type of foreclosure that is conducted as a court proceeding, and is typically used to foreclose loans on property that serves as the basis for a mortgage that is being defaulted on. An alternative foreclosure method is non-judicial foreclosure, which involves out of court proceedings typically conducted by a trustee. In Arizona, judicial foreclosures are incredibly rare because they take up a great deal of time, allow the homeowner the statutory right of redemption (the ability to get their home back after the completion of the foreclosure), and allow for the remedies stature.

Short Sale

When homeowners begin defaulting on their mortgages, they risk foreclosure of their property by the lender. An alternative to a lengthy and stressful foreclosure process is a short sale, or the opportunity for a homeowner to sell their house for less money than he or she actually owes on the mortgage. The lender takes a loss on the loan they extended to the homeowner, but in return prevents further losses and the need to go through the entirety of the foreclosure process. This can happen only if the lender approves a discount on the mortgage and agrees to receive less money from you than you previously owed.

Why would a lender agree to a short sale?

It is in the trustee’s (lender’s) best interest to have their money earning interest by means of loans. However, a home that they foreclosed on is a “non-performing asset” in the sense that they have nothing to gain from a property that they hold on to. If a homeowner is able to do a short sale on their property, it means the bank is able to recoup at least most of their loan and put that money back into circulation in order to resume earning interest on it. Additionally, if the bank is aware of any financial hardship on behalf of the homeowner (loss of job, family issues, or injury), then they are more likely to move ahead with a short sale.

How do I know if a short sale is right in my case?

If you would like more information on whether a short sale is good choice for you, please contact Pak & Moring to discuss your situation, and see if we can help you through this process. Not all candidates for short sales are identical, and seeking consultation could be very beneficial in order to make the process go smoother.

Trustee Sales in Arizona

In these market conditions, homeowners are faced with a multitude of options when it comes to the mortgage and foreclosure process. This is the second article in a series of posts on the Pak & Moring website dedicated to educating the public on real estate law topics beginning with the Arizona foreclosure process.

Trustee Sale

The non-judicial and contractual way in which the mortgage lender can foreclose the mortgage and sell the property of a defaulting homeowner is called a trustee sale. This is exponentially quicker than filing a judicial case, and begins when the lender (trustee) deems a homeowner in default of the loan. If you are undergoing a trustee sale and would like legal advice, please contact Pak & Moring to discuss your situation.

The steps in a trustee sale are

1. When a homeowner begins falling being on their mortgage payments, their lender will send them notices and letters identifying the loan default.
2. A Notice of Sale is recorded by the trustee (lender) with the County Recorder in the county in which the home is located. The homeowner and any other interested (or invested) parties will receive a copy of the Notice of Sale and the Statement of Breach.  The Statement of Breach will identify the defaults of the loan (e.g. failure to make monthly payments).
3. The Notice of Trustee’s Sale is posted on the property itself, and the notice is also published for four consecutive weeks in a newspaper of general circulation in the county in which the home is located.
4. Trustee’s sale auction occurs sometime between the hours of 9 am and 5pm on any day except Saturday or a Federal holiday. It will also take place no fewer than 90 days after the Notice of Sale was formally recorded.* During this auction the property will go to the highest bidder, and the lender is allowed to bid.
5. Following the completion of the auction, the winning bidder receives the trustee’s deed and formally owns the property.
6. The original homeowner no longer has any legal claim to the property, and has no right of redemption in a non-judicial foreclosure.

* During the 90 days prior to the sale, the original homeowner still owns the house and can sell it up until the day of the trustee’s sale, or if a bankruptcy is filed you can sell it as part of the bankruptcy workout process

(Please note: while informative, these posts are not intended to be formal legal advice and are not completely authoritative and should not be solely relied on as a primary basis for legal action.)

Additional Links and Resources

• Veterans Affairs – Phoenix loan administration and help hotlines – http://www.vba.va.gov/ro/phoenixlgy/index.htm
• Arizona Housing Counseling Agencies – approved by HUD – http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=AZ
• Fannie Mae – http://www.fanniemae.com/
• Freddie Mac – http://www.freddiemac.com/

Arizona Foreclosures: An Introduction

Foreclosures
When you are no longer able to make payments on your home, your lender make take steps to take back the house as a way of recouping their loan. This is generally known as a foreclosure. There are different types of foreclosures, and each one will have a different impact on you, the homeowner.  If you are facing foreclosure, contact Pak & Moring to discuss your situation, to see if we can help you through this process.

Arizona residents are often faced with difficult decisions when it comes to their homes in this struggling economy.  These decisions often involve their mortgages, and whether to foreclose or short sale their property.  To offer a sense of direction and provide information of about the most common dilemmas, Pak & Moring is launching a series of articles dedicated to educating the public on these topics beginning with the Arizona foreclosure process.  Below is a look into the non-judicial foreclosure process.  

  Non-Judicial Foreclosures in Arizona
The most likely and common way that a lender will seek to reclaim assets when a homeowner falls behind on the mortgage payments is though a non-judicial foreclosure. In this instance, a court case will not be filed and financial matters will be dealt with by selling your property. This occurs because many mortgages have a “power of sale” clause in their loan agreements, which results in lenders retaining the title to your property until the entirety of the mortgage amount is repaid. The document Arizona homeowners sign at the inception of their loan, known as the trust deed (or deed of trust), gives a lender the right to sell your property to pay off the balance on your loan if you stop making payments.  In mortgages where this power of sale exists, the lender is typically referred to as the trustee. As the trustee, your lender and has the power to put the property up for sale through contractual authority and without judicial measures.

  Additional Homeowner Resources