Are lenders forcing Americans into Bankruptcy?

Most people are heavily invested in their homes. Investment is of various kinds and types- financial (down payment, monthly payments, monthly upkeep, payment of taxes, etc.), emotional and time. Most people primarily have emotional ties. When they have financial problem, they want to work out a solution.

Loan modification, bankruptcy, debt consolidation, loan workout, etc. are various kinds of solution. Loan modification is one solution which has been most hyped. Government bailout has made it more dramatic. However, I have come across various situations where lenders have made people wait borrowers for loan modification for a long time and later denied it. Or, for instance, lenders are not willing to consider loan modification for 2nd homes.

Lenders can postpone foreclosure. Sometimes they don't. One of the methods to stop foreclosure is to file bankruptcy and get automatic stay protection. Other way to keep the house is to file Bankruptcy-Chapter 13. Chapter 13 is a reorganization plan where the law allows you, upon meeting the threshold requirements, to prepare a payment plan and keep the house. Under the plan, borrower/debtor makes the monthly payment as well as payment on delinquent amount to the secured lender. This plan needs to be approved by the U. S. trustee, no creditor should object and the Bankruptcy Judge has to approve it.

Lot of people, upon denial by the lender seek the protection of Bankruptcy laws. I wonder why lenders can not work something out in situation where the borrower does qualify for Bankruptcy and Chapter 13.

Internal Revenue Service and legal system find someone qualified, based on income and expenses, to file Chapter 13. However, the lender does not. I feel it is a big flaw in the system. Private lenders have too much power, too much discretion and too much of lack of compassion. It sucks!!

The problem is also complicated by the fact that lot of homes have lost their value. Therefore, even if the borrower makes sufficient income, lending guidelines do not allow refinance.

I wish there were universal guidelines (similar to lending guidelines to which licensed brokers had access to) with qualification criteria and people were not made to sweat about decision on loan modification, knew whether they will qualify or not right away and make adjustment to their finances privately and move on with new revised persona and private plan instead of having to file Bankruptcy and ruining their credit.

What are your thoughts!!

H1b employers-If Immigration comes knocking, what to do?

Immigration Service has been conducting fraud investigations and raiding H1b employers. One of the things, an H1b employer must do and have is Public access files.

H1b Employers must maintain public access files for each employee. Such files must be created within one working day after the day the LCA is filed with the DOL. The file must be maintained at the employer’s principal place of business or the place of employment.

 The public access file must contain:

·     A copy of the certified labor condition application;

·     Documentation which provides the wage rate to be paid the H-1B nonimmigrant;

·     A full, clear explanation of the system that the employer used to set the "actual wage" the employer has paid or will pay workers in the occupation for which the H-1B nonimmigrant is sought, including any periodic increases which the system may provide--e.g., memorandum summarizing the system or a copy of the employer's pay system or scale;

·     A copy of the documentation the employer used to establish the "prevailing wage" for the occupation for which the H-1B nonimmigrant is sought (a general description of the source and methodology is all that is required to be made available for public examination; the underlying individual wage data relied upon to determine the prevailing wage is not a public record, although it shall be made available to the Department in an enforcement action);

·     A copy of the document(s) with which the employer has satisfied the union/employee notification requirements of 20 CFR §655.734;

·     A summary of the benefits offered to U.S. workers in the same occupational classifications as H-1B nonimmigrants, a statement as to how any differentiation in benefits is made where not all employees are offered or receive the same benefits (such summary need not include proprietary information such as the costs of the benefits to the employer, or the details of stock options or incentive distributions), and/or, where applicable, a statement that some/all H-1B nonimmigrants are receiving "home country" benefits;

·     A summary of the benefits offered to U.S. workers in the same occupational classifications as H-1B nonimmigrants, a statement as to how any differentiation in benefits is made where not all employees are offered or receive the same benefits (such summary need not include proprietary information such as the costs of the benefits to the employer, or the details of stock options or incentive distributions), and/or, where applicable, a statement that some/all H-1B nonimmigrants are receiving "home country" benefits;

·     Where the employer utilizes the definition of "single employer" in the IRC, a list of any entities included as part of the single employer in making the determination as to its H-1B-dependency status;

·     Where the employer is H-1B-dependent and/or a willful violator, and indicates on the LCA(s) that only "exempt" H-1B nonimmigrants will be employed, a list of such "exempt" H-1B nonimmigrants;

·     Where the employer is H-1B-dependent or a willful violator, a summary of the recruitment methods used and the time frames of recruitment of U.S. workers (or copies of pertinent documents showing this information).

Will-definition and requirements

Will: American Heritage Dictionary provides the following meaning (among others):

1. A legal declaration of how a person wishes his or her possessions to be disposed of after death.
   
2. A legally executed document containing this declaration.
   

I need not say any more. It is pretty clear, at least in my mind.

A will can be handwritten or typewritten. A handwritten will is known as Holographic will and can be sufficient without any other indicia's. However, the following information must be present:

1. Identify the testator (person who is writing the Will) fully. We usually also provide address.
   
2. Revoke any previous Will or Codicil. A codicil is an attachment to a Will.
   
3. Putting a date on the Will or Codicil is important. Last one in time controls.
   
4. The testator must be of sound mind. Hence the requirement of two witnesses. Witnesses can prove whether the testator was of sound mind or not or knew what he or she was doing or not. California requires two witnesses.
   
5. Holographic will does not need to be witnessed. However, in order to avoid any possibility of any challenges around validity (sound mind, intention, etc.), it is a good idea to do it formally and in presence of witnesses.
   
6. 
   
   Proper age is important. Any adult over 18 can write a will.
   
   
   
   
   
   

A will can be changed or revoked any time. More later…………….!!

Basic Steps to Obtaining Green Card-Legally!

1. Get your credentials evaluated. First and foremost step is to get your credentials evaluated. This is the foundational question that needs to be answered- what is your qualification for a certain immigration category and whether you meet the US equivalency or other are qualified for it or not. For example if you are going to get H1b work visa status, your education must be equivalent to US college degree (B.S. degree). If you did not get equivalency to B.S. degree, then instead of filing for work visa perhaps you will need to enroll as student to complete the number of units required to get B. S. degree. And a student visa will be required.

Similarly, if you are filing for L-1 category, your should have, at minimum, worked for the company overseas for at least one year out of last years and a certain business relationship must exist between the international company and US business-among other things. If you do not meet the criteria for L1, however, if you are a national of one the countries which has treaty with the U. S., you might qualify for E-1 visa.

If you don’t meet the criteria, no matter what, you won’t qualify and will hope against hope. You will end up wasting your time and perhaps life. I have seen too many individuals being led to believe that they qualify and they end up filing wrong petitions and paperwork and eventually suffering by getting out of status.

2. Consult an Immigration lawyer. An Immigration lawyer is a specialist in this arena just like any other lawyer or professional. Most of the problems work visa holders is that they rely on co-workers, inexperienced employers or generic information on internet. “My cousin got the visa. Why can’t I get it” or “Let us make some resume up”-kind of mentality can lead you in trouble so an X-ray and the right advise by an Immigration Lawyer would go a long way.

Be prepared to meet the attorney in person. There is lot to be said about meeting someone in person, looking them in the eye and having undivided attention. Be prepared to pay a consultation fees if you want some respect and real attention. It shows your commitment to the process and respect for the professional’s time and experience. You will get the same respect and attention back. Do you like when you get paid, so do the attorneys!

3. Find a qualified employer. Once you know which visa category you will qualify in, then act accordingly and find an employer who is willing to sponsor you and meets the criteria. An employer has to be a qualified employer as well. For example, these days IT consulting companies are not doing well because of downturn in economy and are under high scrutiny. Immigration Agency is investigating about 25,000 of company which typically hire H1b workers to investigate fraud. So, if you are an IT professional, for example, seek an employer who has been in business for a little bit, has good business model (product or service), can provide financial standing and meets the other true business indices. If you are doing MS in Education, you might qualify to work for school or other such non-profit agency.

4. Get the visa and obey the law and rules. Once the visa petition is filed and approved, understand the rules and obey them. A non immigrant visa worker is typically eager to please the employer. The employer sometimes can be eager to save money and cost or make the employer work overtime without paying overtime.

There are several cultural issues which can make an employee feel intimidated. Know your rights and stand your rights. This is United States of America, not a third world country. Stand your ground.

If you or the employer break the law, both will land in trouble. For example, if you are an H1b visa worker and do not get paid regularly or are on “bench”, you are breaking the law and consequences can be serious. Similarly, an employee not providing sufficient breaks or paying employee overtime will be found violating the labor laws. Fines are hefty and can range from denial of green card petition, having to wait out of US for green card for number of years to monetary fines to jail time. Is it worth it?

5. Plan ahead for the next step. Know your goal. If you goal is to work temporarily and return to your country after sometime, that is fine. However, if your goal is to get green card, then you need to plan ahead. Know the processing time for visa petition type you will qualify under. Most people keep hopping jobs until last year of work visa. During the last year or so, they try to find an employer who can sponsor for green card and end up missing filing deadlines which would enable to them to extend the visa. It is extremely difficult to return to your home country after you have been here for a while.

A change in economy overall or financial and business conditions of employer can also result in a predicament. For example, if someone starts ahead of time in green card application through the employer, he or she can obtain 3 year visa extension on H1b while waiting for green card final step as contrasted with someone else who will have to get yearly extensions.

None of the factors I have stated are rocket -cience. I am stating the obvious. However, most people don’t want to know the simple truth. People get desperate and they go down this unending cycle of false hope, lies on immigration paperwork risking their peace and freedom. Please be realistic and follow the law.

Can lender come after the Borrower for deficiency in a foreclosure?

Most people think that their liability is limited by the security interest and if property is foreclosed they are not liable. This articles intends to clarify the (mis)understanding.

The answer is- depends. It is not a lawyer like answer. The answer really depends on whether the loan the lender had given on the property being foreclosed was a purchase money loan or a refinance loan.



If the loan the lender had given against the property was a purchase money loan, the anti-deficiency laws prevent the lender from being able to file a lawsuit for the deficiency.

However, if the loan the lender had given against the property was a refinance loan, the anti-deficiency laws allow the lender to file a lawsuit for the deficiency.

The logic is that in a refinanced loan, the borrower was able to find better loan terms or perhaps took the equity out and used it to his or her benefit. So, there is a presumption of added benefit thus allowing lenders to recover the deficiency amount.

The deficiency amount is the difference between the loan amount and amount of money recovered by the lender after foreclosure.

Purchase money loan is the original loan obtained by the borrower at the time of purchase of the property.

Refinance loan is the loan obtained by refinancing the loan to get better loan terms (interest rate, amortization period, etc.) or to take cash out for personal use or to pay off other debts.

Lot of people bought the property to get their foot in the door and got a low interest rate, mostly negative amortization loan. Later, they refinanced the loan when the property went up in value. It was easier. Lenders did not care because it is profitable business. Lenders, loan brokers, appraisers, escrow companies-everybody made money. Now, these people, if facing foreclosure, can be liable for the deficiency amount.

Lot of people know about One Action Rule and think that lender can not bring claim for deficiency. One Action rule is provision of law under California Code of Civil Procedure. Basically, it forces a lender to choose between foreclosure and judicial action which combines foreclosure and deficiency judgment. So, as the name suggest, lender has to decide which (one) form the lender will chose.

The primary method of foreclosure in California involves what is known as non-judicial foreclosure. This type of foreclosure does not involve court action. If a foreclosure is completed by non-judicial means, a second action to recover a deficiency judgment is not permitted. However, rules stated above apply under the case law that if the loan is refinance loan, the deficiency action can be brought. Most lenders will negotiate the amount though and settle for less. This can be an opportunity to negotiate the debt down.

Plan your Affairs-simple ways to avoid Legal fees, taxes and Legal costs

Legal fees are incurred when attorney gets involved or a matter has to be handled in court. Typical example is Will-contest or probate fees (attorneys fees and court fees) in Probate Court.

Taxes are incurred when someone has poor estate tax planning or no estate tax planning. Estate taxes are due nine (9) months after the death and have to paid in cash. No installments. The Estate Tax is a tax on your right to transfer property at your death. Assets have to be sold at the value they can fetch in “fire-sale”.

Legal costs such as probate fees etc. again are incurred when there is poor or no estate planning.

Here are some of the simple ways to avoid legal fees, costs and taxes (estate taxes or gift taxes).

1.       Do not die without a will. At least have a will. No will (for estate worth $100,000 or more) = Probate-for sure. Even a will does not avoid probate but it can give some direction to probate court and help move things along much faster. Something is better than nothing.

2.       Take benefit of tax laws and codes which allow lot of tax savings and cost savings by forming revocable living trust. Revocable Living Trust allows one to take benefit of federal unified tax credit system and save money on legal fees and costs. It also ensures privacy.

3.       Write out your health care and financial affairs power of attorneys which will help deal with your affairs in the event of a disability rendering you incapable of handling your own affairs. Designate someone who is capable of handling the affairs properly. Base your designation and appointment of your agent on competency and not emotion.

4.       Title your accounts properly. If you have a checking account with your son or daughter and there is not much money in the same account, designate it as payable upon death to make the transfer easier.

5.       Give gifts. Of course, everybody cannot or does not need to give gifts; however, gift tax planning is definitely required for individuals with large estates to take benefit of unified tax credit system. Proper gifting on annual basis can go a long way.

6.       In the event of a business, make sure to properly insure it and have provisions of its continuity. This is critical in the case of partnerships, for example, to express your desire about how the business will continue in the event of one partner’s death. Buy-sell agreements or 2^nd to die policies are great way to make up for the loss and ensure smooth continuity of the business.

7.       Benefit from Asset Protection strategies to avoid lawsuits or potential liability.

What is Probate-the basics.

Probate is the Court-administered process which facilitates the transfer of assets of deceased (someone who died) to his or her beneficiaries/next of kin. In California, if the assets owned by deceased are $100,000 or above. The assets subject to probate are those which are not subject to right of survivorship or transferable upon death. A typical example of assets transferable under right of survivorship is real estate owned as community property or joint tenants. An example of property transferable upon death is Payable on Death bank accounts.

So, if someone dies with a property owned as joint tenant and a POD bank account, there will be no probate. This avoids probate but there are other estate tax and income tax related consequences which render these methods expensive later on (higher tax consequences).

Purpose of the probate is for the court to take an inventory of all the assets owned by the deceased, make sure that all creditors are paid, handle any and all challenges to will (if any), and then transfer the balance to the persons named in the Will or if there is no will, to transfer the property to lawful heirs under Probate Code.

So, in reality, if someone has a Will and has assets over $100,000 in assets, the estate will go through probate.

Similarly, if someone dies without a Will, and has assets over $100,000 in assets, the estate will go through probate.