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I read this comment from another bankruptcy attorney today:
“Help me understand why the home value (Z)estimates from a company that lost nearly $1 billion of its own money by relying on those (Z)estimates to play in the house flipping market are reliable.”
Home values provided by Zillow are important in bankruptcy cases, even if those values tend to be inflated.
The first thing I do when speaking to a prospective client who owns a home is to type their address into a Google search. Up pops a list of home valuations, and Zillow is almost at the top of the list.
Why do we search the Zillow value? Because only $60,000 of a home’s equity is protected in a Nebraska bankruptcy case, and it is extremely important to get an accurate valuation of a client’s home.
County assessor values tend to be low. Clients tend to underestimate their home’s value. So it is very important that a bankruptcy attorney look at outside sources.
We look at the county assessor’s webpages, Zillow, Realtor.com, and other valuation sites to get an idea of a home’s value.
What you should know is that the bankruptcy trustee also looks at these valuations as well.
If a Chapter 7 Trustee sees a Zillow value that is substantially higher than the value listed on the bankruptcy schedules, problems will arise. The Trustee may have a real estate agent inspect the home to see if it is worthwhile to sell the home.
Chapter 7 Trustees are paid a commission to uncover undervalued real estate and to sell homes if more than $60,000 of equity exists. That’s why we cannot ignore those Zillow valuations (“Zestimates”).
Problems with Zillow Values:
- Damage to homes. Zillow does not know if your home has a cracked foundation or a leaky roof.
- Deferred Maintenance: Zillow does not see if you have kept the home up to date with regular maintenance.
- Dissimilar Neighborhoods. Perhaps your home is next to a fancy neighborhood, so the sales price of those homes tends to artificially inflate the Zillow value.
Are Zillow values accurate? Sometimes yes and sometimes no. But they are always relevant and must be addressed.
Explain Why Zillow is Wrong:
If a Zillow value overstates a home’s value, the bankruptcy schedules must address that issue. The home description should list the Zillow value and then explain why it should be ignored. (“Zillow value is inaccurate due to crack in foundation and leaky roof.”)
Online valuations are part of the new bankruptcy landscape. It’s a factor we cannot ignore.
Image courtesy Flickr and ajay_suresh
"Jim was a tremendous help in sorting through a complex corporate structure and personal finance situation. Not only did he help with 3 separate bankruptcy filings, but he advised and appeared as needed in state court litigation and kept us calm during a nearly 5 year-long process and a very emotional time. We are so grateful for his counsel and support and the successful outcomes he achieved for us."
"Jim was a tremendous help in sorting through a complex corporate structure and personal finance situation. Not only did he help with 3 separate bankruptcy filings, but he advised and appeared as needed in state court litigation and kept us calm during a nearly 5 year-long process and a very emotional time. We are so grateful for his counsel and support and the successful outcomes he achieved for us."
HouseDigest.com has an excellent article about What You Need To Know About Buying A Home After Bankruptcy. The article can be found at https://www.housedigest.com/1179558/what-you-need-to-know-about-buying-a-home-after-bankruptcy/
Jim Shenwick, Esq has helped many bankruptcy filers rehabilitate their credit after a bankruptcy filing so they can purchase houses or lease automobiles. Jim Shenwick, Esq [email protected] 917 363 3391
HouseDigest.com has an excellent article about What You Need To Know About Buying A Home After Bankruptcy. The article can be found at https://www.housedigest.com/1179558/what-you-need-to-know-about-buying-a-home-after-bankruptcy/
Jim Shenwick, Esq has helped many bankruptcy filers rehabilitate their credit after a bankruptcy filing so they can purchase houses or lease automobiles. Jim Shenwick, Esq [email protected] 917 363 3391
An email from a client (edited to preserve confidentiality):
“Good morning. On October 31, 2022, [my husband] had to have surgery to remove his gallbladder. The hospital is requiring payments of approximately $400 a month on the $5,049.97, a sum I am unable to accommodate with our budget. My husband’s income makes us ineligible for an adjusted payment plan. The representative offered to help us apply for a loan facilitated by the hospital through a local bank, but I informed her that I can’t consider any loan without speaking to you. What, if any, actions should be taken in regards to these bills as relates to our bankruptcy?”
This seems to be a new trend with hospitals. They help customers to get loans to pay the medical debts.
I told my client the loan helps the hospital, not them. A loan involves interest, late fees, etc. How does this help my client?
My client is in the middle of chapter 13. I informed them that the hospital could send the account to collection and they may be sued, but their wages could not be garnished until the bankruptcy was over.
Push back, I told them. Tell them the court will not approve the loan. This is not like getting a car loan, something you need for work. This just changes the name of the creditor from Hospital to Bank.
I told the client to review their budget and pay what they can afford. Just make payments and don’t worry about pleasing the hospital.
“The hospital is requiring payments of approximately $400 a month.” Requiring? How are they “requiring” this? This is just old-fashioned arm twisting. My client is in Chapter 13. Post-petition wages are considered to be property of the bankruptcy estate and cannot be garnished until the case is completed.
Creditors are always demanding full payment or monthly payments that are not affordable. They give the false impression that they will not accept smaller payments. Don’t believe them.
Bill collectors accept every payment you send them. The hospital demands $400 per month. Can’t afford that? Send them $200. Keep sending the payment. They will accept every dime you send them.
Image courtesy of Flickr and dreamingofariz.
Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15min
Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15min
Diane is honored by Legal Services Corp – Pro Bono Service Award for establishing the Self Help Center at the Arizona Bankruptcy Court.
Six Arizona Attorneys Recognized For Their Pro Bono Efforts
January 31, 2023 Terri Jo Neff, Arizona Daily Independent
Those honored by Arizona Supreme Court Vice Chief Justice Ann Scott Timmer during LSC’s Increasing Access to Justice Reception were James Conlogue, Diane Drain, David Engelman, Edwin Ramos, Kelly Rowe, and Benjamin Smith.
Six attorneys from across Arizona were recognized by the nonprofit Legal Services Corporation (LSC) last week for their significant contributions to promoting access to justice through pro bono services.
The LSC is an independent nonprofit established by Congress in 1974 to provide financial support for civil legal aid to low-income Americans. Its grantee organizations serving Arizona include the Community Legal Services, Southern Arizona Legal Aid (SALA), and the Window Rock-based DNA-Peoples Legal Services.
Those honored by Arizona Supreme Court Vice Chief Justice Ann Scott Timmer during LSC’s Increasing Access to Justice Reception were James Conlogue, Diane Drain, David Engelman, Edwin Ramos, Kelly Rowe, and Benjamin Smith.
Conlogue served as a judge for the Cochise County Superior Court for 26 years before retiring in 2020. Since then, he has provided pro bono services through the Southern Arizona Legal Aid (SALA) Family Law Clinic and Rural Clinic by heading up clinics which have had more than 300 attendees. Conlogue was also recently appointed to SALA’s Board of Directors.
Drain, who founded the Law Office of D.L. Drain, P.A. in 1990, began providing pro bono legal assistance in bankruptcy cases in 1994 through the Volunteer Lawyers Program (VLP) for Community Legal Services (CLS). In 2005 Drain established the Self-Help Center at the Arizona Bankruptcy Court. She also serves on the VLP’s advisory committee and provides free consultations through the U.S. Bankruptcy Court Self-Service Center.
Engelman is attorney and shareholder at Engelman Berger, PC. who has volunteered with CLS for 41 years. During that time he has provided several thousand hours of pro bono services. In 2022, he helped DNA-Peoples Legal Services establish a bankruptcy clinic and trained its in-house attorneys on handling bankruptcy cases.
Ramos, an attorney and managing partner at De La Ossa and Ramos PLLC, has volunteered since 2016 on minor guardianship cases for the Children’s Law Clinic offered by CLS’ VLP. He also regularly assists CLS’ Medical Legal Partnership by offering brief services to applicants, and recorded more than 200 hours of pro bono legal assistance in 2022.
Rowe is an author and volunteer attorney in Flagstaff offering pro bono services for immigration cases with DNA-Peoples Legal Services since 2015. The complexity of immigration cases means she has serves some clients for several years.
Smith, who has worked with SALA’s Family Law Clinic since 2007, dedicates his legal practice to pro bono work, primarily assisting clients with domestic violence cases. He is estimated to have assisted 8,700 SALA clients through roughly 1,650 clinics and 135 direct representation cases.
Musings by Diane
Humans are capable of so much. They can help, or they can hurt.
My Grandmother, Flora Frye, was my muse. She was a force to be reckoned with. She was an Army Staff Sergeant in World War II, and brought that same commitment to fighting for those who could not protect themselves to Yuma, Arizona. She lobbied for rights for women, displaced homeowners, and anyone else who needed help. As a House Majority Leader told me – “if Flora Frye wants something, just give it to her because she does not stop until she gets her way.” She received her Master’s degree from the Northern Arizona University at the young age of 75!! Who do you know that could match her energy for life and learning?
That was my grandmother, and I think of her every day. She would be proud to learn that I followed in her footsteps – establishing a Self-Help Center at the Arizona Bankruptcy Court, volunteering for Community Legal Services, and several other community based organizations. All those that I help through those programs are a direct result of the role-model created by Grandma Frye.
I urge each of you to be Grandma Frye to your own family and community.
– Diane L. Drain
Resource Links / References / Citations (internal / external links)
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Beginning in January 2023, millions of small businesses will have to budget for a new monthly expense. During the pandemic, federal loans granted to small businesses will begin repayment, according to a story at https://abc11.com/small-business-ppp-loans-pandemic/12721676/Many small businesses will now have to begin repaying their SBA EIDL loans despite a difficult business environment, including high interest rates and inflation. This may result in many businesses filing for chapter 7 bankruptcy or closing. Jim Shenwick, Esq [email protected] 917 363 3391
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