Mortgage Lifecycle Events Mary Kate Truss, William Sims, Tobi Kareem, TJ McElhinney

BANKRUPTCY

Introduction to Bankruptcy Purpose → to mitigate the effects of financial failure Mitigation is good for everyone The Individual The Creditor Organization The Business/ “The principal purpose of the Bankruptcy Code is to grant a fresh start to the honest but unfortunate debtor.” – The Supreme Court of the United States - Bankruptcy serves to mitigate the effects of financial failure. - Bankruptcy is a process that takes places in federal bankruptcy court. A bankruptcy “case” is a civil action which concerns a particular debtor. - The bankruptcy code is designed to minimize the economic waste of a debtor and maximize equitable distribution between creditors.

Introduction to Bankruptcy Relief Individual Possibility of a fresh start through the bankruptcy discharge Ability to restructure their debts in certain circumstances Creditor Pro-rate distribution of the debtor’s non-exempt assets, in liquidation Debtor must pay creditor at least the his liquidation amount as a condition of reorganization or rehabilitation - For individuals, the bankruptcy code provides the possibility of a fresh start through discharge. - Discharge voids any judicial judgments of the debtor’s personal liability on all claims prior to the commencement of the bankruptcy case. - Discharge also is a statutory injunction against the continued prosecution of any action that would lead to such a judgment. - It is of singular importance to the individual. - For Businesses and Organizations, the bankruptcy code allows reorganization. - In reorganization, businesses can take advantage of bankruptcy code to reorganize into a more profitable structure. - Creditors benefit from bankruptcy because the code helps secure prompt and effectual administration and settlement of the estate. - Creditors of equal priority receive ratable and equitable distributions.

Introduction to Bankruptcy There are options! Relief under bankruptcy can be filed under chapters 7, 11, 12, 13, & 15 Individuals most commonly file under either 7 or 13 Relief under bankruptcy can be filed under chapters 7, 11, 12, 13, & 15. Chapter 7 – Liquidation – is the sale of a debtor’s nonexempt property and the distribution of the proceeds to pay creditors. Chapter 11 - Corporation or Partnership - Usually proposes a plan of reorganization to keep the business alive and pay creditors over time. Chapter 12 - Family Farmer or Family Fisherman - Allows financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts. Chapter 13 - Individual Debt Adjustment - Allows a debtor to keep property and pay debts over time, usually 3 to 5 years. Chapter 15 - Allows a corporate bankruptcy (insolvency) proceeding outside the U.S. can obtain access to the United States courts. It allows cooperation between the United States courts and the foreign courts, as well as other authorities of foreign countries involved in cross-border insolvency cases. Generally, most individuals file bankruptcy under chapters 1 or 13, which will be discussed in further detail today.

Introduction to Bankruptcy Commencement & Administration Filing Voluntary Involuntary Automatic Stay Bars anyone from taking action to recover a debt - When filing for bankruptcy, the person can file voluntarily, which is the most common method, or the creditors can file on behalf of the debtor, which is known as an involuntary filing. - Once the case is filed, the court imposes an automatic stay. - An automatic stay bars anyone from taking action to recover a debt and bars anyone acting to affect property of the debtor.

Chapter 7 : Liquidation The sales of debtor’s non-exempt property to pay creditors– Liquidation. It may provide for keeping your : It is a procedure in the court set out in the 7th Chapter of Bankruptcy code. It is basically the court, converting your assets to cash – Liquidation by selling them Chapter 7 may provide for Forgiving unsecured debts A fresh start and discharged debt

Chapter 7 : Liquidation It offers a fresh start. Discharge may be denied if debtor fails to 1. Produce adequate financials. 2. Explain any loss of assets, etc. Following debts are not discharged: Child support and Alimony, Certain taxes, debts for death or injury caused by debtor A discharge is available to individual debtor and not partnerships or corporation An individual is able to file a schedule of ‘exempt’ property, to protect some property from claims However, the court may deny a Chapter 7 discharge if debtor fails to keep or produce adequate financial records Debts that are not discharged include, but not limited to Child support Certain taxes Debt for death penalty or personal injury caused by debtor.

Chapter 13 : Wage Earner’s Plan Process Complete official bankruptcy forms Provide recent tax return or transcript Certificate of Credit Counseling Create 3-5 year plan

Chapter 13 : Wage Earner’s Plan Advantages Protects debtor and co-debtors Consolidates loans Assets are not liquidated Stop foreclosure proceedings

Bankruptcy Technology designed to help track and manage through the bankruptcy lifecycle Assists Servicer with complying with timelines set fourth by the bankruptcy courts Integrates with the system of record Streamlines communication between the Servicer and Vendor Saves time in the bankruptcy process LoanSphere Bankruptcy is technology designed to help track and manage through the bankruptcy lifecycle LoanSphere Bankruptcy assists servicer with complying with timelines set forth by the bankruptcy courts It also integrates with the system of record It streamlines communication between the Servicer and Vendor Lastly, it saves time in the bankruptcy process

Bankruptcy Automation Bankruptcy Notification Bankruptcy Case Monitoring Bankruptcy Close Bankruptcy Proof of Claim Bankruptcy Notice of Mortgage Payment Change Bankruptcy Notification allows integration with a vendor where Bankruptcy Case Monitoring allows the servicer to stay informed of docket changes throughout the process. Bankruptcy Close automates the closing process in LoanSphere BK and MSP Bankruptcy Proof of Claim allows servicers to define, modify and approve a Proof of Claim using the US Bankruptcy Court approved 410 and 410A forms which can be filed electronically by the servicer. Notice of Mortgage Payment NPC solution automates workflow and forms generation. Servicers are able to define, modify, and approve the US Bankruptcy Court approved 410S1.

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