Five things you should think about when you are having trouble paying your mortgage.

In my practice of law I frequently interview people that are having problems with paying their mortgage, because of job changes, family problems, and other life circumstances. I have found that most of the stress and worry that people feel is because of a lack of information. Essentially people fear what they don’t know, so let’s start by tackling one of the biggest misconceptions and myths.

1. The bank just wants to foreclose on me and take my home.

Banks are business that are heavily suffering a lot of challenges right now, but they still are mostly interested in making money for their shareholders, and not necessarily taking people’s houses away indiscriminately. Most homes that are in foreclosure are “upside-down,” meaning even if the bank took the property at the foreclosure sale they are not going to get back everything that was owed to them. What I find triggers this believe in the people I talk to is that the banks they are with are overwhelmed by too many foreclosures, legally and operationally disorganized, or lazy, or even a combination of all of these things. People get frustrated dealing with the bureaucracy.

2. Consider a Short sale.

Some people have thought about doing a short sale to get out from under a home that they can neither afford to pay for nor sell for the amount that they owe. Most real estate agents will be the first to tell you that they cannot give you legal or tax advice regarding a short sale. The legal and tax implications of a short sale can be more serious than you might suspect. If the property is sold for less than the amount due to the bank, you may be responsible for the difference, and could find yourself in a law suit after the short sale. Banks are also required to send out 1099’s showing the amount that you did not pay; this amount is usually considered income by the IRS. If you are considering a short sale, I recommend that you not only work with a real estate agent that has a proven track record on short sales, but that you make sure you also talk with, legal and tax professionals regarding you short sale and the consequences that it will have for you in your state.

3. Foreclosure is a long process.

Every state has a different process that the banks must take to complete a foreclosure sale. You should talk to an attorney in your state to make sure that you understand the timeline involved. Some of the people that I speak to are worried that there will suddenly be a sale of their home without their knowledge, or that somebody is going to schedule a sale when they are only a month late on payments. This is unlikely. In Utah, for example, there is a waiting period of 90 days after the first notice of default and election to sell before a property can actually be sold at auction. In addition to this 90 day period, the banks most likely will have spent several months attempting to resolve this matter directly with you, and even after the time for a sale has come, very few of the properties go to sale that quickly. I, of course, am not suggesting that you don’t take your foreclosure seriously. You should work with a competent professional or directly with the bank to get the best result from the bank, but it is helpful to know the timeline is not as rushed as some think it is.

4. Negotiate!

Most people I talk to assume that their situation is set in stone, and that they have very few options. they don’t realize that they can try to renegotiate or modify their loan to something that will work for them. Renegotiating your loan is a complex and tedious task, to be sure, but it can be done. Some times people get frustrated because of the poor communications from the bank and mixed messages they are getting. If you feel like you are getting nowhere with the bank, or getting the “run around” I encourage you to contact an attorney that works in a foreclosure area to help you cut through the bureaucracy and get through to a decision maker at the bank.

5. Help is available.

Millions of people let their homes go to foreclosure every year because they don’t realize that they can get help. There is a veritable army of attorneys, real estate agents, and other professional that are dedicated to helping people make the best out of their situation. Even if you feel like you situation is beyond repair, make a few phone calls and ask some questions. It is free and you might discover options that you did not know you had.

How Does “Hourly Billing” Work? What Can I Do to Keep My Costs Down?

Lawyers often bill by the amount of time spent working on your legal matter, a practice called “hourly billing.” Hourly billing is fair to the client and the attorney because the attorney only bills for the time spent actually assisting the client and the client does not have to pay for more than the amount of time the attorney spends on the case. The hourly pay rate is included in the retainer/fee agreement.

Hourly billing can be confusing. Here is a brief sketch of how hourly billing works.

First, the client pays a retainer up front. This is basically a deposit for the firm’s work. This money is placed into a special account called a trust account, which is only used to hold client funds. The firm does not take the money out until it has earned it. After the attorney or paralegal does hourly work, they send a report to the client. If the client does not dispute the report, the firm takes the money out of the trust account and put it into their regular business account, the operating account, to pay for the hours they work.

After the attorney or paralegal has done work, though, though, the money in the trust account is reduced. Because of this, the law firm’s report to the client is also a bill. The client still needs to pay this amount to the law firm. This money does not pay the attorney directly; instead, it goes back into the trust account so the firm can do more work.

After the case is completed, the attorney will give the client any funds that remain in the trust account.

Law offices aren’t credit card companies; they can’t give a client their services and then bill the client later. Once they have put in the time for a case, they need to be paid. The trust accounting system, combined with hourly billing, is a good way to ensure that clients and attorneys are fair with each other. For this reason, it is important that clients keep money in the trust account so the attorneys can continue to work for them.

There are other approaches to billing also, such as flat fees (the client pays a fixed amount up front and the attorney works until the case is done), contingency fees (if the client can get money from the person they sue, they give a percentage of that money to the attorney), monthly retainer agreements (the client pays a fixed monthly amount for ongoing legal representation, and combinations of any of the above, among others. At Freedom Legal, we offer many approaches to meet your legal needs.

So how can you make sure to get the most out of your attorney’s time? The best and most important way to do this is effective communication.

If your attorney sends you information, review it carefully. Many questions can be answered by examining what the attorney has already given you.
If you have questions, write them down and ask several questions together. That way, the attorney can use time more efficiently for you. Every time an attorney gets a phone call, he or she has to mentally “change gears” from whatever they were doing. This takes a little time for all attorneys. If you give the attorney a “quick phone call” every time you have a question, the attorney can’t get as much done on their different cases as they would if they could focus on one or two at a time. Asking lots of questions at once means you only have to pay for one phone call, and lets the attorney give you better work when they focus on your case.
Another way to simplify communication is to send the attorney an e-mail. This is easier for attorneys to record, letting them manage your case more efficiently; you can also ask more questions at once, letting the attorney answer them all for you at the same time. They can usually answer more thoroughly and accurately, too.
If your attorney needs information from you, get back to them quickly. When attorneys call a client several times to get the answer to an important question, it takes time away from other matters and makes the client’s case take longer to resolve. Save time and money for yourself and your attorney by responding quickly when they need information from you.
By using these techniques, you save time for yourself and your attorney. This means you are getting more legal representation for what you pay for, and your attorney can give you better legal service at the same price.

I’m being charged with a felony! How can I get this off my record?

Although many people come to a criminal defense attorney for help when charges are first filed, a knowledgeable and skilled defense lawyer can provide other valuable services as well.

One option available in Utah that often surprises people with convictions is the option to have the level of an offense reduced, even after your sentence is completed. Utah Code 76-3-402 allows the court to reduce an offense by up to two degrees of severity. This means that if someone was convicted of a Class B Misdemeanor, they can have the charge reduced to a Class C Misdemeanor or even an Infraction. If the person was convicted of a Class A Misdemeanor, he or she can get it reduced to a Class B or C Misdemeanor. A person can even get a 2nd or 3rd Degree Felony reduced to a Class A or B Misdemeanor this way.

There are some restrictions to what you can do under 76-3-402, so consult a knowledgeable attorney to find out more.

Another option that is even better than getting charges reduced is getting them expunged. Utah Code 77-40-101 et seq. describes how expungement works. After a time, a person can have their criminal record sealed. This includes restricting access to the person’s record of arrest, investigation, detention, or conviction. Although the requirements are strict and the process is not easy, expunging a criminal record is a worthwhile goal for anyone accused of a crime.

These two processes, when combined with other criminal defense techniques, provide the accused with a clear and effective way forward through the difficulties they are facing. They are limited in what they can do, however, so speak with a knowledgeable and experienced defense attorney to see how you can use these options to the best effect.