Michigan Collection Law Blog

The Federal Fair Trade Commission just issued an advisory opinion to the American Collectors Association. In that opinion, the FTC answered the question, what is a collector supposed to do when a debtor sends in a cease and desist communication letter to a collector while, at the same time, disputing an item on his credit report. The problem is that under the FDCPA, when a third party debt collector receives a cease and desist letter, he is supposed to stop all communication with the debtor, except in certain circumstances. BUT....when the debtor disputes an item on his credit report, a collector may conduct an investigation, but can the collector report his findings back to the consumer if that consumer also sent in a cease and desist letter? The FTC said yes, that indeed, the collector can report his findings and conclusions that result from his investigation.

While ACA has posted a Youtube video on receiving this advisory opinion, it sure raises a lot of questions regarding what the real effect of this opinion will be. For example:

1. After the collector (who has already received a cease and desist letter from a consumer) calls the consumer back and informs him that the debt belongs to the consumer, can the debt collector continue, in that same conversation, to ask for payment from the consumer?

2. if the collector finds that in fact, the debt did not belong to the consumer, does the consumer have an FDCPA action against the collector and collection agency for previously alleging that a debt was due when, in fact, no such debt was ever due?

3. Why would any consumer dispute a trade line with a collection agency. That is just plumb wrong. Consumers, please posit your disputes with the credit reporting agencies. Then and only then have you preserved your rights under the Fair Credit Reporting Act. Complaining to the lender does not preserve your rights.

As you can see, this advisory opinion may raise more questions than it may solves.

I never blog about pending litigation but in this case, I am going to make an exception.

I have filed an Fair Debt Collection Practices Act case against a collection agency. Allegedly, that agency called my client and threatened him with a wage garnishment if he did not pay the debt. Since the agency did not have a judgment, its threat of a wage garnishment is a per se violation of the FDCPA.

A few days ago, I received a telephone call from the agency's attorney. He said that the threats that my client allegedly received from the agency, never happened (yeah...right....). And then, he emailed me an audio file of the conversation between our clients. His agency was well protected by having that audio file. I am still waiting to hear back from my client about his response to that audio file, but I am pretty confident that if he does respond, he is not going to have enough good information to convince me to continue representing him. While I am no fan of collection agencies, I tip my hat to this agency because it was smart enough to take precautions to protect itself. I am certain that the money it saved today by staving off my lawsuit was enough to pay for its recording system. Nice job, agency!

Moral of the story to collection agencies - Invest is a decent audio recording system so that when your agents contact debtors, that you can prove that no violation of the FDCPA took place. These audio recording systems are cheap enough that when they save you from one lawsuit, they will have paid for themselves.

Michigan's new foreclosure law becomes effective on July 5, 2009. I think it will be a great help to home owners who are facing foreclosure. While there are other programs at the federal level, the items contained in the new law should be very helpful. Until this law was passed, foreclosures in Michigan were streamlined. A foreclosure by advertisement, for example, was designed to quickly and as cheaply as possible, return the property to the lender. In light of our current economic mess, the new statute appears to reconsider Michigan's long standing policy of returning the property to lenders. The policy is poised to make both lenders and borrowers think about new alternatives to foreclosure such as loan modification.

The new law has some very good features such as:

1. Lenders must send a new notice to borrowers. In this notice, the lender must cite the reason for the foreclosure, the identifying information for the mortgage holder as well as the contact information of the person who, on behalf of the lender, has the authority to enter into any loan modification. This feature, alone, is totally awesome. I have worked on a some loan modifications and I can tell you that trying to reach some lenders is just impossible. I had received automated answers to their telephones such as "All of our agents are busy, please call back later." Hell, if I ran my business like that, I would run it directly into the ground. Nevertheless, these days are now over (or should be). In any event, if you receive such a notice, you should keep a log of every time you have tried to contact the lender's contact person.

2. The notice referred to above also will include a list of housing counselors. This list is prepared by the Michigan State Housing Development Authority. Within 14 days after the notice is sent, a homeowner may request a meeting with the bank's contact person to discuss a loan modification. If the homeowner requests such a meeting, then foreclosure may not be started until after 90 days from the date of the original notice.

3. The homeowner can contact a housing counselor within 14 days of the letter, and the housing counsel will contact the lender's representative to set up a meeting. If the homeowner requests a meeting, then foreclosure may not start for a period of 90 days from the date of the letter. The meeting has to take place in the county where the property is located.

4. Beware, however, that after the borrower has requested a meeting, the lender has the right (and most likely will) ask the homeowner to produce certain financial information. The borrower must provide the requested docs. Most likely, this document request, at a minimum, will include tax returns, pay check stubs and bank account statement statements for the past three years.

5. If no agreement is reached between the lender and homeowner on the loan, then a separate analysis must be prepared to show whether the homeowner may have otherwise qualified for loan modification under a modified version of President Obama's Home Affordable Modification Plan (HAMP). Under this analysis, a homeowner may qualify for a loan modification if one's housing related debt ("HRD") is 38% or less of one's gross income, on an aggregate basis. HRD is determined by:

a. The interest rate may be reduced to a floor of 3% for a period of 5 years;
b. The loan may be amortized over a period of up to 40 years from the date of the loan modification;
c. Part of the unpaid balance of the loan may be deferred, up to 20%, until maturity, refinancing of the loan or sale of the property;
d. Late fees may be reduced or eliminated.

This new legislation will undoubtedly slow down the foreclosure beast that has beset, if not blind sided the residents of our fine state.

If you are a homeowner that is facing foreclosure and you receive a notice under this new statute, you must take action if you are going to avail yourself of the benefits of this law. Contact a housing counsel. Have that housing counsel make an appointment to discuss loan modification with a lender's representative. DO NOT GIVE UP HOME AND HOPE FOR A MIRACLE. I say this because in times of crisis, I am sometimes guilty of doing this. Don't do it. It usually does not end well. Take the bull by the horns, and make that phone call.

Get your financial documents such as your tax returns, pay stubs and bank statements so that you are prepared to meet with the lender's rep and your housing counsel and make some good things happen.

I tip my hat to Ms. Michelle McLean, an associate with the law firm of Klyczynski, Girtz and Vogelzang in Grand Rapids. Ms. McLean is a lawyer who wrote a great article about resources available to consumers who face foreclosure, in the Michigan Lawyers Weekly of May 25, 2009.
In her article, Michelle suggests that homeowners facing foreclosure should consult the following free resources:

Michigan State Housing Development Authority has established a "Save the Dream" program that can be reached at (866) 946-7432. They will connect you with a local housing counselor.

Another resource is the HopeNow Alliance. This is a non profit organization comprised of some of the largest lenders in the United States. Most lenders want people to stay in their homes because the cost of owning a home for a lender is extraordinary. When a lender takes a property back, it must still pay the taxes and utilities on it. Further still, it has to hire a property management company to go through the house, clean it up for resale and then periodically check on the property to make sure that nothing has happened to it. These costs only drag a bank's profits downward which makes for very unhappy shareholders and a nervous FDIC.
It is a great idea to consult with these free resources in conjunction with a credit and collection attorney. If you simply do not have the resources to stay in your home, you should think about the following:

a. Is there any deal that you can make with the bank that will allow you to keep your home:
b. If you cannot keep the home, how much time can you expect to stay in the home before you absolutely have to leave;
c. an exit strategy that causes minimal disruption to your family and credit;
d. new housing for your family in light of your future income prospects and expectations;

I don't want to sound like an infomercial, but these items should be discussed and decided in advance of approaching your lender for a loan modification. Gary Nitzkin at Nitzkin and Associates can help you through these issues.

Lessons to be learned

1. If you are a homeowner facing foreclosure, do not go it alone. There are valuable resources out there to help you stay in your home...USE THEM. Remember, the lenders want you to stay in your home as much as you want to stay there. The banks do NOT profit from taking your home and evicting you.

2. In conjunction with working with these free resources, it is wise to consult a credit and collection attorney. He or she can help you formulate a negotiation strategy and if necessary, an exit plan. These are your best resources.

Since January 1, 2008, the Federal Trade Commission Red Flag Rules has required businesses to establish policies and procedures for identifying identity theft. These rules require 4 things: 1. That business have reasonable policies and procedures in place to identify the red flags of i.d. theft; 2. the business must have a program designed that actually implements the program of identifying the red flags; 3. The businesses' program must have policies that identify the specific action that business will take when it spots the red flags of i.d. theft; and 4. the businesses' program must include a procedure for periodically reevaluating the red flag program. So the big question is who has to have such a red flag program. According to the FTC, the program applies to "financial institutions" and "creditors." The word "creditors" appears to include those businesses that don't even think of themselves as creditors. Indeed, the FTC states:

The definition of “creditor” is broad and includes businesses or organizations that regularly defer payment for goods or services or provide goods or services and bill customers later. Utility companies, health care providers, and telecommunications companies are among the entities that may fall within this definition, depending on how and when they collect payment for their services. The Rule also defines a “creditor” as one who regularly grants loans, arranges for loans or the extension of credit, or makes credit decisions. Examples include finance companies, mortgage brokers, real estate agents, automobile dealers, and retailers that offer financing or help consumers get financing from others, say, by processing credit applications. In addition, the definition includes anyone who regularly participates in the decision to extend, renew, or continue credit, including setting the terms of credit – for example, a third-party debt collector who regularly renegotiates the terms of a debt. If you regularly extend credit to other businesses, you also are covered under this definition.

Once you are deemed to be covered by these rules, you have to see if you have any "covered accounts." There are two kinds of covered accounts. The first type are consumer accounts for which your customer incurs debt for personal, family or household use and is designed to permit multiple payments or transactions. The FTC gives examples such as utility bills, credit card accounts, and mortgages. The second type of account are those "for which there is a a reasonably foreseeable risk to customers or to the safety and soundness of the financial institution or creditor from identity theft including financial, operational, compliance, reputation or litigation risks.

So what does this mean to us lawyers and you business owners? We are no longer able to cast a blind eye to what may appear to be red flags of identity theft. We are now participants in the game of helping to catch the bad guy. This means that we can no longer sit on the side lines and hope that the authorities do their job as we look idly on. So whats next? If I were you, I would start developing my program. I certainly don't want to the be the first test case that the FTC accuses of violating this new law.

I just read the Sixth Circuit's opinion in Miller v Javitch, Block & Rathbone, 561 F.3d 588 (2009). This case holds good news for debt collection lawyers. In that case, Miller contends that JBR violated the Fair Debt Collection Practices Act by using false, deceptive, and misleading language in a debt-collection complaint. The state court "COMPLAINT [*3] FOR MONEY LOANED" read as follows:

1. Plaintiff acquired, for a valuable consideration, all right, title and interest in and to the claim set forth below originally owed by Defendant(s) to ASTA II/PROVIDIAN -03 /NAT As a result of the assignment, Plaintiff became, and now is, the owner of funds loaned on account number xxxx-xxxx-xxxx-0736.

WHEREFORE, Plaintiff prays for judgment against Defendant (s) in the amount of $ 4,604.56 with statutory interest from the date of judgment, costs of this action, and such other and further relief as the Court deems just and proper under the circumstances.

The FDCPA uses the "least sophisticated consumer" standard to determine whether something is confusing or misleading. This is a very low standard and hence, its very easy to violate. One would think that the the part of the complaint that refers to "ASTA II/PROVIDIAN -03 /NAT As a result of the assignment," would easily qualify as a violation of the FDCPA. The court did not think so.

In a very well worded opinion that court held:

[Not] everything a lawyer writes during the course of litigation must be stated in plain English understandable by unsophisticated consumers. However desirable that might be, it is not a command to be found in the FDCPA.. Section 1692e does not require clarity in all writings. What it says is that "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. A rule against trickery differs from a command to use plain English and write at a sixth-grade level. . . . Whatever shorthand appeared in the complaint--the payments system through which credit-card slips flow is complex, and even many lawyers don't grasp all of its details--was harmless rather than an effort to lead anyone astray. It was the judge, not [the plaintiff], who had to be able to determine to whom the debt was owed, for it is the judge (or clerk of court) rather than the defendant who prepares the judgment specifying the relief to which the prevailing party is entitled.

So what does this mean to us collection attorneys? On the surface it appears that the court is holding that the FDCPA is inapplicable to pleadings. When the court states that it is only imporant for the judge or the clerk of the court to know what you are talking about in pleadings, the Sixth Circuit is pushing aside the communication strictures of the statute. Yet, I think this would be too broad of an interpretation because the court fell short of plainly stating that the FDCPA does not apply to pleadings. If it had meant to say that, it would and could have done so in a much more direct fashion. The court simply did not go that far. How do we read this case to stay out of trouble?

I think Javitch could have done away with the gibberish about the assignee and simply named it plainly. By failing to do so, it simply opened the door and invited an FDCPA claim in. Had Javitch simply named the assignee of the Plaintiff's credit card debt, Ms. Miller could never have been heard to complain about any FDCPA violation.

Moral of the story for collection attorneys - Do not think that this case gives you carte blanche to write your pleadings in legalese or in industry short hand. While the court sided with Javitch in this matter, it did NOT go as far as to say that the FDCPA does not apply to pleadings. The better practice is to write your pleadings in plain English as if you were explaining the complaint to the least sophisticated consumer. Your malpractice insurance carrier will thank you.

Social networking websites such as Facebook and Myspace have offered us new opportunities to reach out and communicate with one another. For the less scrupulous collection agencies, it has offered many other possibilities.
Consider the the case of JP Morgan Chase and its collection agency, Universal Tracing Services, Inc. Chase's customer, Mr. James Ricobene fell behind on his Mercedes payment. Chase hired UTS to collect on this debt. UTS, priding itself on using "the latest technology" to track down "the harest to find missing persons and debtors" decided to post the following demand letter on Mr. Ricobene's daughter's Myspace account:

We have been retained by, JPMorgan Chase Bank, to locate and repossess their missing collateral a 2007 Mercedes GL 450. Please contact our office immediately so we can discuss the peaceful recovery of the collateral. Failure to contact me will result in further action against your father James Ricobene. Legal options range from having a replevin order served on you or even worse reporting the collateral as stolen to local authorities in Illinois under the A.R.S. act 18-5-504. Failure to comply with this notice of surrender is a class 5 felony and carries a maximum penalty of imprisonment for two years plus all applicable surcharges. You must contact the writer within 5 days to prevent this action from taking place. You can contact me directly at 800-667-7704 ext 222 or directly at 604-267-1581 ext. 222

Chris Flanagan
Senior investigator

This was posted on March 20, 2009. Not only did UTS violate a host of Fair Debt Collection Practices Act laws, it has embarrassed and mortified the daughter as well. This makes two new Plaintiffs who can and should sue UTS and JP Morgan Chase. UTS obviously views social networking as an opportunity to cyberstalk. Gina Ricobene has filed her lawsuit against Chase and UTS. Her father also filed his complaint as well. There are certain lines that no one should ever cross. Using a daughter to reach a father in order to collect a debt is shameful, vile and as a father, it infuriates me. Click here for more information about this story.

But wait...I got another for you. Auto Financing Network is developing a reputation for its "no hostages taken" policy towards debt collection. It financed a car for Ms. Jennifer Dicks. When she two payments on her car note, APN repossessed it. When she went to pick up the car from APN, they informed her that they had hidden a GPS device in her car to track its whereabouts. It gets better. APN decided to shame Ms. Dicks when she fell behind again in her payment, by purchasing an URL that matches her name with the site titled "Jennifer Dicks isn't paying for her Cavalier."
If this weren't enough, APN then began a campaign of sending text messages to Ms. Dicks. Some excerpts, allegedly are as follows:

You need to call me. This has put me in a bad spot. I know you don't give a shit but I do. I need the car back.

April 10:

Can you quit playing games and give me the car?

April 11:

I'm 2 miles away coming to your house...are you home? Neeee the car.

April 15:

You need to call me...This isn't fair to me. Do you have no soul?

April 18:

All you do is lie. It isn't registered to you so call again. I wish you died when you fell off the roof. If ur not married good. He can do soooo much better.

And:

LOL. I'm sure he is really good. You will need him because az allows us to call the car in stolen. Please send him this, you are fucked!

As you can see, social networking has really provided people with new opportunities to connect and cyber stalkers with new opportunities to step into crap and get in trouble.

Moral of the story:

Debt Collectors - Web 2.0 does NOT provide you with any special exemptions from the FDCPA. IT STILL APPLIES which means you have to treat debtors as human beings. Next, remember that debtors are not failing to pay because they don't like you, so stop making debt collection a personal thing. Its about business and dollars. There no room for hurt feelings and such in debt collection. Just like Tom Hanks said "There's no crying in baseball" and there's no whining in debt collection. Here is my last bit of advice for you in this post; charm, kindness and consideration always win the day. Be kind and charming always and you will always avoid getting into trouble. Seriously...think about it.

Debtors - Learn from Mr. Ricobene and his daughter. They stood up to these tyrannical if not manical debt collectors. They will ultimately prevail and win sizable awards. If you have been disrespected, email me, Gary Nitzkin or call me at (888) 293-2882.

I just read an interesting article in the National Law Journal of April 6, 2009 about Payday loan companies that are affiliating with Tribal American nations in order to avoid regulation by the United States. Is this legal one may ask?

For the past few years, many states have begun to regulate these payday loan companies. Between the processing fees, interest rates and short terms of the loans, their effective rate of return is often between 600% - 800%. It is an obnoxious way to gouge a necessitous borrower. Yeah, yeah, whine whine, the payday lenders will cry "its all about risk and there is a lot of it with these borrowers." Screw them. Its all about the bottom line and there is even more of that than there is risk. I don't begrudge anyone a fair rate of return. It just turns my stomach when a fat cat lender holds his dollars over a borrower's head and makes him jump through rings of fire for the loan. I am a collection attorney and yet this kind of debt nauseates me. I used to collect that crap and now I won't touch it. Old age, I guess...ok...back to our story.

In the past two years, many states out west, such as Colorado, West Virgina, California, Nebraska and Oklahoma have passed laws that regulate these payday loan companies and the fees that they can charge. Indeed, Michigan is now one of those states that regulates these payday loans. Not having the desire to be regulated or the conscience to do the right thing, some of these lenders have decided to incorporate under the laws of Indian. Humorously, some consumer groups have labeled these Indian groups as "rent-a-tribes." Anyways, these payday lenders are now claiming sovereign immunity when served with state court subpoenas. Essentially, the payday cowboys are telling the states to buzz off with their regulations and such, and that the states cannot touch them. Are they right? They may legally be correct.

Colorado has decided to take on this challenge to see who is ultimately correct. Its court of appeals has held that if a payday loan company is not "sufficiently affiliated" with an Indian tribe, that it may be subject to a court's subpoena and subsequently, it may be regulated. The court then set forth a test to define what "sufficiently affiliated" means. Naturally, neither the payday loan companies nor the Indians care to have their claims to sovereign immunity questioned. This is a fascinating issue that I will follow and report upon later. I will keep you posted as events unfold.

So, what do you think? Should payday loan companies be allowed to scalp the under privileged with the help of our Tribal American brothers? Does anyone else see irony in this?

For the past few years, I have been blogging on how collection agencies have been spiraling out of control. Late last year, the FTC assessed the largest penalty it ever has against a collection agency for harassing and intimidating debtors. I found this blog post about Academy Collection Service, Inc. and its owner, Keith Dickstein. The FTC assessed a penalty of $2.25 million for their actions. Guys, it ain't just me noticing how collection agencies and collectors are losing control.

Today, perhaps more than ever, its important for people to know your rights under the Fair Debt Collection Practices Act. This statute levels the playing field between collectors who have the power to threaten legal action against people who owe money. The Act requires the collector to act as human beings and not tyrants.The Act was actually formed to be a shield for debtors. Over the years, case law has morphed the FDCPA into a sword used by debtors to attack unscrupulous and sleazy collectors. Don't get me wrong. I am a lawyer that specializes in debt collection. However, I don't abide sleazy collectors and have sued them without hesitation.

Because our economy is in such a down turn, I am seeing more and more debt collectors actually stooping to these lowly tactics that violate the law. Many are purposely violating the law in order to bully debtors into paying. I predict that the FTC will be collecting more and more penalties as these agencies and their tactics come to light. I have the following advice for you, depending on who you are:

Debt Collection Agencies - Train your collectors on the FDCPA. Make sure that you spend time and money not only training them, but document the fact that your collectors have learned the ins and outs of the statute. It ain't that complicated. Moreover, you must watch and monitor your collectors on the telephone. Be sure that they document every conversation that they have with every debtor. Lastly, screen them for temperament. If you hire a loose cannon, an attorney (such as I), will absolutely go after you and your agency because you have the deep pockets.

Humans who owe money. Remember that you are not just a "debtor." Rather, you are a human being entitled to be treated to with respect and dignity. If you are abused by a debt collector, chances are excellent that you the debt collector has violated the FDCPA. Do not roll over and take this laying down. You can and should sue the collector.

There was a great article in USA Today of Saturday, March 7, 2009. In that article, the reporter advises that banks are now closing lines of credit and credit card accounts that are inactive. Even people who have been making their payments timely are seeing a reduction in the LOC that the bank will extend. This is having the unintended consequence of lowering one's credit score. Like it or not, the FICO score is the most prevalent determinant in how much credit any grantor will give a consumer.

The Fair Issac company invented the FICO score back in the 1950s or so. It was founded by some mathematical geniuses who put together some models of how to predict one's credit worthiness. They have done quite well ever since. Now, no one knows for sure what all exactly goes into the Fair Isaac credit score. We also don't know how much weight is attributable to each factor. Fair Isaac keeps its methodologies as a closely guarded secret (who knows, may be they know the formula for Coka-cola, too). However, we do know that the size of the lines of credit, and the percentage that those lines are used at the end of each month, are factors in determining your line of credit. The more of your line that is used at the end of the month, the more deleterious effect it has on your credit score. For example, if you have used $10,000 of a $40,000 line of credit and that is outstanding at the end of the month, that is one thing. But if the bank has cut your available credit down to $20,000. You are now going to be reported as using half your available credit. By cutting your credit score, your ability to get future credit is diminished.

I am now genius, but then it does not take a genius to see that all of us are in an economic downward spiral if those who have been fortunate enough to avoid job loss and the other economic atrocities of this economy are financially affected. Whats the solution? Ha ha...that answer does require a genius.

I would advise that if you have any inactive LOC, go ahead and use it. Pay it off as soon as you can, but go ahead and use it. You do not want the bank to close your LOC for want of use. Secondly, if your bank has cut your LOC, call your bank and see if you can get it to reverse it decision. Explain that economic consequences to the bank and how it will affect your credit score. Be nice, but firm. Your bank should not be hurting a good and loyal customer in today's market. These are rarities. Use your status as a rarity to make your bank return the favor.

I just read a very interesting article in USA Today. It talked about credit card companies like American Express paying some consumers $300 to pay off and close their accounts. I have never seen anything like this before. It appears that these banks are targeting those consumers that are carrying balances and not charging very much.

Its just like I have been telling my clients for years; if you are pursuing someone for a debt, you are in a race for your money, competing with other creditors. The banks are finally getting around to realizing this. They want to be paid first because they now know that the race is on and if they are going to get their money, they have to win that race.

If you are approached by your credit card company, you may want to consider their offer to close your account. Just make sure that they promise (in writing please), to report that you were the one to have closed the account on your credit report. By doing so, you will preserve your rights under the Fair Credit Reporting Act and perhaps even under the Fair Debt Collection Practices Act. You do NOT want a notation that says "Account closed by lender" or any such thing. You want to it reported on your credit report as "Account closed by consumer." Now, the bank may threaten to close your account anyway if you do not accept their offer. That is probably their prerogative under the credit card agreement. However, if the bank wants to terminate this relationship amicably and they certainly don't want you make a fuss about whose idea it is to close your account, simply insist on this provision in your credit file. By the way, did I mention that you should get that in writing? :)

I am working with a few clients that are suffering through a mortgage foreclosure. As soon as they received the sheriff's notice, I sat with them to discuss their options. In both cases, we put together an exit strategy that I would like to share with you.

First, we had to prioritize what was important in a new home. In our case, we decided that keeping the kids in the same school system was paramount so we knew we had to look for a new home in that area.

Second, we had to look at resources we had to move into a new home. One option to consider is moving into an apartment. Another option was to consider purchasing a home on a land contract. The land contract should have a 5 year balloon which should be enough time for someone to reestablish one's credit. The third option is to rent a house in the same area as the current home. I was amazed to learn that even though the area that we were looking was very well heeled with expensive homes, that there were a lot of rental properties. Not only that, these rental houses were fairly large (over 3,000 square feet...large by my standards anyway) with very modest rents. It appears that the mortgage foreclosure crisis has created a glut of these large homes that people need to get some money out of for on reason or another. It may be that the owners have passed away and the kids are trying to get some money from the houses and cannot sell them today. Anyway, it appears that staying in the same area would not only be easily accomplished, it would be quite economical too.

The third part of an exit plan is to calculate is the date that you have to be out of the foreclosed property. Under Michigan law, home owners can be evicted six months after the sheriff's sale unless the property is abandoned. After the sheriff's sale and until the the order of eviction is filed, the use of the property remains exclusive to the former home owners. Hence, you get to live rent and mortgage free for six months. At the risk of sounding like a conniving jerk (a phrase hurled at me t by my wife once in a while), a home owner can use this period to save up money for a down payment on a land contract, or a security deposit and moving costs. Think about it, living rent and mortgage free for six months is a great boon to anyone's finances. You just need enough discipline to save what you can.

Interestingly, the sheriff's sale for my clients' property was scheduled for last month. Although we had our exit plan in place, the bank did not appear at the sale. I cannot tell you why the bank did that, but I can give you plenty of good reasons why the bank made the right move. First of all, when the bank owns the home, it incurs substantial holding costs on the property such as taxes and utilities. Moreover, the bank has to hire a property maintenance company to visit the property to keep out trespassers, squaters, thieves and vandals. It is far more economic for the bank to keep people in their homes and perform these functions than for the bank to start forking out bailout dollars. Third, the banks already own tons of property. They were not supposed to be in the real estate business, but now they are. The banks are unhappy about this. Finally, there is talk of legislation to put a moratorium on foreclosures.

The moral of my story is to let you know that even though the bank may post a notice of foreclosure on your door, it may not actually attend the sale. It is important, however, that when this does occur, you must circle the proverbial wagons, keep calm and talk with attorney or some calm and detached third party about assembling an exit strategy. You have no idea how much inner peace you will achieve during the storm of a foreclosure, once you have put that plan together. Foreclosure sucks and for many of us, its a fact of life. Embrace it, face it and continue to live....elsewhere.