The Law Offices of Schneider & Stone Reduces Mortgage to Unsecured Claim in Chapter 13

  The Law Offices of Schneider & Stone Reduces Mortgage to Unsecured Claim in
  Chapter 13

Business Wire

SKOKIE, Ill. -- January 8, 2013

The Law Offices of Schneider & Stone, a bankruptcy and business law firm based
in Skokie, has successfully removed a Bank of America mortgage from their
clients’ home. In an incredible turn of events, the homeowners’ Chapter 13
plan will treat the entire mortgage as unsecured – no different than a common
credit card – and the clients will own their home free and clear after
successfully completing their case.

The firm’s clients refinanced their property with Bank of America several
years ago. The clients signed a standard mortgage giving Bank of America a
lien on their house. Bank of America failed to record the mortgage with the
Recorder of Deeds. The homeowners fell behind on their mortgage payments and
filed Chapter 13 bankruptcy to save their home. Chapter 13 does not discharge
a mortgage from a debtor’s home; it rolls late payments into the bankruptcy
plan and lets the client start making regular payments until the loan is paid
off. In this case, Bank of America’s failure to record the mortgage negated
their rights.

The bankruptcy filing caused the bank to review the account, at which point it
determined that the mortgage had never been recorded. The bank filed a Motion
for Relief from the Automatic Stay in an effort to record the mortgage. The
Law Offices of Schneider & Stone objected to the Motion and the court denied
relief. The court demanded briefs, and on November 28, 2012, after hearing
both parties, the court entered an order deeming the bank’s claim as wholly

“An unrecorded mortgage does not create a valid secured claim, period,” said
bankruptcy attorney and firm partner Ben Schneider. “The fact that the bank
tried to record its mortgage post-petition is incredible to me, and based on
the facts of this case, the court absolutely made the right decision.”

Since this matter has been resolved, the homeowners’ Chapter 13 plan will now
be able to move forward with confirmation. With the mortgage treated as an
unsecured claim, successful completion of the plan will mean the homeowners
will leave the bankruptcy with a mortgage-free home. The bankruptcy judge has
set a status hearing on the matter, scheduled for January 18, 2013.

(Case Number: 12-11838)

Ben Schneider is the principal bankruptcy attorney at The Law Offices of
Schneider & Stone. Schneider handles all types of consumer bankruptcy cases,
including Chapter 7, Chapter 13 and individual Chapter 11 bankruptcies.
Schneider and his partner, Motty Stone, also want to give credit to associate
Edward Brener, who did a lot of the research that led to the win.

For more information, contact Ben Schneider by calling (847) 933-0300 or by
filling out a contact form at


The Law Offices of Schneider & Stone
Ben Schneider, 847-933-0300
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