I filed for bankruptcy. When can I buy property again?

Friday 5th of October 2012 01:46:58 AM

I filed bankruptcy.  When can I buy property again?

 

This question comes up often in my bankruptcy consultations, so I decided that it would be interesting reading for some of you.

The subtitle to this blog post should probably be the related question, “When can I start re-building my credit?  I hear that bankruptcies stay on your record for 10 years.”

The truth of the matter is that EVERYTHING stays on your credit report forever.  I have seen credit reports with information (both good and derogatory) going back thirty years.  I see 30 day late reports from the 1980’s or earlier on credit reports.

However, something magical seems to happen around the 7-8 year mark; it stops mattering to many creditors.  That includes The Fair Isaac Company, the owners of the FICO score (which is independent of your credit report).  Understand that Fair Isaac compiles a credit score based on the information in your credit report.  The credit bureaus and Fair Isaac guard the secret ingredients to their formulas very jealously; they are after all in the business of selling their information.  What we do know is that many debtors notice a jump in their FICO scores coinciding with derogatory information passing the 7-8 year mark.

Many creditors these days are even more forgiving than that.  I have seen bankrupt debtors begin to rebuild their credit 6 months after receiving their discharge.  You may pay in the form of higher interest rates, but the offers are out there.

What does this mean in terms of buying property again?  As long as a creditor sees a steady rebuilding of your credit, you may be surprised what they are willing to offer you.  Times are bad, and lenders need to lend money to stay in business.  If they don’t find enough borrowers at the levels that they want to lend to, they are going to drop those standards (even if it means having to charge a little more).

The ultimate question to ask yourself is, “Do I continue to carry all this debt and damage my credit further with no end in sight, or do I opt for a fresh start and move forward with my life?”

Bankruptcy is a serious decision, but it’s not a credit death sentence.

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Can I keep my car if I file for Bankruptcy?

Friday 5th of October 2012 01:45:15 AM

If you are filing for chapter 7 bankruptcy, or considering it, you may be asking yourself, “Can I keep my car in ch.7 bankruptcy?”. Being able to keep your car is important, as you want to be able to get to work and be generally mobile. Finding out whether you can keep your car really depends on your situation. You may have a loan payment, you may own your vehicle, or you may be leasing a vehicle. Let’s start with the last situation first.

If you are leasing a vehicle, the relevant question to ask yourself is, can I keep up with the lease payments, or do I need to turn the vehicle in for a situation I can afford? You have to be able to keep up with payments, so you don’t get yourself in trouble.

If you own your vehicle, in case of chapter 7 bankruptcy, your vehicle may or may not be taken in. It does depend on the state you live in and what your specific case is, but in most cases you can file for exemption and keep a vehicle that is valued under a certain amount. If there is a $7500 exemption for vehicles, and your vehicle is valued under that amount, you can keep it. If it is valued at above $7500, you have to be able to pay the difference or they will take your vehicle and give you the exemption fee to look for another one.

 

Glendale California Bankruptcy attorney Raffy Boulgourjian

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Do I Need an Attorney to file for Bankruptcy?

Friday 5th of October 2012 01:38:55 AM

Us Chapter 7 and Chapter 13 bankruptcy attorneys are fully aware that there is a long list of non attorneys willing to help you file bankruptcy for less than what an attorney would charge.

No doubt, it sounds completely self serving for me to tell you that I would never recommend anyone filing for bankruptcy without an attorney.

I am sure that there are many capable people doing good work to help debtors file chapter 7 or chapter 13 bankruptcy in Glendale, Burbank and Pasadena. I understand that debtors in financial trouble don’t have a lot of available cash. I tell you that this is not the time to skimp on costs.

Our Court system is complicated and difficult. It just is. Unless you have knowledge, training or familiarity with the bankruptcy court system, going it alone would be like to trying to perform surgery on yourself.

My other concern for you is getting legal advice. Paralegals, form preparers, or other non attorneys cannot give you legal advice. Non attorneys cannot advise you on whether you should keep a debt or not, oppose a motion or not, file papers on time, claim exemptions for assets you may keep, know which assets you stand to lose for payment to creditors, understand the long term implications of decisions you make in bankruptcy. There are so many considerations that could cause your bankruptcy to fail. If your bankruptcy fails, you do not get your debts discharged (forgiven
I receive several bankruptcy cases a week that were screwed up by debtors trying to go it alone or with non attorney assistance. It is oftentimes much harder and more expensive for the debtor to put these bankruptcy cases straight than it would have cost for me to do it right in the first place. It simply isn’t worth the risk in my opinion.). What’s worse, you could be barred from filing again.

Our consultations are free. Our offices serve the entire Greater Los Angeles area. We are local to anyone in the Glendale, Burbank or Pasadena area. You may reach us at our toll free number (888) 607-7460, which doesn’t cost you anything but your time. Find out where you stand.

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Do I Really Need to File For Bankruptcy?

Friday 5th of October 2012 01:35:31 AM

No, I really mean it.  Please check with a bankruptcy attorney before deciding to file.  If you read my last blog post you will know that I freely make comments that may sound self serving.  But
Almost every bankruptcy attorney I know, including myself, offers a free consultation.  I also volunteer my time at a free bankruptcy walk-in clinic organized by the Bankruptcy Court.  You could be committing a terrible mistake just by filing alone. I do mean it.  I have seen dozens of disastrous bankruptcy petitions filed by people representing themselves.  Listen, it’s not easy, I know attorneys cost money and many people facing financial difficulty cannot afford one.

What could go wrong?  What could not go wrong?

I received a call recently from someone who is of questionable legal status (perhaps even illegal) who filed their bankruptcy themselves only to be staring at two United States Marshalls waiting for them at their 341a meeting of creditors.   There are ways to deal with such problems and they don’t have to end this way.

If you are filing to avoid the heavy hand of a collection agency, they may not even have legal standing to harass you that way (they may have  blown the statute of limitations on collecting the debt).  If the law is on your side, you may avoid filing for bankruptcy altogether.

Are you completely ready to walk away from your home?  If so, perhaps you could just hand it back to the bank (a deed in lieu of foreclosure) and not have to file bankruptcy.  If you hand it back, you may or may not be on the hook for the rest of the loan.  You must check with an attorney.  If you are not on the hook for the remainder of the debt, you certainly don’t need to file bankruptcy for your mortgage alone.

These are just a few of the scenarios I’ve seen; there are many, many more.  Don’t file bankruptcy unless you understand what it can (and cannot) do to help you.  The cost to find out?  Zero.

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“I Won’t Qualify for Bankruptcy; I Make Too Much Money.”

Friday 5th of October 2012 01:24:34 AM

One of the biggest misconceptions held by people with a steady income is that they won’t qualify for bankruptcy.  Nothing could be further from the truth.  The short answer to this concern is that it doesn’t matter how much money you make; what matters is how much debt you are going to be able to discharge.

Let me explain this.  First, if someone has told you that you make too much money to qualify for a chapter seven bankruptcy, ask them if they have taken a look at your expenses.  True, there is a median income for your geographic area.  If you make less that median income then you will AUTOMATICALLY qualify for Chapter 7.  This does not mean that all is lost if you are over the median income, it simply means that the test goes to the second step; reviewing your expenses.  A bankruptcy attorney should review your expenses to see if you will qualify.  If someone tells you that you don’t qualify because you make more money then the median income and they have not reviewed your expenses, then run the other way because they are not qualified to assist you with a bankruptcy.

Second, if you still do not qualify for a 7, you might qualify for a 13.  There is no income limit in a 13, and there are in fact many benefits to a 13 which are only available in a 13. The only difference that your income will make in your 13 bankruptcy is in determining how much unsecured debt you will have to pay back. 

How much?  10%, 20%, 50%, 100%?  That question can only be answered once an office has thoroughly reviewed your income, debts and assets.  Our office has handled 13 plans which pay back NONE of the unsecured debt (usually credit cards) and have also handled 13 plans where clients have paid back ALL of the unsecured debt, and every scenario in between.

If you did in fact have steady income and couldn’t eliminate all of your debt, wouldn’t you want the chance to at least eliminate SOME of it?

Why would anyone want to file bankruptcy if they must pay back all of their debt?  There are several good reasons.  Keep in mind that a 100% plan is the usually the last bankruptcyoption available to a debtor.  The debtor may still find it better than not filing, because it gives them a better repayment plan than their creditors would otherwise offer them.  Example?  Debtor can keep their home and make payments toward the arrears of a mortgage loan instead of face a foreclosure.  Debtor can repay debts over the course of 5 years.  Debtors can strip junior liens from homes, making it easier to possibly sell or refinance their home should such an opportunity arise.  Debtors can reduce the principal balance on SOME auto loans.  Debtors AND THEIR SPOUSES can enjoy the protection of a stay against collection for the term of their repayment plan (up to 5 years).  All of these advantages may not have existed for the debtor prior to filing for bankruptcy.

If you are having debt concerns and want to know if bankruptcy is an option for you, finding out is free.

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“I Have Equity in my Home. Will I lose it in Bankruptcy?”

Friday 5th of October 2012 01:18:12 AM

Let me start by saying to those who were wondering; If you owe more on your home than it is worth, the Bankruptcy Trustee will have no interest in selling your home to pay creditors.

Now, what if you DO have some equity?  You are allowed to keep up to almost $150,000 of equity in the Central District of California.  How much you will be allowed to keep is a formula which includes your age, your spouse’s age, how many dependants you have and several other factors.

Don’t write off bankruptcy just because you are scared that you will be losing the equity in your home.  Let us figure out if you really run a risk of losing it.  There is no obligation and no fee.

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Adversary proceedings: Being sued in bankruptcy and what to do about it.

Friday 5th of October 2012 01:13:27 AM

Adversary proceedings.  A lot of debtors enter bankruptcy painfully unaware that they can be sued in bankruptcy.  The bigger surprise, usually for debtors who have hired legal counsel, is that the defense of such lawsuits is not covered in their retainer.

You can be sued by creditors in bankruptcy.  The grounds are numerous, but the most common are those controlled by Section 523 of the Bankruptcy Code.  The most common grounds involve preferential transfers (paying off debts to ‘insiders’ right before filing), major purchases or cash advances on credit cards right before filing for bankruptcy (the previous 90 days are the most common), or borrowing funds based on false or misleading information (overstating income when applying for a loan, for example). Lastly, such lawsuits can be brought for outright fraud.  There are more grounds, but a full discussion would be beyond the scope of this post.

Bankruptcy Trustees could also bring such actions against debtors, usually to undo transfers or to demand the return of assets sold to others, payoff of debts just before filing, and a few others.

Understand that such actions typically seek the non-dischargeability of the debt (i.e that the debt survive your bankruptcy) or that the asset be returned for purposes of paying your creditors.

If you are sued in bankruptcy, you and your attorney (if you have hired one) will be served with a summons and complaint.  Beware, failing to defend yourself against such a lawsuit will likely result in a money judgment against you.  More importantly, if you have paid your attorney a flat fee to prepare your bankruptcy petition and appear at your Meeting of Creditors, then you have very likely not hired them to defend any such actions.  In fact, the majority of bankruptcy attorneys don’t even do such work.  If you are sued in bankruptcy and your attorney cannot help you, you will have to find an attorney who does.

Our office has both prosecuted and defended adversary proceedings in bankruptcy, for both creditors and for debtors.  We represent clients in bankruptcy for only the adversary proceedings, oftentimes through referral from other bankruptcy attorneys who were only hired by the client to file the petition alone.

Whatever you do, don’t presume that your defense is covered under your retainer, because it usually is not.  Find a law firm that does, if you are in the Southern California area, we can help.

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“I Have Equity in my Home. Will I lose it in Bankruptcy?”

Friday 5th of October 2012 01:12:55 AM

Let me start by saying to those who were wondering; If you owe more on your home than it is worth, the Bankruptcy Trustee will have no interest in selling your home to pay creditors.

Now, what if you DO have some equity?  You are allowed to keep up to almost $150,000 of equity in the Central District of California.  How much you will be allowed to keep is a formula which includes your age, your spouse’s age, how many dependants you have and several other factors.

Don’t write off bankruptcy just because you are scared that you will be losing the equity in your home.  Let us figure out if you really run a risk of losing it.  There is no obligation and no fee.

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