Can bankruptcy help you save your home?

Friday 5th of October 2012 01:49:10 AM

If you are a homeowner in distress and you are being made offers to file bankruptcy, find out what bankruptcy really will (and won’t) do for you if you file.

Bankruptcy can offer you many powerful options in your fight to keep your home.  There is a virtual soup of misinformation out there on different ways to save your home.  Time and again clients have come to us having fallen viction to one form of scam or another.  It’s time to sort out the good from the bad and learn once and for all if bankruptcy is going to offer you a way out.

To do so, I prepared a 4 part short video tutorial for you.  The videos are short and as ‘to the point’ informative as I could make them.  I couldn’t cover everything, but I think I got the basics down for you.

You can view the videos by enrolling at  www.freebankruptcybasics.com.

If you still have questions, feel free to call us.  Please keep in mind that we are a Los Angeles, California based practice.  If you are located outside of the Los Angeles, Orange County, Riverside, San Bernardino or Ventura County areas, you are best to contact a local bankruptcy attorney as bankruptcy laws can be very location-specific and must be filed close to home.

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Why Filing Bankruptcy is Better Than Debt Settlement.

Friday 5th of October 2012 01:47:25 AM

If you have considered filing for bankruptcy, debt settlement may also be on your radar.  Here is how the two size up in my eyes.  The ads are everywhere, the straight talk is right here.

You may not qualify for bankruptcy, in which case debt settlement may by your only option.   However, if you do qualify for bankruptcy, here are some good reasons why it’s your better choice.

1. Cost:    When you work with a debt settlement company, you will be asked to send them a fixed sum of money on a monthly basis.  The money is pooled into a sizeable sum in the hope that they will be able to negotiate a lump sum payoff of your creditors; one by one.  The premise of the approach is fine; most creditors are more willing to cooperate if you can offer a lump sum settlement.  In practice however, it can get costly.  It could take you months to gather enough money to make any sort of reasonable cash offer that your creditors might accept.  Second, debt settlement companies take a hefty cut of each monthly payment, making it doubly difficult to accumulate enough money to entice a settlement.  If you are able to afford such payments, you can open a separate account for yourself and make the deposits every month without paying a cut to someone else.  Once a deal is made, you will have accumulated enough money to close the deal.

2. Debt Settlement Does Not Stop Collections!  When you are inbankruptcy, creditors cannot continue with ANY collection efforts (no nasty calls, no direct communication with you, no garnishments, levies, repos, foreclosures).  Debt settlement affords no such protection.  I have heard one horror story after the other of debtors hiring debt settlement negotiators only to be served with collections lawsuits in the meantime.  Most debtors are shocked to learn this, so consider yourself warned.  Creditors don’t have to (and usually won’t) stop collection against you just because you are trying to negotiate a settlement.  As long as you are behind on your payments and have not filed for bankruptcy, creditors are free to proceed with collection.

3. Debt settlement does not provide finality:  A bankruptcy can eliminate many debts (especially unsecured debt like credit card debt) once and for all within a matter of months.  Debt settlement plans can take years to complete, oftentimes without a guarantee that the creditor won’t come after you for the full balance.  In fact, most debt settlement plans are set for monthly payments over 2-5 years.  Most plans clearly state that if one payment is late, the creditor has the right to demand  the full original balance.  No such thing takes place in bankruptcy.  Once your bankruptcy is complete, the debt is dealt with and is final.

4. Tax Implications of debt settlement:  As a general rule, debt forgiven is considered taxable income.  If a creditor forgives some of your debt, they are going to issue you a 1099 for the forgiven amount.  You will likely owe taxes on the forgiven debt.  In bankruptcy, you will not be required to pay taxes on debt that is discharged.

5.  Credit Implications:  Let’s face it; if you fall behind on several payments to your creditors, your credit profile is already shot.  At such a point, you have to ask yourself whether worrying about a bankruptcy on your record is worth it.  Compared to the clean, fresh start that bankruptcy can offer you; it usually isn’t worth worrying about.  Which is easier, getting a fresh start and rebuilding your credit, or saddling yourself with settlement arrangements you may not be able to honor?

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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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Bankruptcy and tax debt: Can I discharge my tax debt in Bankruptcy?

Friday 5th of October 2012 01:46:25 AM

I am often asked this question by clients.  The short answer that most clients will get from their attorney is “No.”  However, this is oversimplifying it.  You CAN get a discharge of tax debt under the right circumstances.

I recently read an expertly written article on this topic.  Here is the link:

Bankruptcy: Can I discharge my tax debt if I file bankruptcy?

Thank You Attorney Coats for your very informative and well written article on the topic.

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If I File Chapter 7 Bankruptcy, Can I Still Keep My House?

Friday 5th of October 2012 01:44:15 AM

If you are considering filing Chapter 7 bankruptcy Glendale, you are probably asking, “Can I keep my home in bankruptcy?” The answer to that is varied, depending on your personal situation.

Exemptions & Equity

The first thing to know is what your home equity is, and what state homestead exemption you qualify for. When you file for bankruptcy, lenders will want to know if you have any built up home equity (or value) that can go towards paying off your debts by selling the home. However, when filing bankruptcy you can also apply for state homestead exemption, so a certain amount that your home can be worth that is exempt from being used to pay off your debt. Be sure to find out the details  so that you can calculate if you have any non-exempt home equity. If it is, your home will likely be sold off (while leaving you with the state exemption amount). This will influence which of the following options you may want to look into when filing for bankruptcy:

If you are behind on mortgage payments, there are several paths you can take:If you’d like to work towards trying to keep your home, you may opt for a loan modification. This should be done before filing bankruptcy and will allow you to renegotiate your mortgage to a level where you can once again stay up to date on payments and not face foreclosure.If you are facing foreclosure because of being behind on your mortgage, when you file for bankruptcy any foreclosures can be given what is called an automatic stay. This will freeze the foreclosing process for a time, while also freeing you from paying the mortgage as you have filed for bankruptcy.If you are keeping up with your mortgage payments, here are your options: Reaffirm the loan. While Ch. 7 bankruptcy basically erases your responsibility for a home loan, if you do not file for reaffirmation the mortgage company will only let you stay in the home as long as you stay up to date with payments. Reaffirmation gives you more options should you get behind on payments.If you are up to date and your home does not have any non exempt equity, you can easily keep your home while also freeing you from debts when you file for bankruptcy. Consult a professional and discuss all options  in detail!  You may reach us at 888-607-7460.

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Can I keep my home in Chapter 13 bankruptcy

Friday 5th of October 2012 01:43:48 AM

It is no secret that the economy has been bad for several years. There have been many job cuts. Raises are not coming, bonuses are smaller or gone entirely. Jobs that are offered pay less than they used to.

Many adults are finding themselves in a financial bind. Often they wonder, “Is Chapter 13 bankruptcy for me? Will I qualify for Chapter 13? Can I keep my home if I’m in a Chapter 13 bankruptcy?  Is that the right choice for me? Can I work out a deal with the lender? ”

Have you already gotten so far behind that they won’t help you? Should you sell your home and downsize to a small payment? Do you need to take on a second job?  Do you make too much money to qualify for a Chapter 7?

All of these questions deserve answers.  For some, the answer is a Chapter 13 bankruptcy.

You can keep your home if you are in Chapter 13 bankruptcy.  In fact, Chapter 13 is commonly referred to as the homeowner’s bankruptcy.  One of Chapter 13′s principle goals is to help homeowners stay in their homes.

There are rules you must follow and it won’t be cheap.  You must know that you will be expected to pay your mortgage as it is currently moving forward, month after month.  You willalso need to pay something toward any arrears (if you have arrears on your mortgage) spread out over 5 years.

However, like a chapter 7, you can, at the same time, seek a discharge of your unsecured (usually credit card) debt.  This one-two punch is an invaluable feature of a chapter 13.  Remember, if you can eliminate your credit card debt, perhaps now you can afford to make your mortgage payments.  You may even be able to eliminate a second mortgage on your home (more on this later).  If you could eliminate your second and your credit card debts, perhaps now you could afford to keep your home?

When you file Chapter 13 bankruptcy you will be in the plan for a 3-5 year period to pay off the arrears. Can you follow through? In some states they take the payment directly out of your paycheck to ensure successful completion of the plan.  Missing a payment is not an option.  Your entire bankruptcy plan may fail.  However, if your income changes over the course of the 5 year repayment plan, adjustments can be requested based on how much you can afford.

While in Chapter 13 bankruptcy, you cannot take on any more debt without permission from the court until you have completed the plan.

If you fall behind again, you may be able to amend your plan to include new debt, but beware of that it could jeapordize your plan and will cost you more attorney fees and court costs. You may be able to work out a deal with the lender to pay extra payments, but you still have to make the Chapter 13 bankruptcy payments. Filing for Chapter 13 bankruptcy isn’t the right path for everyone, consult with an attorney before you make a decision.  Not all bankruptcy attorneys do chapter 13′s; they can be complicated and have a lot of moving parts.  Make sure that your attorney has filed several 13′s before you make a decision.

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Bankruptcy and Foreclosure; Part 1: The straight and the narrow

Friday 5th of October 2012 01:33:29 AM

Before you throw in the towel and walk away from the fight to save your home, let us take a look at your situation and see if there is anything we can do for you.  There is no fee and no obligation.

I want to congratulate you for taking the initiative to explore bankruptcy as an option.  As a real estate and bankruptcy attorney, I know that for circumstances beyond your control, you are very likely facing a financial situation that you cannot repair.  I want you to know that you are not alone.

Bankruptcy is a powerful and effective tool to remedy a person’s dire financial state, and many times today such difficulties begin with your mortgage.  If you have spent the last several

First, Bankruptcy has the power to stop a foreclosure sale until your bankruptcy matter has been reviewed by The Court.   This is because a bankruptcy filing imposes an automatic stay against all collection, IMMEDIATELY.  The stay is a federal court order which takes effect as soon as we file your case. .  Our office files its bankruptcies electronically, so we will obtain a case number and a stay order almost instantly for you.months, or even years, trying to find a way out of the problem by applying for a loan modification or other methods, and nothing has worked, then it’s time to take a hard look at the bankruptcy option and here’s why:

A second reason why bankruptcy may be for you is because it doesn’t have to interfere with your chances of being approved for a modification.  If you have applied for a modification, the process can still continue.

Third, here’s something that I want you to keep in mind.  If your bankruptcy eliminates all of your other debt (like credit card debt), then once the debt is eliminated, perhaps you may now be able to afford the mortgage,  even if it doesn’t get modified.  This way you eliminate a lot of the debt that is weighing you down, leaving only the mortgage as the only large payment you need to worry about.  I will cover this point in greater detail in later videos.

Fourth, under the right conditions, bankruptcy can even eliminate a second loan on your home.  If you have a second, third or even fourth loan secured against your home, there is a good chance that we can get those loans eliminated.  I’ll discuss this point in more detail in further videos as well.

Like I said before, don’t walk away from the fight to save your home before you let us take a look at your situation to see if there is anything we can do for you.  There is no fee and no obligation.  You can reach us through the form on this webpage, or you can call us directly at 888 607 7460.  I look forward to helping you.

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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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Married couples. File Bankruptcy jointly or not?

Friday 5th of October 2012 01:22:29 AM

 

In California, a community property state, spouses in a marriage are both liable for any debt taken out by either spouse during their marriage.

This means that you are ultimately both on the hook for many of your debts.  The only bulletproof solution if you are facing dire financial straits would be to file jointly, as is your right.  Filing jointly offers several advantages.

First, filing jointly is usually less expensive;  You pay your filing fee once and your attorney once. Second, you have very likely formally co-signed debts together (this is especially true for mortgages).  In such situations, you are both liable for the mortgage, whether you were married or not.  If you don’t both file for bankruptcy, your mortgage lender will most certainly look to the signor that did not file for bankruptcy.

However, in the name of prudence, some married couples may elect to take their chances and only file bankruptcy for one spouse.  A creditor may make a business decision not to pursue a non signor spouse, even if they have legal grounds to do so.  This is sometimes the case when only one spouse is the formal debtor without the other spouse as a co-signor to the debt.  Keep in mind that the other spouse may always file individually at a later time should it become necessary, as is their right.

In the meantime, the marriage can rely on the non filing spouse’s credit profile as the one without a bankruptcy on it.

 

There are many non married co-debtors who wish they could file jointly.  Married couples have that option; use it to your best advantage.

If you are a married couple considering bankruptcy, a no fee no obligation consultation is the best thing to do.

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“I make too much money to file for bankruptcy.” The Means Test.

Friday 5th of October 2012 01:20:09 AM

How do you know?  Did you look it up online?  Did you ask your neighbor?  Did you ask a friend who has filed before?
The answer lies in a test so complicated that most attorneys cannot even answer the question without inputting almost all of your financial information into an incredibly complex formula known as the ‘means test’.

The means test has some basic major variables, but in truth, it’s so complicated that you need software to figure it out correctly.  If that is the case, how on Earth do you expect to get a reliable answer from friends, family or online?
Sure, there is one element to the test known as the ‘median income’ threshold, but that is only one element.  Yes, if you make less than the median, then the means test may not even apply to you, but you may have expenses that still disqualify you from filing, even with a ‘below median’ income.

Look, there is no reason why you should take an educated guess.  There is no reason why you shouldn’t know for sure.  Finding out is free and only takes a little bit of your time.
You can find out by calling my office and booking an appointment, or filling out some of the basic info on our online questionnaire.  There is no obligation whatsoever.

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