In these tough economic times, many Americans are desperate to make ends meet. Some are becoming trapped in a destructive cycle of payday loans. A payday loan is a short term, high interest loan that is secured by a post-dated check. The company loans the borrower a few hundred dollars that is repaid on the borrower’s next payday. What is meant to be a small, convenient, and short term loan to pay an immediate expense (an overdue electric bill, for instance), often results in multiple loans and an endless cycle of debt. Unfortunately, many payday loan borrowers are unable to free themselves from this cycle and are forced to seek bankruptcy protection.
Individuals often worry that the payday loan company may file a criminal “bad check” charge if the payday loan is included in the bankruptcy. The payday loan company wants you to believe this, and many have their customers sign a certification that the borrower is not contemplating bankruptcy.
While there are a few exceptions, generally being unable to pay a post-dated check is not a crime. When you wrote the check both you and the payday loan company knew there were not sufficient funds in your bank account to pay the check. Because there was no present intent to pay, the post-dated check is not a “bad check,” only a future promise to repay the loan.
Even after your bankruptcy is filed, a post-dated check may be presented for payment. In some cases (notably in the 6th and 8th Circuit Court of Appeals) courts have stated that the presentment of the post-dated check does not violate the automatic stay provisions of the bankruptcy code. However, some courts have said that the funds collected by the payday loan company is an “avoidable transfer” meaning the bankruptcy court could order the company to return the money.
If you have payday loans, consult with an experienced bankruptcy attorney. It is important to identify any outstanding payday loan before filing bankruptcy. Most payday loans are discharged without issue; however, payday loan companies are becoming increasingly more knowledgeable and aggressive towards debtors in bankruptcy. Discuss the matter with your attorney and protect your legal rights.
Showing posts with label Bankruptcy. Show all posts
Showing posts with label Bankruptcy. Show all posts
Friday, October 29, 2010
Monday, October 25, 2010
How Much Debt Do I Need To File Bankruptcy?
There is no qualifying minimum debt limit for an individual bankruptcy. Debtors who otherwise qualify for Chapter 7 bankruptcy can file with any amount of secured or unsecured debt. The purpose of a Chapter 7 bankruptcy is to provide the debtor a fresh start without the burden of overwhelming debt. In some cases this debt may be objectively very small (perhaps only a few thousand dollars), but it be relatively very large to a person on a fixed income from retirement, disability, or otherwise.
In cases where the amount of dischargeable debt is objectively small, both the bankruptcy attorney and the client should take care to consider all of the consequences of filing. First, bankruptcy is not cheap. There is a court filing fee, a credit counseling fee, a personal financial management course fee, and, of course, your attorney’s fees. In some extreme cases some or all of these fees may be waived. Second, a bankruptcy filing can significantly impair the debtor’s ability to borrow money and obtain credit, at least for the short term. Finally, non-exempt property may be at risk. For many poor debtors, these consequences have little, if any, affect. Many poor debtors seek bankruptcy protection simply to rid themselves of the nuisance of debt collection.
While there is no minimum amount of debt required to file a Chapter 13 bankruptcy, the bankruptcy laws set a ceiling on the amount of secured and unsecured debt a person can have in a Chapter 13 case. These limits as of April 1, 2010 are $1,081,400 for secured debt and $360,475 for unsecured debt. The Chapter 13 debt limits adjust every three years. Cases that exceed these limits are ineligible for Chapter 13 bankruptcy, but may qualify under Chapters 7 or 11. There is currently some confusion in our courts as to how these debt limits apply in a joint husband and wife Chapter 13 case. Some courts will separately consider debt that is individual and not joint, effectively increasing the Chapter 13 limits.
An experienced bankruptcy attorney can evaluate your case and discuss any issues surrounding your case. Whatever the amount of your debt, if you are unable to pay, the federal bankruptcy laws can offer you substantial relief. Speak with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you.
In cases where the amount of dischargeable debt is objectively small, both the bankruptcy attorney and the client should take care to consider all of the consequences of filing. First, bankruptcy is not cheap. There is a court filing fee, a credit counseling fee, a personal financial management course fee, and, of course, your attorney’s fees. In some extreme cases some or all of these fees may be waived. Second, a bankruptcy filing can significantly impair the debtor’s ability to borrow money and obtain credit, at least for the short term. Finally, non-exempt property may be at risk. For many poor debtors, these consequences have little, if any, affect. Many poor debtors seek bankruptcy protection simply to rid themselves of the nuisance of debt collection.
While there is no minimum amount of debt required to file a Chapter 13 bankruptcy, the bankruptcy laws set a ceiling on the amount of secured and unsecured debt a person can have in a Chapter 13 case. These limits as of April 1, 2010 are $1,081,400 for secured debt and $360,475 for unsecured debt. The Chapter 13 debt limits adjust every three years. Cases that exceed these limits are ineligible for Chapter 13 bankruptcy, but may qualify under Chapters 7 or 11. There is currently some confusion in our courts as to how these debt limits apply in a joint husband and wife Chapter 13 case. Some courts will separately consider debt that is individual and not joint, effectively increasing the Chapter 13 limits.
An experienced bankruptcy attorney can evaluate your case and discuss any issues surrounding your case. Whatever the amount of your debt, if you are unable to pay, the federal bankruptcy laws can offer you substantial relief. Speak with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you.
How Much Debt Do I Need To File Bankruptcy?
There is no qualifying minimum debt limit for an individual bankruptcy. Debtors who otherwise qualify for Chapter 7 bankruptcy can file with any amount of secured or unsecured debt. The purpose of a Chapter 7 bankruptcy is to provide the debtor a fresh start without the burden of overwhelming debt. In some cases this debt may be objectively very small (perhaps only a few thousand dollars), but it be relatively very large to a person on a fixed income from retirement, disability, or otherwise.
In cases where the amount of dischargeable debt is objectively small, both the bankruptcy attorney and the client should take care to consider all of the consequences of filing. First, bankruptcy is not cheap. There is a court filing fee, a credit counseling fee, a personal financial management course fee, and, of course, your attorney’s fees. In some extreme cases some or all of these fees may be waived. Second, a bankruptcy filing can significantly impair the debtor’s ability to borrow money and obtain credit, at least for the short term. Finally, non-exempt property may be at risk. For many poor debtors, these consequences have little, if any, affect. Many poor debtors seek bankruptcy protection simply to rid themselves of the nuisance of debt collection.
While there is no minimum amount of debt required to file a Chapter 13 bankruptcy, the bankruptcy laws set a ceiling on the amount of secured and unsecured debt a person can have in a Chapter 13 case. These limits as of April 1, 2010 are $1,081,400 for secured debt and $360,475 for unsecured debt. The Chapter 13 debt limits adjust every three years. Cases that exceed these limits are ineligible for Chapter 13 bankruptcy, but may qualify under Chapters 7 or 11. There is currently some confusion in our courts as to how these debt limits apply in a joint husband and wife Chapter 13 case. Some courts will separately consider debt that is individual and not joint, effectively increasing the Chapter 13 limits.
An experienced bankruptcy attorney can evaluate your case and discuss any issues surrounding your case. Whatever the amount of your debt, if you are unable to pay, the federal bankruptcy laws can offer you substantial relief. Speak with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you.
In cases where the amount of dischargeable debt is objectively small, both the bankruptcy attorney and the client should take care to consider all of the consequences of filing. First, bankruptcy is not cheap. There is a court filing fee, a credit counseling fee, a personal financial management course fee, and, of course, your attorney’s fees. In some extreme cases some or all of these fees may be waived. Second, a bankruptcy filing can significantly impair the debtor’s ability to borrow money and obtain credit, at least for the short term. Finally, non-exempt property may be at risk. For many poor debtors, these consequences have little, if any, affect. Many poor debtors seek bankruptcy protection simply to rid themselves of the nuisance of debt collection.
While there is no minimum amount of debt required to file a Chapter 13 bankruptcy, the bankruptcy laws set a ceiling on the amount of secured and unsecured debt a person can have in a Chapter 13 case. These limits as of April 1, 2010 are $1,081,400 for secured debt and $360,475 for unsecured debt. The Chapter 13 debt limits adjust every three years. Cases that exceed these limits are ineligible for Chapter 13 bankruptcy, but may qualify under Chapters 7 or 11. There is currently some confusion in our courts as to how these debt limits apply in a joint husband and wife Chapter 13 case. Some courts will separately consider debt that is individual and not joint, effectively increasing the Chapter 13 limits.
An experienced bankruptcy attorney can evaluate your case and discuss any issues surrounding your case. Whatever the amount of your debt, if you are unable to pay, the federal bankruptcy laws can offer you substantial relief. Speak with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you.
Monday, October 4, 2010
Divorce Debt and Bankruptcy
Since 1967 there have been several studies that rank stress due to a traumatic life event. The studies agree that divorce causes tremendous stress in a person’s life, and is number two in the rankings for most studies, behind death of a spouse or child.
Since divorce is such a stressful time, it is no wonder that people make mistakes with their finances during a divorce. Many couples either overlook or ignore the economic realities of their changed financial condition. In some cases financial mistakes made during the divorce can lead to bankruruptcy. In other situations bankruptcy is simply inevitable.
One financial mistake divorced couples commonly make is a misunderstanding of the family court’s “assignment” of a joint debt to one of the spouses. The family court has the authority to order one spouse to pay a particular joint debt. For instance, husband pays the MasterCard; wife pays the car payment and keeps the car. The court order may contain a “hold harmless” provision that means that if the obligated spouse does not pay the debt, and the other spouse is harmed, the obligated spouse is responsible to repair the harm (usually this means money damages). This order is enforceable through the court’s contempt power.
Many people mistake this assignment as an alteration of the contract with the creditor. The family court’s order does not change the couple’s joint obligation on the debt because the creditor was not a party to the couple’s divorce case. A joint debt remains legally enforceable against both or either party even after the divorce. If the obligated spouse does not pay pursuant to the family court’s order or the terms of the contract, the only recourse is to cry foul to the family court judge. The creditor can pursue any legal action to collect on the debt including reporting the delinquent account to the credit bureaus, filing a lawsuit against both spouses, and repossession or foreclosure as authorized by law.
Many couples can benefit from filing bankruptcy before a divorce is final. In most circumstances property that is owed by a husband and wife receives better protection from creditors than it receives if owned by a single person. Some debts that are ordered by a family court cannot be discharged by the bankruptcy court, so it is better to discharge those debts prior to a family court order. In some cases, if one spouse files bankruptcy and discharges a debt, a family court cannot reassign that debt to the discharged debtor.
Divorce can complicate the legal obligations of a divorcing couple’s finances. If you and your spouse are considering divorce and have significant debt, speak with an experienced bankruptcy attorney and discuss your options before finalizing your divorce.
Since divorce is such a stressful time, it is no wonder that people make mistakes with their finances during a divorce. Many couples either overlook or ignore the economic realities of their changed financial condition. In some cases financial mistakes made during the divorce can lead to bankruruptcy. In other situations bankruptcy is simply inevitable.
One financial mistake divorced couples commonly make is a misunderstanding of the family court’s “assignment” of a joint debt to one of the spouses. The family court has the authority to order one spouse to pay a particular joint debt. For instance, husband pays the MasterCard; wife pays the car payment and keeps the car. The court order may contain a “hold harmless” provision that means that if the obligated spouse does not pay the debt, and the other spouse is harmed, the obligated spouse is responsible to repair the harm (usually this means money damages). This order is enforceable through the court’s contempt power.
Many people mistake this assignment as an alteration of the contract with the creditor. The family court’s order does not change the couple’s joint obligation on the debt because the creditor was not a party to the couple’s divorce case. A joint debt remains legally enforceable against both or either party even after the divorce. If the obligated spouse does not pay pursuant to the family court’s order or the terms of the contract, the only recourse is to cry foul to the family court judge. The creditor can pursue any legal action to collect on the debt including reporting the delinquent account to the credit bureaus, filing a lawsuit against both spouses, and repossession or foreclosure as authorized by law.
Many couples can benefit from filing bankruptcy before a divorce is final. In most circumstances property that is owed by a husband and wife receives better protection from creditors than it receives if owned by a single person. Some debts that are ordered by a family court cannot be discharged by the bankruptcy court, so it is better to discharge those debts prior to a family court order. In some cases, if one spouse files bankruptcy and discharges a debt, a family court cannot reassign that debt to the discharged debtor.
Divorce can complicate the legal obligations of a divorcing couple’s finances. If you and your spouse are considering divorce and have significant debt, speak with an experienced bankruptcy attorney and discuss your options before finalizing your divorce.
Divorce Debt and Bankruptcy
Since 1967 there have been several studies that rank stress due to a traumatic life event. The studies agree that divorce causes tremendous stress in a person’s life, and is number two in the rankings for most studies, behind death of a spouse or child.
Since divorce is such a stressful time, it is no wonder that people make mistakes with their finances during a divorce. Many couples either overlook or ignore the economic realities of their changed financial condition. In some cases financial mistakes made during the divorce can lead to bankruruptcy. In other situations bankruptcy is simply inevitable.
One financial mistake divorced couples commonly make is a misunderstanding of the family court’s “assignment” of a joint debt to one of the spouses. The family court has the authority to order one spouse to pay a particular joint debt. For instance, husband pays the MasterCard; wife pays the car payment and keeps the car. The court order may contain a “hold harmless” provision that means that if the obligated spouse does not pay the debt, and the other spouse is harmed, the obligated spouse is responsible to repair the harm (usually this means money damages). This order is enforceable through the court’s contempt power.
Many people mistake this assignment as an alteration of the contract with the creditor. The family court’s order does not change the couple’s joint obligation on the debt because the creditor was not a party to the couple’s divorce case. A joint debt remains legally enforceable against both or either party even after the divorce. If the obligated spouse does not pay pursuant to the family court’s order or the terms of the contract, the only recourse is to cry foul to the family court judge. The creditor can pursue any legal action to collect on the debt including reporting the delinquent account to the credit bureaus, filing a lawsuit against both spouses, and repossession or foreclosure as authorized by law.
Many couples can benefit from filing bankruptcy before a divorce is final. In most circumstances property that is owed by a husband and wife receives better protection from creditors than it receives if owned by a single person. Some debts that are ordered by a family court cannot be discharged by the bankruptcy court, so it is better to discharge those debts prior to a family court order. In some cases, if one spouse files bankruptcy and discharges a debt, a family court cannot reassign that debt to the discharged debtor.
Divorce can complicate the legal obligations of a divorcing couple’s finances. If you and your spouse are considering divorce and have significant debt, speak with an experienced bankruptcy attorney and discuss your options before finalizing your divorce.
Since divorce is such a stressful time, it is no wonder that people make mistakes with their finances during a divorce. Many couples either overlook or ignore the economic realities of their changed financial condition. In some cases financial mistakes made during the divorce can lead to bankruruptcy. In other situations bankruptcy is simply inevitable.
One financial mistake divorced couples commonly make is a misunderstanding of the family court’s “assignment” of a joint debt to one of the spouses. The family court has the authority to order one spouse to pay a particular joint debt. For instance, husband pays the MasterCard; wife pays the car payment and keeps the car. The court order may contain a “hold harmless” provision that means that if the obligated spouse does not pay the debt, and the other spouse is harmed, the obligated spouse is responsible to repair the harm (usually this means money damages). This order is enforceable through the court’s contempt power.
Many people mistake this assignment as an alteration of the contract with the creditor. The family court’s order does not change the couple’s joint obligation on the debt because the creditor was not a party to the couple’s divorce case. A joint debt remains legally enforceable against both or either party even after the divorce. If the obligated spouse does not pay pursuant to the family court’s order or the terms of the contract, the only recourse is to cry foul to the family court judge. The creditor can pursue any legal action to collect on the debt including reporting the delinquent account to the credit bureaus, filing a lawsuit against both spouses, and repossession or foreclosure as authorized by law.
Many couples can benefit from filing bankruptcy before a divorce is final. In most circumstances property that is owed by a husband and wife receives better protection from creditors than it receives if owned by a single person. Some debts that are ordered by a family court cannot be discharged by the bankruptcy court, so it is better to discharge those debts prior to a family court order. In some cases, if one spouse files bankruptcy and discharges a debt, a family court cannot reassign that debt to the discharged debtor.
Divorce can complicate the legal obligations of a divorcing couple’s finances. If you and your spouse are considering divorce and have significant debt, speak with an experienced bankruptcy attorney and discuss your options before finalizing your divorce.
Wednesday, September 1, 2010
What If You Forget a Creditor?
Usually by the time a person visits a bankruptcy attorney he has been struggling with overwhelming debt for months if not years. Often the person’s creditors have not been paid for a considerable time. It is not surprising that occasionally a person will forget to list a creditor in the bankruptcy paperwork.
If an omitted creditor is discovered during the bankruptcy case, the law requires the debtor to file amended schedules and identify the creditor. The debtor has an obligation to ensure all creditors are identified and receive notice of the bankruptcy case. Intentionally failing to list a creditor can cause that debt to be declared non-dischargeable and survive the bankruptcy. In extreme cases the bankruptcy court may deny a discharge altogether.
Sometimes even the most diligent debtor will forget a creditor. Things get trickier if the omission is discovered after the bankruptcy case has closed. How the debtor proceeds will depend on the court and the circumstances. In many cases an omitted creditor is considered discharged as a matter of law. If an unsecured creditor did not receive notice of the bankruptcy, but none of the debtor’s assets were distributed to creditors, many bankruptcy courts say the omission did not have any practical effect. In these cases it didn’t matter that the creditor did not receive notice, the debt is discharged anyway.
Conversely, if an omitted creditor loses the opportunity to receive money through the bankruptcy, the omission matters a great deal. Under these circumstances the failure to include the creditor means the debt cannot be discharged and the debtor is stuck with paying the debt.
If you discover an omitted creditor during or after your bankruptcy case, inform your attorney immediately. You and your attorney can discuss the proper procedure for dealing with an omitted creditor.
If an omitted creditor is discovered during the bankruptcy case, the law requires the debtor to file amended schedules and identify the creditor. The debtor has an obligation to ensure all creditors are identified and receive notice of the bankruptcy case. Intentionally failing to list a creditor can cause that debt to be declared non-dischargeable and survive the bankruptcy. In extreme cases the bankruptcy court may deny a discharge altogether.
Sometimes even the most diligent debtor will forget a creditor. Things get trickier if the omission is discovered after the bankruptcy case has closed. How the debtor proceeds will depend on the court and the circumstances. In many cases an omitted creditor is considered discharged as a matter of law. If an unsecured creditor did not receive notice of the bankruptcy, but none of the debtor’s assets were distributed to creditors, many bankruptcy courts say the omission did not have any practical effect. In these cases it didn’t matter that the creditor did not receive notice, the debt is discharged anyway.
Conversely, if an omitted creditor loses the opportunity to receive money through the bankruptcy, the omission matters a great deal. Under these circumstances the failure to include the creditor means the debt cannot be discharged and the debtor is stuck with paying the debt.
If you discover an omitted creditor during or after your bankruptcy case, inform your attorney immediately. You and your attorney can discuss the proper procedure for dealing with an omitted creditor.
Tuesday, July 27, 2010
Five Common Bankruptcy Mistakes to Avoid
The federal bankruptcy laws promise a fresh financial start for the honest but unfortunate debtor. Bankruptcy balances the interests of the debtor to obtain his fresh start and the interests of the creditor to see that the debtor pays whatever he can afford. In some circumstances the debtor can complicate his bankruptcy case before he files.
Mistake #1: Paying an Insider Creditor
The bankruptcy laws attempt to ensure that all creditors receive fair treatment during the bankruptcy process. One concern is that the debtor will pay loans to family or friends before filing bankruptcy, and therefore deprive other creditors from receiving payment. Family, friends, business partners, and other creditors who have close relationships with the debtor are called “insider creditors” and transfers to insider creditors can be avoided by the bankruptcy trustee if the transfer occurred within one year before the bankruptcy filing. For instance, if you gave your mother $1,000 from your income tax refund as payment for a debt, and then filed bankruptcy two months later, the bankruptcy trustee can sue your mother to recover the $1,000. To make matters worse, often the debtor could have protected the cash money during the bankruptcy and paid the debt without difficulty after the case was filed.
Mistake #2: Incurring Debt After Deciding to File
Some people decide to charge up credit cards or take payday loans just before filing bankruptcy. If you have decided to file bankruptcy, do not incur additional debt. Taking loans with no intention to repay the creditor could be fraud. It could also be a criminal act.
Mistake #3: Transferring Property
Some people fear that they will lose property when they file bankruptcy. Some will give away or sell property to avoid losing it. In most cases your bankruptcy attorney can protect your property and you will not lose anything. However, once you have transferred an item it is no longer eligible for legal protections. For instance, a car worth $2,000 is likely entirely protected from turnover during your bankruptcy. If you transfer title of this vehicle to your brother before the bankruptcy, the trustee can avoid the transfer, take the car, and sell it to pay your creditors.
Mistake #4: Cashing out Retirement
Most retirement accounts are entirely protected during bankruptcy. Unfortunately, some people are unaware of these broad protections and cash out their retirement savings out of fear that it will be taken during the bankruptcy. Sometimes the money is spent to pay off loans which can create preference issues. In other cases the debtor converts an exempt asset (retirement funds) to a non-exempt asset (e.g. a paid off car).
Mistake #5: Failing to Be Honest
This is the worst mistake of all because the bankruptcy laws do not protect a dishonest debtor. Failure to truthfully list all of your assets, debts, income and expenses is grounds for dismissal of your case, or you may have to answer allegations of bankruptcy fraud (a federal crime).
If you are experiencing financial difficulty and are considering bankruptcy, discuss your case with an experienced bankruptcy attorney. Your bankruptcy attorney can advise you on the best actions to take before bankruptcy and how to avoid common mistakes. Use the federal bankruptcy laws and protect your property.
Mistake #1: Paying an Insider Creditor
The bankruptcy laws attempt to ensure that all creditors receive fair treatment during the bankruptcy process. One concern is that the debtor will pay loans to family or friends before filing bankruptcy, and therefore deprive other creditors from receiving payment. Family, friends, business partners, and other creditors who have close relationships with the debtor are called “insider creditors” and transfers to insider creditors can be avoided by the bankruptcy trustee if the transfer occurred within one year before the bankruptcy filing. For instance, if you gave your mother $1,000 from your income tax refund as payment for a debt, and then filed bankruptcy two months later, the bankruptcy trustee can sue your mother to recover the $1,000. To make matters worse, often the debtor could have protected the cash money during the bankruptcy and paid the debt without difficulty after the case was filed.
Mistake #2: Incurring Debt After Deciding to File
Some people decide to charge up credit cards or take payday loans just before filing bankruptcy. If you have decided to file bankruptcy, do not incur additional debt. Taking loans with no intention to repay the creditor could be fraud. It could also be a criminal act.
Mistake #3: Transferring Property
Some people fear that they will lose property when they file bankruptcy. Some will give away or sell property to avoid losing it. In most cases your bankruptcy attorney can protect your property and you will not lose anything. However, once you have transferred an item it is no longer eligible for legal protections. For instance, a car worth $2,000 is likely entirely protected from turnover during your bankruptcy. If you transfer title of this vehicle to your brother before the bankruptcy, the trustee can avoid the transfer, take the car, and sell it to pay your creditors.
Mistake #4: Cashing out Retirement
Most retirement accounts are entirely protected during bankruptcy. Unfortunately, some people are unaware of these broad protections and cash out their retirement savings out of fear that it will be taken during the bankruptcy. Sometimes the money is spent to pay off loans which can create preference issues. In other cases the debtor converts an exempt asset (retirement funds) to a non-exempt asset (e.g. a paid off car).
Mistake #5: Failing to Be Honest
This is the worst mistake of all because the bankruptcy laws do not protect a dishonest debtor. Failure to truthfully list all of your assets, debts, income and expenses is grounds for dismissal of your case, or you may have to answer allegations of bankruptcy fraud (a federal crime).
If you are experiencing financial difficulty and are considering bankruptcy, discuss your case with an experienced bankruptcy attorney. Your bankruptcy attorney can advise you on the best actions to take before bankruptcy and how to avoid common mistakes. Use the federal bankruptcy laws and protect your property.
Tuesday, July 20, 2010
Can Bankruptcy Stop a Rental Eviction?
A person’s financial situation is often desperate by the time a bankruptcy is filed. In some circumstances the rent is past due and the debtor is facing eviction. Fortunately, the bankruptcy laws can help many debtors stay in their homes, at least temporarily.
Generally, when you file a bankruptcy petition all collection actions are automatically stayed. The purpose of this stay is to give you some breathing room and time to sort out your financial difficulties. If you are behind on rent payments, the bankruptcy automatic stays the commencement or continuation of an eviction action. The automatic stay prohibits your landlord from any attempt to collect rents that accrued prior to the bankruptcy filing date. Your landlord may not write or call you in an effort to collect these rents, and may not start or continue a lawsuit to evict you.
The bankruptcy automatic stay will not relieve you from your obligation to pay rent after the bankruptcy filing date. If you fall behind on your rent payments after the bankruptcy is filed, your landlord may evict you regardless of the bankruptcy, but cannot seek payment of past rents. If you are not behind on rents at the time the bankruptcy case is filed, your landlord is not a creditor and will not receive notice of your bankruptcy filing. However, you must account for any rent deposit on your bankruptcy schedules.
In some circumstances a landlord may complain to the bankruptcy court that the tenant is endangering the property or using controlled substances illegally on the property. The landlord must file a certification to the bankruptcy court and the tenant has 15 days to respond. The court must hold a hearing within 10 days. If the landlord is successful in this complaint, the court will lift the automatic stay and allow the eviction process to continue.
If your landlord has obtained a judgment for possession and order of eviction before you file bankruptcy, the legal process is more complex. You must deposit one month of rent to the bankruptcy court immediately upon filing the bankruptcy petition along with a certification stating that your landlord’s judgment permits you to stay in the premises upon satisfaction of the entire judgment amount. This filing stays the eviction process for thirty days. If you wish to remain longer, the amount stated in the judgment for possession must be paid within the thirty day period.
Bankruptcy can stop an eviction and give you time to move or make arrangements to stay. If you are facing eviction from your rental home and contemplating bankruptcy, discuss your situation with an experienced bankruptcy attorney.
Generally, when you file a bankruptcy petition all collection actions are automatically stayed. The purpose of this stay is to give you some breathing room and time to sort out your financial difficulties. If you are behind on rent payments, the bankruptcy automatic stays the commencement or continuation of an eviction action. The automatic stay prohibits your landlord from any attempt to collect rents that accrued prior to the bankruptcy filing date. Your landlord may not write or call you in an effort to collect these rents, and may not start or continue a lawsuit to evict you.
The bankruptcy automatic stay will not relieve you from your obligation to pay rent after the bankruptcy filing date. If you fall behind on your rent payments after the bankruptcy is filed, your landlord may evict you regardless of the bankruptcy, but cannot seek payment of past rents. If you are not behind on rents at the time the bankruptcy case is filed, your landlord is not a creditor and will not receive notice of your bankruptcy filing. However, you must account for any rent deposit on your bankruptcy schedules.
In some circumstances a landlord may complain to the bankruptcy court that the tenant is endangering the property or using controlled substances illegally on the property. The landlord must file a certification to the bankruptcy court and the tenant has 15 days to respond. The court must hold a hearing within 10 days. If the landlord is successful in this complaint, the court will lift the automatic stay and allow the eviction process to continue.
If your landlord has obtained a judgment for possession and order of eviction before you file bankruptcy, the legal process is more complex. You must deposit one month of rent to the bankruptcy court immediately upon filing the bankruptcy petition along with a certification stating that your landlord’s judgment permits you to stay in the premises upon satisfaction of the entire judgment amount. This filing stays the eviction process for thirty days. If you wish to remain longer, the amount stated in the judgment for possession must be paid within the thirty day period.
Bankruptcy can stop an eviction and give you time to move or make arrangements to stay. If you are facing eviction from your rental home and contemplating bankruptcy, discuss your situation with an experienced bankruptcy attorney.
Thursday, July 8, 2010
Medical Treatment And Bankruptcy
It is no surprise that illness is a chief contributor to personal bankruptcy. In fact, a 2009 study released by Harvard researchers claims that 62% of all personal bankruptcies during 2007 were caused by health problems. Many individuals struggling with medical bills need relief, but worry about how a bankruptcy will affect their ability to receive medical care in the future.
Under the Emergency Medical Treatment and Active Labor Act hospitals and ambulance services are required to provide emergency healthcare to a person regardless of ability to pay. This federal law requires appropriate medical screening, necessary stabilization, and transfer to an appropriate facility for treatment of an emergency condition. In broad general terms, if you have an emergency medical condition, a hospital ER must treat you.
If you do not have an emergency medical condition, the hospital or doctor may refuse treatment to a bankruptcy debtor. It is unusual for a hospital to deny service after bankruptcy unless the patient demonstrates an inability to pay the new bill. If you have insurance or other form of guaranteed payment, the hospital will likely treat you.
Individual physicians are more likely to deny services if you have discharged their bill. Many bankruptcy debtors want to continue a relationship with their personal doctor, and consequently make payment arrangements after the bankruptcy has been filed. While the bankruptcy law requires the debtor to list every creditor, there is no prohibition against paying a debt after the bankruptcy. Paying the debt does not renew or create a new obligation and the doctor may not take action to collect a discharged debt (i.e. writing or calling to encourage payment).
If you need to include medical bills in your bankruptcy, but worry about receiving future medical care, consult with your bankruptcy attorney. In most cases there is no interruption in medical care or treatment. Know your legal rights and be informed of how your bankruptcy will affect your ability to receive medical care.
Under the Emergency Medical Treatment and Active Labor Act hospitals and ambulance services are required to provide emergency healthcare to a person regardless of ability to pay. This federal law requires appropriate medical screening, necessary stabilization, and transfer to an appropriate facility for treatment of an emergency condition. In broad general terms, if you have an emergency medical condition, a hospital ER must treat you.
If you do not have an emergency medical condition, the hospital or doctor may refuse treatment to a bankruptcy debtor. It is unusual for a hospital to deny service after bankruptcy unless the patient demonstrates an inability to pay the new bill. If you have insurance or other form of guaranteed payment, the hospital will likely treat you.
Individual physicians are more likely to deny services if you have discharged their bill. Many bankruptcy debtors want to continue a relationship with their personal doctor, and consequently make payment arrangements after the bankruptcy has been filed. While the bankruptcy law requires the debtor to list every creditor, there is no prohibition against paying a debt after the bankruptcy. Paying the debt does not renew or create a new obligation and the doctor may not take action to collect a discharged debt (i.e. writing or calling to encourage payment).
If you need to include medical bills in your bankruptcy, but worry about receiving future medical care, consult with your bankruptcy attorney. In most cases there is no interruption in medical care or treatment. Know your legal rights and be informed of how your bankruptcy will affect your ability to receive medical care.
Tuesday, June 29, 2010
Buying A Car During Bankruptcy
There are a surprising number of options for a debtor to retain possession of a vehicle during bankruptcy. Choosing the best option depends on several factors including your ability to pay and the condition of your vehicle. In some cases the best financial option is to surrender your vehicle back to the bank and purchase a different one.
Years ago it was unheard of for a debtor in an active bankruptcy to obtain an auto loan. Several years ago two companies, 722 Redemption Funding, and Fresh Start Loan Corporation, began making auto loans to debtors in bankruptcy, and now many banks have lending programs for debtors. The attitude towards bankruptcy has changed and many debtors are evaluated more on their future ability to pay the loan rather than their past financial trouble.
Obtaining an auto loan during bankruptcy is a matter of showing stable income, a good debt-to-income ratio, and some assurance that your current financial trouble is unusual and not likely to reoccur. All lenders require a loan application and the criteria for approval can vary significantly. Some lenders will not approve a loan if you have had a prior repossession. Other lenders want a substantial down payment. New auto loans often want the bankruptcy discharged before approving the loan. In all cases your vehicle choice will be restricted to a newer vehicle with low miles.
During a Chapter 7 bankruptcy the debtor and the lender are free to negotiate terms outside of the bankruptcy case. The loan is not a part of the case and is not affected by the bankruptcy discharge. For Chapter 13 debtors, any new indebtedness must be approved by the trustee and the court. In most cases the Chapter 13 debtor can obtain approval after a showing of need and ability to pay.
If you are considering bankruptcy and need to buy a different vehicle, consult with an experienced attorney. There are many different options during bankruptcy for retaining, refinancing, or purchasing a different vehicle. Call today and get the information you need to drive your financial future.
Years ago it was unheard of for a debtor in an active bankruptcy to obtain an auto loan. Several years ago two companies, 722 Redemption Funding, and Fresh Start Loan Corporation, began making auto loans to debtors in bankruptcy, and now many banks have lending programs for debtors. The attitude towards bankruptcy has changed and many debtors are evaluated more on their future ability to pay the loan rather than their past financial trouble.
Obtaining an auto loan during bankruptcy is a matter of showing stable income, a good debt-to-income ratio, and some assurance that your current financial trouble is unusual and not likely to reoccur. All lenders require a loan application and the criteria for approval can vary significantly. Some lenders will not approve a loan if you have had a prior repossession. Other lenders want a substantial down payment. New auto loans often want the bankruptcy discharged before approving the loan. In all cases your vehicle choice will be restricted to a newer vehicle with low miles.
During a Chapter 7 bankruptcy the debtor and the lender are free to negotiate terms outside of the bankruptcy case. The loan is not a part of the case and is not affected by the bankruptcy discharge. For Chapter 13 debtors, any new indebtedness must be approved by the trustee and the court. In most cases the Chapter 13 debtor can obtain approval after a showing of need and ability to pay.
If you are considering bankruptcy and need to buy a different vehicle, consult with an experienced attorney. There are many different options during bankruptcy for retaining, refinancing, or purchasing a different vehicle. Call today and get the information you need to drive your financial future.
Thursday, June 17, 2010
Are People In Need Avoiding Bankruptcy?
Although bankruptcy filings are climbing back to the all-time high of 2 million reached in 2005, there is a growing concern that many Americans in need of bankruptcy protection are not filing. A recent article in USA Today quotes Katherine Porter, associate professor of law at the University of Iowa who says, “[T]he filing rate doesn’t even begin to count the depth of financial pain.”
Are you hurting financially? Bankruptcy can help ease that pain.
Bankruptcy is a federal legal process for declaring an inability to pay your creditors. When you file bankruptcy you get immediate relief. The bankruptcy court imposes an “automatic stay” prohibiting creditors from taking collection action against you while the bankruptcy case is pending. The automatic stay is very powerful and stops lawsuits, wage garnishments, and even foreclosures. Its purpose is to give the debtor some breathing room and an opportunity to decide how to resolve an overwhelming debt problem.
There are typically two different types of bankruptcy cases: chapter 7 and chapter 13. In chapter 7 you eliminate debt without payment while chapter 13 is a repayment plan over three to five years. At the end of a bankruptcy case the court enters an order discharging eligible debts and permanently prohibits creditors from taking collection action against you.
In some cases certain debts are not discharged. The most common types are family support obligations, student loans, and taxes. However, bankruptcy offers significant relief by discharging other debts and freeing up money to pay the non-discharged debt. Chapter 13 can also be helpful by allowing payment of the non-dischargeable debt under the supervision of the bankruptcy court and without fear of lawsuits, wage garnishments, or other nasty creditor action.
The bankruptcy process is very efficient. For most chapter 7 debtors the case will last a few months and requires one meeting with the bankruptcy trustee. The cost of bankruptcy is very reasonable compared to the relief that is given.
If you are hurting financially, speak with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you. There are many options available in the law and can give you real relief from overwhelming debt.
Are you hurting financially? Bankruptcy can help ease that pain.
Bankruptcy is a federal legal process for declaring an inability to pay your creditors. When you file bankruptcy you get immediate relief. The bankruptcy court imposes an “automatic stay” prohibiting creditors from taking collection action against you while the bankruptcy case is pending. The automatic stay is very powerful and stops lawsuits, wage garnishments, and even foreclosures. Its purpose is to give the debtor some breathing room and an opportunity to decide how to resolve an overwhelming debt problem.
There are typically two different types of bankruptcy cases: chapter 7 and chapter 13. In chapter 7 you eliminate debt without payment while chapter 13 is a repayment plan over three to five years. At the end of a bankruptcy case the court enters an order discharging eligible debts and permanently prohibits creditors from taking collection action against you.
In some cases certain debts are not discharged. The most common types are family support obligations, student loans, and taxes. However, bankruptcy offers significant relief by discharging other debts and freeing up money to pay the non-discharged debt. Chapter 13 can also be helpful by allowing payment of the non-dischargeable debt under the supervision of the bankruptcy court and without fear of lawsuits, wage garnishments, or other nasty creditor action.
The bankruptcy process is very efficient. For most chapter 7 debtors the case will last a few months and requires one meeting with the bankruptcy trustee. The cost of bankruptcy is very reasonable compared to the relief that is given.
If you are hurting financially, speak with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you. There are many options available in the law and can give you real relief from overwhelming debt.
Tuesday, June 8, 2010
Making Your First Chapter 13 Payment
In a Chapter 13 bankruptcy case the debtor proposes a plan to pay back creditors. That plan is composed of monthly payments to satisfy all or part of the creditors' claims over three to five years. Monthly payments are made to the Chapter 13 Trustee, who then pays your creditors.
There is often confusion over when the first plan payment due. Section 1326 of the Bankruptcy Code directs that the first payment must be made within 30 days after filing the bankruptcy case, even if the debtor’s bankruptcy plan has not yet been approved by the court. Often the first meeting with the Trustee (also known as the "341 meeting" or "meeting of creditors") is scheduled more than 30 days after the filing date, so the Trustee expects your first payment before that meeting. The Trustee will hold all payments until the plan is approved by the Bankruptcy Court (called "confirmation"), and then make distributions to creditors.
It is critical that you make this initial payment within thirty days after filing. It is especially important to monitor the status of this first payment when you have instructed your employer to pay the Trustee from your wages. It is your responsibility to ensure that this first payment is made, and neither the Trustee nor the Bankruptcy Court gives much latitude to a debtor who misses the first deadline in the case.
Making a timely first Chapter 13 payment allows your plan to proceed to confirmation and will expedite the bankruptcy process. Failure to commence making payments can result in delays, additional expenses, or even dismissal. Consult with your bankruptcy attorney regarding payment details, and make that first payment on-time!
There is often confusion over when the first plan payment due. Section 1326 of the Bankruptcy Code directs that the first payment must be made within 30 days after filing the bankruptcy case, even if the debtor’s bankruptcy plan has not yet been approved by the court. Often the first meeting with the Trustee (also known as the "341 meeting" or "meeting of creditors") is scheduled more than 30 days after the filing date, so the Trustee expects your first payment before that meeting. The Trustee will hold all payments until the plan is approved by the Bankruptcy Court (called "confirmation"), and then make distributions to creditors.
It is critical that you make this initial payment within thirty days after filing. It is especially important to monitor the status of this first payment when you have instructed your employer to pay the Trustee from your wages. It is your responsibility to ensure that this first payment is made, and neither the Trustee nor the Bankruptcy Court gives much latitude to a debtor who misses the first deadline in the case.
Making a timely first Chapter 13 payment allows your plan to proceed to confirmation and will expedite the bankruptcy process. Failure to commence making payments can result in delays, additional expenses, or even dismissal. Consult with your bankruptcy attorney regarding payment details, and make that first payment on-time!
Tuesday, June 1, 2010
Who Will Know About My Bankruptcy?
Filing bankruptcy is a very personal process. Many clients worry that their friends and neighbors will learn about their bankruptcy. A common question is, "Who will know about my bankruptcy?"
First, personal bankruptcy cases are generally not reported in the local newspaper. Unless you are a celebrity or public figure, your bankruptcy is not newsworthy. More than 1.4 million consumer filings were recorded last year, so many larger newspapers would have to publish thousands of bankruptcies in their papers each month. It is not cost-effective for a newspaper to search through the bankruptcy court records to find individuals who filed in their distribution area and use valuable print space to report on personal bankruptcy cases.
Second, the bankruptcy laws require notices of the bankruptcy filing to go out to the following:
1. Everyone you owe money (called "creditors");
Under special circumstances other notices are sent, for instance if you owe taxes, or if you want to terminate a lease or contract. Family, neighbors, friends, your employer, your bank, etc. will generally not receive notice of your bankruptcy. A common exception to this general rule is when the debtor causes a voluntary wage withholding to pay chapter 13 plan payments.
Third, while bankruptcy court proceedings and trustee meetings are open to the public, it is unusual for the press or members of the public to attend. Most of these meetings are very brief and can even be a little boring.
Finally, other than receiving notice of the bankruptcy filing from the bankruptcy court, there are only a few ways to learn of a bankruptcy case. The most common way is to contact the bankruptcy court directly. Most bankruptcy courts have an automated telephone system that will provide basic case information to the public.
Filing a bankruptcy petition is generally a private and confidential process. While there are no guarantees that your friends and neighbors will not learn about your bankruptcy, chances are they will not unless you decide to tell them. However, every case is different. If you have specific questions about the effects of filing bankruptcy, consult with an experienced bankruptcy attorney.
First, personal bankruptcy cases are generally not reported in the local newspaper. Unless you are a celebrity or public figure, your bankruptcy is not newsworthy. More than 1.4 million consumer filings were recorded last year, so many larger newspapers would have to publish thousands of bankruptcies in their papers each month. It is not cost-effective for a newspaper to search through the bankruptcy court records to find individuals who filed in their distribution area and use valuable print space to report on personal bankruptcy cases.
Second, the bankruptcy laws require notices of the bankruptcy filing to go out to the following:
1. Everyone you owe money (called "creditors");
2. The bankruptcy trustee;
3. Co-signors and co-debtors; and
4. You and your attorney.
Under special circumstances other notices are sent, for instance if you owe taxes, or if you want to terminate a lease or contract. Family, neighbors, friends, your employer, your bank, etc. will generally not receive notice of your bankruptcy. A common exception to this general rule is when the debtor causes a voluntary wage withholding to pay chapter 13 plan payments.
Third, while bankruptcy court proceedings and trustee meetings are open to the public, it is unusual for the press or members of the public to attend. Most of these meetings are very brief and can even be a little boring.
Finally, other than receiving notice of the bankruptcy filing from the bankruptcy court, there are only a few ways to learn of a bankruptcy case. The most common way is to contact the bankruptcy court directly. Most bankruptcy courts have an automated telephone system that will provide basic case information to the public.
Filing a bankruptcy petition is generally a private and confidential process. While there are no guarantees that your friends and neighbors will not learn about your bankruptcy, chances are they will not unless you decide to tell them. However, every case is different. If you have specific questions about the effects of filing bankruptcy, consult with an experienced bankruptcy attorney.
Wednesday, May 12, 2010
Non-Dischargeable Debts in Bankruptcy
Bankruptcy is a federal legal process for declaring an inability of an individual or organization to pay its creditors. The United States Constitution authorizes the bankruptcy laws and federal laws govern all bankruptcy cases.
One stated purpose of the federal bankruptcy laws is to give the debtor a financial "fresh start." At the end of most cases the bankruptcy judge will discharge certain debts and release the debtor from personal liability.
The bankruptcy laws are meant to give the honest debtor a fresh start, but not a head start. Therefore, Congress has identified certain debts that cannot be discharged in a bankruptcy. Many debts that would ordinarily qualify for discharge may be determined as non-dischargeable if a debtor has committed a crime or fraud in acquiring the debt. Other debts are deemed generally non-dischargeable based on public policy reasons (like taxes or child support).
Generally, the following are non-dischargeable debts:
1. child support or alimony obligations, and debts considered in the nature of support;
2. student loans, unless repayment would cause you undue hardship;
3. criminal fines or restitution;
4. debts listed in a prior bankruptcy where debtor was denied a discharge;
5. recent income taxes less than three years past due; and
6. auto accident claims involving intoxication.
Additionally, there are circumstances which may make a debt non-dischargeable:
1. debts incurred on the basis of fraud;
2. debts from willful or malicious injury to another or another's property;
3. recent purchases with credit cards;
4. debts from larceny (theft), breach of trust or embezzlement; and
5. most federal, state and local taxes and any money borrowed on a credit card to pay those taxes.
All of the categories of non-dischargeable debts in bankruptcy have specific rules and exceptions and each situation has its own challenges. If you have a debt that may fall into a non-dischargeable category, discuss your situation with a qualified bankruptcy attorney and learn your options. Your attorney can provide options for managing, repaying, or discharging the debt.
One stated purpose of the federal bankruptcy laws is to give the debtor a financial "fresh start." At the end of most cases the bankruptcy judge will discharge certain debts and release the debtor from personal liability.
The bankruptcy laws are meant to give the honest debtor a fresh start, but not a head start. Therefore, Congress has identified certain debts that cannot be discharged in a bankruptcy. Many debts that would ordinarily qualify for discharge may be determined as non-dischargeable if a debtor has committed a crime or fraud in acquiring the debt. Other debts are deemed generally non-dischargeable based on public policy reasons (like taxes or child support).
Generally, the following are non-dischargeable debts:
1. child support or alimony obligations, and debts considered in the nature of support;
2. student loans, unless repayment would cause you undue hardship;
3. criminal fines or restitution;
4. debts listed in a prior bankruptcy where debtor was denied a discharge;
5. recent income taxes less than three years past due; and
6. auto accident claims involving intoxication.
Additionally, there are circumstances which may make a debt non-dischargeable:
1. debts incurred on the basis of fraud;
2. debts from willful or malicious injury to another or another's property;
3. recent purchases with credit cards;
4. debts from larceny (theft), breach of trust or embezzlement; and
5. most federal, state and local taxes and any money borrowed on a credit card to pay those taxes.
All of the categories of non-dischargeable debts in bankruptcy have specific rules and exceptions and each situation has its own challenges. If you have a debt that may fall into a non-dischargeable category, discuss your situation with a qualified bankruptcy attorney and learn your options. Your attorney can provide options for managing, repaying, or discharging the debt.
Monday, May 10, 2010
The War On Error: Bankruptcy Attorneys Take Aim Against MERS
Around the country courts are questioning the standing of MERS to assert legal rights in foreclosure or bankruptcy proceedings. Many courts are finding that Mortgage Electronic Registration System, or “MERS,” is not a legal mortgage holder for lenders, investors and their loan servicers, and are invalidating bankruptcy claims or foreclosure processes.
On its website MERS describes itself:
"MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans."
Since the mortgage bubble burst, MERS has come under increasing attack in state and federal courts. Some courts (most notably in Kansas, Florida, and New York) have found that MERS does not have standing to assert mortgage rights because it is a mere nominee, and not a mortgage assignee (an assignment of a mortgage without the debt transfers nothing. 55 Am. Jur. 2d, Mortgages § 1002). Additionally, MERS routinely skips legally required processes when a mortgage is transferred.
MERS is not the beneficiary of a Deed of Trust, and has no ownership or possession of a promissory note. Therefore, many courts are finding noncompliance with state laws. Recently one bankruptcy court in the State of New York invalidated a bankruptcy claim by MERS when the company could not show how it had standing in the case.
Many bankruptcy attorneys are demanding proof of assignment and documents establishing a paper trail for their client’s mortgage. In many cases MERS is unable to provide this information; much like collection companies often cannot prove a debt. Original documents, recorded deeds, payment history, and executed assignments seem to be inconsequential matters to the MERS powerhouse. Fortunately, MERS is now under attack and accused of not following legal processes. It will be very interesting to see how the state and federal appellate courts address the MERS debacle.
If you are dealing with an uncooperative mortgage company and need assistance saving your home, speak with an experienced bankruptcy attorney and discuss your options. There are many legal options available and your bankruptcy attorney can help you determine the best choice for your family.
On its website MERS describes itself:
"MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans."
Since the mortgage bubble burst, MERS has come under increasing attack in state and federal courts. Some courts (most notably in Kansas, Florida, and New York) have found that MERS does not have standing to assert mortgage rights because it is a mere nominee, and not a mortgage assignee (an assignment of a mortgage without the debt transfers nothing. 55 Am. Jur. 2d, Mortgages § 1002). Additionally, MERS routinely skips legally required processes when a mortgage is transferred.
MERS is not the beneficiary of a Deed of Trust, and has no ownership or possession of a promissory note. Therefore, many courts are finding noncompliance with state laws. Recently one bankruptcy court in the State of New York invalidated a bankruptcy claim by MERS when the company could not show how it had standing in the case.
Many bankruptcy attorneys are demanding proof of assignment and documents establishing a paper trail for their client’s mortgage. In many cases MERS is unable to provide this information; much like collection companies often cannot prove a debt. Original documents, recorded deeds, payment history, and executed assignments seem to be inconsequential matters to the MERS powerhouse. Fortunately, MERS is now under attack and accused of not following legal processes. It will be very interesting to see how the state and federal appellate courts address the MERS debacle.
If you are dealing with an uncooperative mortgage company and need assistance saving your home, speak with an experienced bankruptcy attorney and discuss your options. There are many legal options available and your bankruptcy attorney can help you determine the best choice for your family.
Friday, May 7, 2010
Can I Keep My House If I File Bankruptcy?
One of the most common and important questions asked by a client during the initial bankruptcy consultation is, “Can I keep my house?”
The happy answer is, “Yes.” However, every client’s case is different and requires a skilled and experience attorney to evaluate your situation and help you choose the appropriate debt relief process.
The first question is whether there is equity in your home. Every state allows the debtor to exempt home equity from creditors during bankruptcy. Home equity is simply the difference between the amount that is owed and what the property is worth. If you have more equity in your home than can be exempted, you may need to consider either a Chapter 13 repayment plan or a non-bankruptcy option for debt repayment. In a Chapter 13 the debtor pays the amount equal to the non-exempt home equity to unsecured creditors (like credit cards and medical bills) over a three to five year period. If Chapter 13 is not a feasible option, the debtor may want to consider borrowing against the home equity to pay unsecured creditors.
The second issue is whether you can afford to keep the home by making the monthly payments. A home mortgage is a secured debt which must be paid or you must surrender the property back to the mortgage holder. When circumstances have changed and you can no loner afford to keep your home, the bankruptcy laws can help you to leave on your terms without any lingering debt.
In some cases a third issue is present: the debt is more than the value of the house. In those cases bankruptcy may help either through lien stripping an entirely unsecured second mortgage, or by encouraging the mortgage holder to negotiate for a modification and reduction in principle. Typically the mortgage holder does not want your property, and is usually willing to discuss payment options once a bankruptcy case is filed.
Finally, some debtors are facing foreclosure from an uncooperative mortgage holder. A Chapter 13 bankruptcy can be used to force the mortgage holder to accept payments that cure mortgage arrears over three to five years.
There are many options available for saving your home. Your bankruptcy attorney can discuss the pros and cons of each and help you decide which option is best for your family. Use the federal law to your advantage and discover how the bankruptcy laws can help you keep your home.
The happy answer is, “Yes.” However, every client’s case is different and requires a skilled and experience attorney to evaluate your situation and help you choose the appropriate debt relief process.
The first question is whether there is equity in your home. Every state allows the debtor to exempt home equity from creditors during bankruptcy. Home equity is simply the difference between the amount that is owed and what the property is worth. If you have more equity in your home than can be exempted, you may need to consider either a Chapter 13 repayment plan or a non-bankruptcy option for debt repayment. In a Chapter 13 the debtor pays the amount equal to the non-exempt home equity to unsecured creditors (like credit cards and medical bills) over a three to five year period. If Chapter 13 is not a feasible option, the debtor may want to consider borrowing against the home equity to pay unsecured creditors.
The second issue is whether you can afford to keep the home by making the monthly payments. A home mortgage is a secured debt which must be paid or you must surrender the property back to the mortgage holder. When circumstances have changed and you can no loner afford to keep your home, the bankruptcy laws can help you to leave on your terms without any lingering debt.
In some cases a third issue is present: the debt is more than the value of the house. In those cases bankruptcy may help either through lien stripping an entirely unsecured second mortgage, or by encouraging the mortgage holder to negotiate for a modification and reduction in principle. Typically the mortgage holder does not want your property, and is usually willing to discuss payment options once a bankruptcy case is filed.
Finally, some debtors are facing foreclosure from an uncooperative mortgage holder. A Chapter 13 bankruptcy can be used to force the mortgage holder to accept payments that cure mortgage arrears over three to five years.
There are many options available for saving your home. Your bankruptcy attorney can discuss the pros and cons of each and help you decide which option is best for your family. Use the federal law to your advantage and discover how the bankruptcy laws can help you keep your home.
Friday, April 9, 2010
New Federal Guidelines Hope to Increase Home Modifications
In response to many criticisms of its Home Affordable Modification Program (HAMP), the Obama Administration recently announced significant changes intended to speed the modification process and clarify eligibility. Under the new guidelines, mortgage lenders must pursue early intervention to determine borrower eligibility under HAMP, and may not refer any loan to foreclosure until the borrower has been determined ineligible for the program. New timeframes have also been implemented and homeowners can expect a modification decision within 30 days.
The new HAMP guidelines require participating lenders to use principal reduction as a primary means of reducing borrowers’ payments where loans are more than 115 percent of the current home value. Borrowers that are current on their mortgages may qualify for refinancing at a low interest, fixed rate loan insured by the FHA, provided that the lender agrees to reduce the principal for the total combined debt to no more than 115 percent of the home’s value. This provision is meant to encourage lenders to reduce principle for those property owners with negative home equity.
Another important change is a clarification that debtors in bankruptcy must be considered for HAMP. A request for consideration for a modification while in bankruptcy may be made by the debtor, the debtor’s attorney, or by the bankruptcy trustee. This provides a yet another tool for the bankruptcy attorney to save a home mortgage from foreclosure and negotiate terms that the debtor can afford.
To qualify for a loan modification under HAMP, the borrower must:
The new HAMP guidelines require participating lenders to use principal reduction as a primary means of reducing borrowers’ payments where loans are more than 115 percent of the current home value. Borrowers that are current on their mortgages may qualify for refinancing at a low interest, fixed rate loan insured by the FHA, provided that the lender agrees to reduce the principal for the total combined debt to no more than 115 percent of the home’s value. This provision is meant to encourage lenders to reduce principle for those property owners with negative home equity.
Another important change is a clarification that debtors in bankruptcy must be considered for HAMP. A request for consideration for a modification while in bankruptcy may be made by the debtor, the debtor’s attorney, or by the bankruptcy trustee. This provides a yet another tool for the bankruptcy attorney to save a home mortgage from foreclosure and negotiate terms that the debtor can afford.
To qualify for a loan modification under HAMP, the borrower must:
- Be the owner-occupant of a one- to four-unit home;
- Have an unpaid principal balance that is equal to or less than $729,750 for a single-unit home (other limits apply for multi-unit homes);
- Have a first lien mortgage that was originated on or before January 1, 2009;
- Have a monthly mortgage payment (including taxes, insurance, and home owners association dues) greater than 31% of your monthly gross (pre-tax) income; and
- Have a mortgage payment that is not affordable due to a financial hardship that can be documented.
Tuesday, April 6, 2010
Debtors Must Cooperate With the Bankruptcy Trustee
When a consumer bankruptcy case is filed, a trustee is appointed to oversee and administer the case. The trustee does not represent the interests of the debtor and cannot give legal advice, which is the role of your bankruptcy attorney. However, it is important to cooperate with the trustee and any request for information.
The issue of a debtor’s duty to cooperate with the trustee was recently litigated in the case of In re Royce Homes, LP. 2009 WL 3052439 (Bkrtcy. S.D.Tex.). In that Chapter 7 case the trustee requested financial documents and information from a corporate debtor. In response to the request the debtor provided access to “storage facilities containing stacks of documents and old computer servers, most of which are wholly unresponsive to the Trustee's request.” The trustee filed a motion asking the bankruptcy court to compel the debtor’s cooperation.
In deciding the matter the court cited several sections of the bankruptcy code and rules which require debtors to cooperate with the trustee. Notably section 521(a)(3) requires the Debtor to “cooperate with the trustee as necessary to enable the trustee to perform the trustee's duties under this title.” The court ordered the debtor to provide the specific information that the trustee had requested, rather than simply dumping documents or permitting access to records. The court emphasized the debtor’s duty to cooperate by stating, “It is well settled that a [trustee] should not be required to drag information from a reluctant and uncooperative debtor. Because of the extraordinary relief offered under the Bankruptcy Code delay and avoidance tactics are inconsistent with, and offensive to, its purpose and spirit.”
Cooperation with the trustee is an important part of the bankruptcy process. Failure to cooperate or to testify truthfully could result in a discharge, or worse. Your bankruptcy attorney can help guide you through this process of disclosure with the trustee and protect your interests.
The issue of a debtor’s duty to cooperate with the trustee was recently litigated in the case of In re Royce Homes, LP. 2009 WL 3052439 (Bkrtcy. S.D.Tex.). In that Chapter 7 case the trustee requested financial documents and information from a corporate debtor. In response to the request the debtor provided access to “storage facilities containing stacks of documents and old computer servers, most of which are wholly unresponsive to the Trustee's request.” The trustee filed a motion asking the bankruptcy court to compel the debtor’s cooperation.
In deciding the matter the court cited several sections of the bankruptcy code and rules which require debtors to cooperate with the trustee. Notably section 521(a)(3) requires the Debtor to “cooperate with the trustee as necessary to enable the trustee to perform the trustee's duties under this title.” The court ordered the debtor to provide the specific information that the trustee had requested, rather than simply dumping documents or permitting access to records. The court emphasized the debtor’s duty to cooperate by stating, “It is well settled that a [trustee] should not be required to drag information from a reluctant and uncooperative debtor. Because of the extraordinary relief offered under the Bankruptcy Code delay and avoidance tactics are inconsistent with, and offensive to, its purpose and spirit.”
Cooperation with the trustee is an important part of the bankruptcy process. Failure to cooperate or to testify truthfully could result in a discharge, or worse. Your bankruptcy attorney can help guide you through this process of disclosure with the trustee and protect your interests.
Friday, April 2, 2010
Changes in Law Make Bankruptcy More Accessible
Effective April 1, 2010, certain dollar limits contained in the Bankruptcy Code will be increased. A full comparison of the current and changed amounts can be found by following this link. These most meaningful changes to consumer bankruptcy cases are:
• An increase of the eligibility limit for Chapter 13 from $336, 900 to $360,475 in unsecured debt, and from $1,010,650 to
$1,081,400 in secured debt;
• The federal homestead exemption increases from $136,875 to $146,450; and
• The presumption of fraud for luxury items purchased with a credit card within 90 days of a bankruptcy filing increases from $550 to $600; and the presumption of fraud for credit card cash advances within 70 days of filing increases from $825 to $875.
Many other dollar amount increases will take effect on April 1, 2010, including increases to protected educational accounts, increasing restrictions to the bankruptcy trustee’s powers under certain circumstances, and increased protection for retirement accounts. In all, these increases will make the bankruptcy attorney’s job of protecting the consumer debtor a little easier, and make the bankruptcy process more accessible. Please note that these changes will only affect bankruptcy cases filed on or after April 1, 2010.
If you and your family struggle each month to pay bills, consult with an experienced bankruptcy attorney and discuss your financial options. There are many repayment and “walk-away” options available under the Bankruptcy Code. Get the facts and don’t let debt ruin your life.
• An increase of the eligibility limit for Chapter 13 from $336, 900 to $360,475 in unsecured debt, and from $1,010,650 to
$1,081,400 in secured debt;
• The federal homestead exemption increases from $136,875 to $146,450; and
• The presumption of fraud for luxury items purchased with a credit card within 90 days of a bankruptcy filing increases from $550 to $600; and the presumption of fraud for credit card cash advances within 70 days of filing increases from $825 to $875.
Many other dollar amount increases will take effect on April 1, 2010, including increases to protected educational accounts, increasing restrictions to the bankruptcy trustee’s powers under certain circumstances, and increased protection for retirement accounts. In all, these increases will make the bankruptcy attorney’s job of protecting the consumer debtor a little easier, and make the bankruptcy process more accessible. Please note that these changes will only affect bankruptcy cases filed on or after April 1, 2010.
If you and your family struggle each month to pay bills, consult with an experienced bankruptcy attorney and discuss your financial options. There are many repayment and “walk-away” options available under the Bankruptcy Code. Get the facts and don’t let debt ruin your life.
Changes in Law Make Bankruptcy More Accessible
Effective April 1, 2010, certain dollar limits contained in the Bankruptcy Code will be increased. A full comparison of the current and changed amounts can be found by following this link. These most meaningful changes to consumer bankruptcy cases are:
• An increase of the eligibility limit for Chapter 13 from $336, 900 to $360,475 in unsecured debt, and from $1,010,650 to
$1,081,400 in secured debt;
• The federal homestead exemption increases from $136,875 to $146,450; and
• The presumption of fraud for luxury items purchased with a credit card within 90 days of a bankruptcy filing increases from $550 to $600; and the presumption of fraud for credit card cash advances within 70 days of filing increases from $825 to $875.
Many other dollar amount increases will take effect on April 1, 2010, including increases to protected educational accounts, increasing restrictions to the bankruptcy trustee’s powers under certain circumstances, and increased protection for retirement accounts. In all, these increases will make the bankruptcy attorney’s job of protecting the consumer debtor a little easier, and make the bankruptcy process more accessible. Please note that these changes will only affect bankruptcy cases filed on or after April 1, 2010.
If you and your family struggle each month to pay bills, consult with an experienced bankruptcy attorney and discuss your financial options. There are many repayment and “walk-away” options available under the Bankruptcy Code. Get the facts and don’t let debt ruin your life.
• An increase of the eligibility limit for Chapter 13 from $336, 900 to $360,475 in unsecured debt, and from $1,010,650 to
$1,081,400 in secured debt;
• The federal homestead exemption increases from $136,875 to $146,450; and
• The presumption of fraud for luxury items purchased with a credit card within 90 days of a bankruptcy filing increases from $550 to $600; and the presumption of fraud for credit card cash advances within 70 days of filing increases from $825 to $875.
Many other dollar amount increases will take effect on April 1, 2010, including increases to protected educational accounts, increasing restrictions to the bankruptcy trustee’s powers under certain circumstances, and increased protection for retirement accounts. In all, these increases will make the bankruptcy attorney’s job of protecting the consumer debtor a little easier, and make the bankruptcy process more accessible. Please note that these changes will only affect bankruptcy cases filed on or after April 1, 2010.
If you and your family struggle each month to pay bills, consult with an experienced bankruptcy attorney and discuss your financial options. There are many repayment and “walk-away” options available under the Bankruptcy Code. Get the facts and don’t let debt ruin your life.
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