bankruptcy foreclosure

Saving Your Home from Foreclosure During Bankruptcy

by

The decision to file bankruptcy is a difficult one that often comes after long periods of discussion, tears, and debate. For many people, the toughest part of filing bankruptcy is knowing that they risk losing their family home. This may put you in a position where you need to buy a new home or try to get an apartment, neither of which is easy when you have a fresh new bankruptcy on your record.

If you’re interested in saving your home while still going through the bankruptcy process, it’s time to talk to an experienced bankruptcy attorney. Use our listings to find a good fit in your area.

Using the Automatic Stay to Get Some Breathing Room

When you file bankruptcy, the automatic stay goes into effect. This prevents lenders from continuing to try to collect debt payments from you. This is often a huge relief for debtors who have been hit with dozens of calls every week for past-due debts. Rather than trying to figure out which debts to pay this week and which ones to ignore for another couple weeks, you can focus on getting your bankruptcy paperwork together and moving forward to a fresh start.

This also prevents lenders from attempting to collect on your mortgage debt. If you are already in foreclosure proceedings, this should give you a break from the constant letters and phone calls trying to get you up to date on your mortgage.

However, the automatic stay is only a temporary solution. It will not save your home unless you take further steps. It’s important to consult with a bankruptcy attorney to find out if Chapter 7 or Chapter 13 bankruptcy is a better option for you.

Keeping Your Home in Chapter 7 Bankruptcy

To start, you’ll have to figure out how much home equity you have. The more equity you have, the less likely it is that it will be protected under a bankruptcy exemption. This may allow you to save your home if you are a recent buyer or you still owe a considerable amount on it. However, exemptions vary between states, so it’s important to consult with an attorney in your area.

If the exemption covers your entire equity in a Chapter 7 bankruptcy, you may be able to keep your home. However, if it does not, the home will be sold, and the proceeds will be used to pay off unsecured debt.

To keep your home in this situation, you must be current on house payments and be able to continue making your payments in the future. If you are already in foreclosure proceedings, this may not be an option for you.

Chapter 13 Bankruptcy as an Option to Keep Your Home

Chapter 13 bankruptcy has a few more options for homeowners who are behind on house payments or who have too much equity. If you have too much equity in your home, you aren’t automatically forced to sell it and use the proceeds to pay other debts. The trustee will take the nonexempt portion of your equity and require you to pay it back in your repayment plan.

In Chapter 13 bankruptcy, you must create a repayment plan that is practical for your income level and ability to pay. You can pay back the amount past due on your home over three to five years, which makes this a more viable option for those who are already in foreclosure. Keep in mind, though, that arrears payments are separate from your mortgage. Your payment plan must allow you to make mortgage payments going forward and your past due payments.

Keep in mind that this gives you a fairly narrow path to keeping your home. Should you fall behind on arrears payments or mortgage payments, the mortgage holder may move to restart foreclosure proceedings. Make sure that your payment plan is manageable for your financial situation.

Bankruptcy is a big decision, and it’s not one to tackle on your own. With the assistance of a bankruptcy attorney in your area, you can learn more about state laws regarding exemptions and explore options for keeping your home.

Filing for Bankruptcy in Glasgow, KY

by

Glasgow may be a city in Kentucky that is recognized for being the birthplace of multiple notable people ranging from major league baseball players to governors, its appreciate of Scottish culture, and its gorgeous historic homes, but it is also a city where more than 19 percent of individuals live below the poverty line. Indeed, financial woes are very real to many Glasgow residents, and some find themselves struggling under mountains of debt, wondering whether there will ever be an escape.

A skilled Kentucky can help you find a solution to your financial woes. Reach out to an attorney today for a consultation to discuss your situation.

What Is Bankruptcy?

Bankruptcy is a legal process that involves an individual appearing before a bankruptcy court, presenting evidence of debts, assets, and income, and asking the court to discharge those debts. Bankruptcy is one way for an individual who cannot pay their debts to acquire a degree of financial relief, but it is important to remember that there are different types of bankruptcies, not all debts are dischargeable, and that filing for bankruptcy often means losing property and taking a significant hit to one’s credit score.

Chapter 7 and Chapter 13 Bankruptcy

There are two primary types of bankruptcies that are available to individual consumers: Chapter 7 and Chapter 13 bankruptcy.

Chapter 7 bankruptcy. Chapter 7 bankruptcy is only available to those individuals with few assets and little income; if you make too much money, you will not be eligible for Chapter 7 bankruptcy. Chapter 7 bankruptcy is designed to give you a fresh start by liquidating your assets, using these assets to pay creditors, and wiping out remaining debts (with the exception of certain debts that cannot be discharged).

Chapter 13 bankruptcy. Chapter 13 bankruptcy is designed for those debtors who have some income and are able to form a repayment plan in which they pay back a portion of their debts over a three-to-five year time period. Chapter 13 is often more advantageous for those who do have some income as it allows for the debtor to keep more assets in exchange for repayment.

The type of bankruptcy you will file will depend on numerous factors, including the means test.

Bankruptcy Means Test

Even if you want to file for Chapter 7 bankruptcy, you will be barred from doing so if you do not pass the means test. The means test is used to determine whether or not you have the income and assets to pay back a portion of your debts, rather than having all of your debts forgiven. You do not have to take the means test if you are a disabled veteran and your debt was incurred while on active duty, or if your debts are not primarily consumer debts.

The means test looks at your income or means. If your monthly income is less than the median household income for a household of your size in Kentucky, then you will likely pass the means test and be eligible for Chapter 7 bankruptcy. There are some cases in which you may be able to qualify for Chapter 7 even if you make above the median income; discuss your case with a bankruptcy attorney to learn more.

Advantages of Filing for Bankruptcy

Filing for bankruptcy has advantages and disadvantages. Two of the biggest disadvantages have already been listed: losing your property and suffering a negative hit to your credit score, which can of course prevent you from being able to get a loan, take out a line of credit, or even secure housing in the future.

While the disadvantages of bankruptcy should certainly be taken seriously, there are also a number of advantages, making filing for bankruptcy the best choice for individuals who do not have other debt relief alternatives available to them. These include:

  • Initiate the automatic stay. One of the most beneficial parts of filing for bankruptcy is that the moment that you file, the automatic stay will be initiated. The automatic stay places a mandatory hold on creditors’ ability to collect debt. This can give you some much-needed breathing room, and can provide relief when action against you was imminent, such as a foreclosure, lawsuit, etc.
  • Discharge debt. Of course, the other reason that many people choose to file for bankruptcy is because they simply have too much debt and too little income to ever be able to pay down their debt and discharging debt and starting over is a must. While not all debts can be discharged in a bankruptcy proceeding, being released from liability for many debt types, including credit card debt, can provide a huge sense of freedom.
  • Keeping your property. Another major advantage to filing for bankruptcy, specifically Chapter 13 bankruptcy, is that doing so may allow you to keep property such as a house, car, and other personal assets. Indeed, in exchange for allowing you to keep your property, you pay off a portion of your debts overtime with a repayment plan. While repayment can be difficult, this can also be a very empowering experience.

Learn More About Bankruptcy Today

Bankruptcy is not something that you should rush into, and it’s not the right choice for all people in Glasgow who have debt, even if that amount of debt is oppressive. Before you make the decision to file for bankruptcy, we strongly encourage you to schedule an appointment with a local bankruptcy attorney today.

 Helpful Tips for Paying Off Credit Card Debt in The New Year

 Helpful Tips for Paying Off Credit Card Debt in The New Year

by

Debt can be a mortifying four-letter word, and multiple credit card debt can be especially troublesome. The gleaming piece of plastic seems like a great tool to have when the card issuers are enticing you with a low APR and an extended credit line. But just a few shopping sprees and some unforeseen emergencies later, it feels like a millstone around your neck.

What Makes Credit Card Debt Especially Bad?

Revolving credit card debt comes with cripplingly high interest rates. When you just make the minimum payment at the end of each billing cycle, not only does it take a long time to pay off the entire balance, but you also end up paying a huge amount as interest on the initial spend.

Paying the minimum due amount, especially with multiple cards, can have a negative impact on your credit scores too. This is because credit utilization (the percentage of credit available to you) carries considerable weight in your credit scores.

The best way to maintain a healthy credit score is to keep the balances low, or ideally, pay off the full balance each month.

Strategize to Win the Battle against Credit Card Debt

You can fight your way out of the credit card debt trap one step at a time. We will discuss some strategies that can help you take control of your financial health by paying off your credit card debt. The first step in fighting the battle is to arm yourself with relevant information. You must gather all the relevant details for all your cards, including their balances, due dates, interest rates, and minimum payments.

Here are some more practical steps that can help you tackle your debt:

Control Your Spending

The mountain of debt you face has not sprung up overnight. So, you need to realize you cannot wave a magic wand at it to make it disappear in a flash. You need to replace the excessive spending habits with frugality and restraint. And there are no shortcuts. The first step that will pave your way out of existing debt is not to add more debt. Stop using your credit cards for a while and use cash. Paying with cash will help you remain cautious and cut down on your spending.

Consolidate Your Debt

If necessary, keep just one card instead of multiple credit cards. Consolidate and transfer balances from all your cards to one card. Find out if you have a balance transfer offer on an existing card, or else, apply for a new card that offers zero APR on such transfers for an initial period. Select the cards with higher interest rates and transfer the balances to the new card. Start paying off on the new card and try to pay off before the 0 percent period ends.

Prioritize Your Debts

Start with compiling information on all your credit card debts and make a list based on their importance. Figure out your priorities, whether it is to pay off the one with the highest interest rate or the one with the lowest credit line. Aim for a payment strategy that corresponds to your financial needs, while keeping yourself sufficiently motivated to pay off your debts.

Use the Avalanche Approach

The avalanche method saves you money while helping you pay off your debts faster. This method seems to be the popular choice for getting out of credit card debt. In the avalanche method, you need to pay higher amounts towards cards with higher interest rates, and lower or minimum payments towards cards with the lowest interest rates.

Use the Snowball Approach

In this method, you pay off the cards with smaller balances first. This boosts motivation and provides a sense of accomplishment to people who favor it to get out of debt. The debt snowball is suitable for you if you need to pay off several small balances on different credit cards but are not eligible for a new balance transfer card to shift the balances.

Personal Loan

The best strategy is to keep paying off your credit card balances to be debt-free eventually. But if managing multiple credit card debt is looking too daunting or slow, you could try a different approach. It would not be a bad idea under the circumstances to pay off several credit cards with the help of a low-interest rate personal loan.

Debt Settlement

Debt settlement can be an option if you can afford to make a one-time payment to settle your debts. You can choose to negotiate the settlement on your own or hire a professional company that engages in debt settlement. Do your homework before hiring a company to avoid the typically high fees these debt settlement companies charge for such services.

File Bankruptcy as the Last Resort

If you feel the multiple credit card debt and their high-interest payments are spiraling out of your control, bankruptcy could be your last resort. Even though bankruptcy can provide you a fresh start, you may want to avoid it unless inevitable because of its adverse effect on your credit status.

You can choose one of the two types of bankruptcy. Under Chapter 7 bankruptcy, you need to surrender property, while that is not the case under a Chapter 13 bankruptcy. It will be in your best interest to hire an experienced attorney before filing bankruptcy as it can be a long and complex process.

Contact an Experienced Bankruptcy Lawyer

If you are drowning in debt and it seems like bankruptcy is your best option, the first step is to speak with a skilled and knowledgeable bankruptcy attorney. Schedule a consultation today to discuss your circumstances, so you can make the most informed decision.

What Happens if My Income goes Down or My Expenses go Up during my Chapter 13?

What Happens if My Income goes Down or My Expenses go Up during my Chapter 13?

by

Bankruptcy. It is sometimes a necessary option when an individual accrues too much consumer or business debt without enough income to pay it off. Sometimes it is due to a life event. Maybe you experienced a physical ailment, an accident, high medical bills, college loan debt, repayment of a government obligation – it all becomes too much to deal with and you can’t meet your obligations under your current salary.

Chapter 7 bankruptcy is available to individuals, partnerships or corporations. The debt is discharged in the majority of cases with a few exceptions. Some of your assets may be liquidated to pay off debt.

According to the U.S. Courts, debtors receive a discharge in more than 99% of Chapter 7 filings after qualifying under a “Means Test.”

These tests are thorough. Your financial records, present income/ debt ratio, expenses and future expenses are calculated along with income.

The “means” or average is calculated by determining your income for the six months prior and comparing it to the average monthly income in your county.  If you fall below the median income, you should be able to file for Chapter 7.

Chapter 13 Bankruptcy

If you don’t qualify for Chapter 7 (e.g., you make too much money or you want to pay off your debt rather than discharge it), you may qualify for Chapter 13 bankruptcy. Chapter 13 bankruptcy is for wage earners who are able to repay all or part of their debt in three to five years.

This allows you to keep your assets and stop foreclosure proceedings but consolidate debt and make reasonable payments to a trustee who distributes payments to creditors. Some unsecured debt such as credit cards may be dismissed or the debt reduced.

An experienced bankruptcy attorney will let you know what debts are not dischargeable such as child and spousal support, a lien on a property, luxury purchases before filing, government debts and fines, and auto accident claims involving drunk driving.

Changes in Income After Chapter 13

Even with a bankruptcy, you still need maintain some lifestyle. Bills come in, electricity, rent, a mortgage and car payment, insurance, all must be paid and on time.

But sometimes life happens. You may lose a job, are reduced from a full-time to part-time position, or face a large unanticipated medical expense. These events were not anticipated when you created your payment plan.

It may be time to make an adjustment to your Chapter 13 repayment plan. When this is the case, you have some options.

The court may convert your Chapter 13 bankruptcy to a Chapter 7 and require liquidation of some assets under the U.S. Bankruptcy Code.

The debtor may request the court grant a “hardship discharge” to address the events that are out of your control. Some debts that are not dischargeable, such as taxes and spousal support still must be paid.

Your attorney may opt to request the court to temporarily suspend your payment obligations provided your circumstance is likely to change in the short-term, for example 90 days. After that time period, you would be expected to resume your payment plan.

Lastly, we may help you modify the payment plan to lower your payments over time. A motion will be filed and served on the bankruptcy trustee and all of your creditors, and a hearing date will be set.

Certain debt cannot be adjusted such as child and spousal support and tax obligations.

But if at that time, you fall behind again on your mortgage payment, for example, your experienced legal representative may file a motion to prevent the mortgage company from asking the court to begin foreclosing your home.

During this stressful time, it is essential that you have representation to preserve whatever assets you can such as your home. This is a time when you absolutely need to consult with an experienced bankruptcy lawyer so you can retain as many of your assets as possible. Take the first step by contacting a bankruptcy attorney in your area for a free, no obligation consultation.

 

Sources:

U.S. Bankruptcy Code
https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics

NOLO Press on Bankruptcy
https://www.nolo.com/legal-encyclopedia/debt-discharged-chapter-7-bankruptcy.html

The Bankruptcy Site
https://www.thebankruptcysite.org/resources/i-cant-afford-my-current-chapter-13-plan-payment-can-i-re

Chapter 13 Bankruptcy Basics
https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics