A simple question that gets asked often.
A Chapter 13 bankruptcy will.
Yes, filing this before the sale date stops foreclosure.
But it'll only work long term if you're now able to afford to pay the regular mortgage payment again.
You'll also have a trustee payment to pay, one of the key elements of that will be your arrearage.
Have an attorney run the numbers for your situation.
But, if the original cause for you being behind is resolved, this could be a simple resolution.
While you have the phone and your finances available, present those same details to your lender. Many are offereing modification plans even better than bankruptcy. They may willingly offer you better terms.
Wednesday, October 7, 2009
Wednesday, September 16, 2009
Breaking the news: Chapter 13
One of the tough parts of my job is when I need to be the one to first break the news that a fresh start isn't in the near future for a client. Chapter 7 just isn't appropriate for all cases.
The four main reasons why clients will file Chapter 13 are:
The four main reasons why clients will file Chapter 13 are:
- Means Test Qualification
- Asset Protection
- Prior Chapter 7 case within 8 years.
- Foreclosure.
Foreclosure and prior case filings are usually simple if/then checkoffs that most callers will have understood well during their own research.
Asset exemptions and the Means Test are more complex topics. Plenty of times I'm the first contact with a solid understanding of these topics. That can make me the bad guy. Read on:
Means test failure.
Unexempt assets.
Tuesday, September 8, 2009
Will a landlord rent to me after bankruptcy?
There are two types of landlords. Those with brains and those with systems. Either can be successful.
Those with a system will probably say "No" as soon as you walk in the door. Just keep walking, this is what you signed up for when you chose bankruptcy.
Those with a brain will probably understand that you are a better risk the day after you file bankruptcy than you were before. After filing, you no longer have creditors threatening, judgments pending and garnishments possible.
Credit collectors have and a whole range of psychological tricks designed for you to spend your rent check to resolve your old credit card bill. There are very, very few instances where that would be a smart idea. But people get threatened into it all the time.
Now, sometimes those landlords with brains are smart.I've worked with some before. They'll review your case filing. They'll make sure you're not still broke because of some car you still can't afford. They'll compare their rent to your old rent.
I worked with a good friend who rented their home out to someone in a bankruptcy and hopes to close of the lease/purchase side of the contract.Digging deep in that paperwork showed that the bankruptcy was set up as a Ch13 in order to stop foreclosure on a home they were really stretching to afford.The problem that lead to the bankruptcy was solved, they let go of the home. They've been solid renters.
How can I hire an attorney if I'm bankrupt?
I get this question less than I expect. But still often enough to address.
How can I hire an attorney if I'm bankrupt?
The answer lies in the difference between Poor and Broke.
Poor is someone who is "being held down by the man, " they don't have anything, never expect to build anything, become anything or build anything. To be poor is to be sad.
Broke on the other hand is a pendulum that swings too far towards debt. The worse off the situation gets, the more determined that pendulum is to swing back the other way.
I've met people with very low means. It's pretty sad. It's sad to me because it's a problem bigger than I can fix. If you have so little income you can barely keep the lights on, bankruptcy may be in your future, but it's not a solution to your problem. I can force them to leave the lights on. It's up to you to keep them burning.
Most clients pay their attorneys fees with simple math.
When you're moving forward towards filing BK, there's no point in continuing to make payments towards items you will be including in the case. Most will keep making payments towards their homes, cars and utilities, but ignore all the rest.
Most attorneys will have you refer those friendly creditor phone calls over to their office too.
If you've been making any sort of payment to your debts, shift the focus of those payments towards your attorney instead.
In a few months, you're case will be paid in full and ready to go.
How can I hire an attorney if I'm bankrupt?
The answer lies in the difference between Poor and Broke.
Poor is someone who is "being held down by the man, " they don't have anything, never expect to build anything, become anything or build anything. To be poor is to be sad.
Broke on the other hand is a pendulum that swings too far towards debt. The worse off the situation gets, the more determined that pendulum is to swing back the other way.
I've met people with very low means. It's pretty sad. It's sad to me because it's a problem bigger than I can fix. If you have so little income you can barely keep the lights on, bankruptcy may be in your future, but it's not a solution to your problem. I can force them to leave the lights on. It's up to you to keep them burning.
Most clients pay their attorneys fees with simple math.
When you're moving forward towards filing BK, there's no point in continuing to make payments towards items you will be including in the case. Most will keep making payments towards their homes, cars and utilities, but ignore all the rest.
Most attorneys will have you refer those friendly creditor phone calls over to their office too.
If you've been making any sort of payment to your debts, shift the focus of those payments towards your attorney instead.
In a few months, you're case will be paid in full and ready to go.
Thursday, September 3, 2009
The Means Test
The Means Test.
For those brave souls attempting to file cases Pro Se, without an attorney, I can think of only one phrase worse than this to send you running to hire an attorney, and that's 'loose your house.'
The test is quite simple, but you need to flex those dormant High School Math Muscles and reference a half dozen government charts.
But I'll give you the easier version.
First, the median income. Most people filing bankruptcy don't even need to run the full means test. It's an Ebert style Thumbs Up/Thumbs Down test. Is your houseshold income higher than the median household income for your family size and your state?
If it's lower, you can file Chapter 7. If it's higher, well, you might still qualify for Chapter 7, you've just got more math to work through.
Link to the full official listing.
For example: Illinois.
One Person: $47,355
Two People: $60,049
Three People: $68,730
Four People: $81,184
Most people can simply look at the number, shrug, and know without a doubt they pass.
But, income is seldom even. The rules are smart enough to take that into account. It's based on the six months prior to your filing date.
Good news teachers and construction workers, pick the season you file your case and those slow months drag down your income quickly.
Bad news if you want or need to file quickly. Overtime, bonuses and part time work can flex against you.
The second half of the test is only for those whose income is higher than the median.
I won't dig into each line item, it's messy. But, just some generalities.
The question it's out to answer is simple: can you repay your debt at all?
If you can, you must, at least as much as you are able to. You don't qualify for Chapter 7.
If you have no ability to repay, you don't need to. You qualify for Chapter 7.
Where the test gets sticky to explain is what qualifies as normal expenses. I've had people shocked that they couldn't file Chapter 7. They spend everything they earn. The test is a cruel mistress, it doesn't what you do spend your money on, it holds your budget up to everyone else in your county. Lots of people are spending more than their neighbors and these numbers will prove it.
For those brave souls attempting to file cases Pro Se, without an attorney, I can think of only one phrase worse than this to send you running to hire an attorney, and that's 'loose your house.'
The test is quite simple, but you need to flex those dormant High School Math Muscles and reference a half dozen government charts.
But I'll give you the easier version.
First, the median income. Most people filing bankruptcy don't even need to run the full means test. It's an Ebert style Thumbs Up/Thumbs Down test. Is your houseshold income higher than the median household income for your family size and your state?
If it's lower, you can file Chapter 7. If it's higher, well, you might still qualify for Chapter 7, you've just got more math to work through.
Link to the full official listing.
For example: Illinois.
One Person: $47,355
Two People: $60,049
Three People: $68,730
Four People: $81,184
Most people can simply look at the number, shrug, and know without a doubt they pass.
But, income is seldom even. The rules are smart enough to take that into account. It's based on the six months prior to your filing date.
Good news teachers and construction workers, pick the season you file your case and those slow months drag down your income quickly.
Bad news if you want or need to file quickly. Overtime, bonuses and part time work can flex against you.
The second half of the test is only for those whose income is higher than the median.
I won't dig into each line item, it's messy. But, just some generalities.
The question it's out to answer is simple: can you repay your debt at all?
If you can, you must, at least as much as you are able to. You don't qualify for Chapter 7.
If you have no ability to repay, you don't need to. You qualify for Chapter 7.
Where the test gets sticky to explain is what qualifies as normal expenses. I've had people shocked that they couldn't file Chapter 7. They spend everything they earn. The test is a cruel mistress, it doesn't what you do spend your money on, it holds your budget up to everyone else in your county. Lots of people are spending more than their neighbors and these numbers will prove it.
Introduction
I'm a BK Worker.
I'm a bankruptcy clerk in a law office. I'm not a lawyer, but that just means I spend more time working on bankruptcy than waiting around in court. I work with people. The lawyers work with paper.
My job is simple. It's just not easy. I tell people how bankruptcy will work for their situation. I'm good at what I do. Clients learn alot from talking to me. I help them make that big decision if they want to move forward and really file a case. I've learned alot and there are few things I don't know.
That's what I'm here to share. If you're considering filing a case, I'll be posting some scenarios. Each case is different, but you may find some very similar to where you stand.
If you're a BK worker too, welcome. We'll learn alot from eachother. From how to best relay information to how to best close the deal (and get on to that growing pile of paperwork).
I'm a bankruptcy clerk in a law office. I'm not a lawyer, but that just means I spend more time working on bankruptcy than waiting around in court. I work with people. The lawyers work with paper.
My job is simple. It's just not easy. I tell people how bankruptcy will work for their situation. I'm good at what I do. Clients learn alot from talking to me. I help them make that big decision if they want to move forward and really file a case. I've learned alot and there are few things I don't know.
That's what I'm here to share. If you're considering filing a case, I'll be posting some scenarios. Each case is different, but you may find some very similar to where you stand.
If you're a BK worker too, welcome. We'll learn alot from eachother. From how to best relay information to how to best close the deal (and get on to that growing pile of paperwork).
Subscribe to:
Posts (Atom)