Are All Debts Forgiven in Bankruptcy?
Bankruptcy is a very useful thing that can help many people and give them a fresh start in their financial lives. Many debts can be discharged in bankruptcy. However, there are sometimes exceptions. Debts that are commonly discharged in bankruptcy include things such as:
- -credit cards or unsecured loans
- -car repos and deficiency balances
- -SOME car accidents
- -material supplier debts
- -medical bills
- -lawsuits and judgments
- -evictions and unpaid rent
- -unpaid utility bills
- -foreclosure balances
There are exceptions, however, to the above standard discharges covered by going bankrupt. The following are four different examples of these exceptions:
Excessive credit card use immediately leading up to the bankruptcy. If you go on a major credit spree just before filing for bankruptcy, you may have troubles. The creditor may challenge your request claiming you never intended to pay for those items. If this happens your entire balance MAY NOT be discharged.
Being under the influence of drugs or alcohol when you cause an accident or maliciously or willfully causing an accident. Debts under these kinds of circumstances cannot be eliminated.
In the case of money owed to suppliers, if you STILL have material that the supplier can recover and resell, you have to return it. You don’t get to keep it, eliminate your debt and then resell the material for your own profit.
Committing fraud when you’re sued may prevent debts from judgments against you from being discharged.
The aforementioned debts are the most common types included in bankruptcy petitions. It should be noted that each case is unique and has its own set of circumstances. Therefore you should always consult an attorney concerning your particular debts as well as do your own personal research.
Foreclosure Rescue Scams Are Out There – BEWARE!
Washington, as well as other areas, have a growing problem of foreclosure rescue and mortgage modification scams that could cost you thousands of dollars OR your home should you fall victim. Scammers will usually make promises they can’t keep such as ensuring GUARANTEES of certain outcomes for a fee and/or pretending they have direct contact with your mortgage servicer.
If you think you may be a victim of one of these kinds of scams, file a complaint NOW.
To help you avoid such scams follow these tips:
If you see/hear promises to save your home and lower your mortgage or debt payment, beware of con artists. If you are struggling to pay your mortgage, keep these tips in mind:
On your own or with help from a HUD-approved housing counseling agency, you can apply to the federal Making Home Affordable (MHA) program. For more information call 888-995-HOPE.
ONLY your mortgage servicer can grant a loan modification. This is how you know it’s impossible for a third party to guarantee or pre-approve your HAMP mortgage modification application.
If they want you to pay a fee upfront, beware. In most cases, charging fees in advance of a mortgage modification is actually illegal. Paying a third party won’t improve your likelihood of receiving a mortgage modification anyway.
If an individual or company claims to be affiliated with HAMP or has a logo or some display representing themselves as such, check out the said connection by calling the Homeowner’s HOPE Hotline at 888-995-HOPE.
Also, be leery of anyone that offers money-back guarantees.
ESPECIALLY beware of anyone who advises you to discontinue contact with your mortgage servicer or to stop making mortgage payments.
Never sign over the deed to your property to any individual or organization unless you are working directly with your mortgage company to forgive your debt.
Where do you start if you are considering bankruptcy?
Reality has changed for millions of people over the last few years. Even though the housing market has recovered nicely, for some, this reality is not in their favor. If you feel overwhelmed by a mountain of debt and can’t see your way out of the situation. It might be time to consider filing for bankruptcy.
Filing bankruptcy is a serious matter. You should get financial counseling before you take this step, but if you have no other option, the process can protect you from harassment. It is pretty straight forward. Over time, if you are careful, you will have a chance to rebuild your credit.
Once you have researched your options and concluded that bankruptcy is the best way forward, make sure that you understand the process before you begin filing so that at any point along the way you will know what steps are next.
How Do I Start a Bankruptcy?
The first step in filing bankruptcy is to determine what you owe to each lender. You can do this by obtaining a copy of your free credit report from each of the three major reporting agencies: Equifax, Experian and TransUnion. This will provide you with the most recent records of your debts and will play an important part in ensuring that you properly proceed.
Next, visit the U.S. Courts Bankruptcy website. Here you can find information regarding the type of bankruptcy you will need to file. Generally, you will file under chapter 7 or chapter 13. When you understand the differences you are ready for step 3.
You will probably want to obtain an attorney who specializes in bankruptcy in your area. This is always recommended because his/her expertise can help you make your way through the often confusing process of bankruptcy. They can also advise you on how to get creditors off your back while you are moving ahead.
Locate a bankruptcy attorney in your area. Although an attorney is not required to file for bankruptcy, it is highly encouraged that consumers use a knowledgeable bankruptcy attorney. The bankruptcy process is not clear-cut and it is important to have an experienced professional on your side. The e-bk website maintains a lawyer directory that will help you in your search for an attorney to help you with filing your bankruptcy.
Once you have your records in place, meet the attorney in person. If you are married or have a partner, bring them along and talk about the right process for your bankruptcy. This will also mean taking a Means Test that will determine whether you file for chapter 7 or chapter 13 bankruptcy. Once your path is set, the attorney will file a petition on your behalf. The entire process can be quite lengthy, but once the petition is filed with the court, you are well on your way to a new beginning.
Filing bankruptcy in Western Washington should never be your first step in finding debt relief, but if you have exhausted your other options and still find yourself unable to meet your debt obligations, bankruptcy can help you move forward toward a better future.
Contact Advantage Legal Group for more information on Western Washington bankruptcy.
Is Bankruptcy Embarrassing?
Being an adult is rough. As an adolescent we would hesitate to do things, worried about what our peers would think, and often, being an adult is no different. Being an adult doesn’t mean you no longer have emotions or that you don’t worry about others judging you. However, being an adult DOES mean that you need to go ahead and make the hard decisions that DO come with consequences, BUT do turn out better for you in the long run.
Bankruptcy has a weird stigma and connotation like people think their name will appear on some “website of shame” or something. The truth is, unless you’re a celebrity, you probably won’t hit any tabloids.
Most of bankruptcy is between you and your lawyer. As with any other attorney/client relationship, the attorney/client privilege of confidentiality applies.
When your case is filed with the bankruptcy court, your case will be sent to your creditors for obvious reason. Additionally, any family or friends that you owe money to will be notified as well since you are required to list ALL debts. Therefore, now your lawyer knows and the people you owe money. No one else. It is true that your filing of bankruptcy is public record but no one would ever know unless for some reason they purposely sought it out.
The only time you will be out in public discussing your bankruptcy is at your “Meeting of Creditors”. This meeting is a short meeting between you and your bankruptcy trustee. Creditors are welcome to attend however, they usually don’t. These meetings are generally held in a conference room and last about five minutes or so. So, rest assured that this is a short meeting with STRANGERS that you’ll probably never see again. So, once again unless you’re a celeb and get caught by TMZ, the process is relatively short and painless.
No one will know you filed for bankruptcy unless you tell them. Besides all this, if you’re facing serious financial problems and TRULY WANT to begin to do what RIGHT with your money, you shouldn’t feel any shame in creating a fresh start with a clean slate for yourself. Hold your chin up and begin on the path of financial responsibility. You got this.
Bankruptcy is all about helping an individual(s) resolve debt and learn better financial management. Getting a fresh start is not just about leaving the past behind but it also requires someone to protect the assets they still have. You can maximize the benefits of this by NOT borrowing, selling or getting rid of these assets before you file for bankruptcy.
Before I File for Bankruptcy, Can I Sell Some of My Assets?
All too often, bankruptcy attorneys meet clients who have taken desperate measures in order to stay afloat with mountains of debt. They operate under the belief that they will lose their assets after filing bankruptcy. However, the truth is, that it can be harder to recover from bankruptcy if you don’t have the basics, such as a home, car, retirement accounts, unemployment benefits, tools of your trade and so on.
Bankruptcy Protection and Your Assets
A lot of times bankruptcy will provide protection for your assets. Straight bankruptcy (Chapter 7 filing) will protect “exempt” assets which means people filing for this type of bankruptcy will be able to keep much of what they own. Assets that have a higher value than what is exempt by law can be kept by “an adjustment of debts” under Chapter 13 bankruptcy for items that are nonexempt. To develop a plan to protect these assets, obtain an experienced attorney.
Bankruptcy Can’t Bring Back What Has Already Been Lost
Although bankruptcy can provide protection for what you currently own, it cannot bring back what you may have already lost before you filed for bankruptcy. Things that have been spent, sold or borrowed against to avoid financial disaster could have been saved if bankruptcy was filed beforehand.
Most people facing bankruptcy don’t realize the consequences of borrowing, selling and spending or that their assets may be protected under law. An experienced attorney can help place you in the perfect position for filing bankruptcy.
Ready to schedule a consultation? 425-452-9797 Or Contact Us Here
Give Yourself the Gift of Mortgage Mediation this Christmas (or New Years)
While many families are celebrating the season with hearts full of peace and joy, it can actually be a stressful and discouraging time for families under economic distress. Many homeowners are still facing foreclosure, having never recovered from the downturn that began in 2008.
However, Advantage Legal Group is here to shed some light on your holiday season by letting you know about a law that can help you mediate and resolve those problems. This law is four years old but many still don’t know about it or how to take advantage of it. The law is the Foreclosure Fairness Act that was put into law in 2011.
This law provides an opportunity for most homeowners to force most mortgage companies to come to the table and negotiate a solution that works for everybody. So few people have taken advantage of this law. It is highly recommended that if you or someone you know can be helped with this law that you take advantage of it by contacting Advantage Legal right away!
OLD PAYMENT: $3185.01 at 5.875% fixed rate
NEW PAYMENT: $1999.24 at 4.125% fixed rate
REDUCTION OF: $1185.77
And that’s just one of many ways Advantage Legal is bringing the Merry back to Christmas for so many families this year.
Begin writing your Christmas Wish List now and start crossing off your MUST HAVE gifts to yourself and your family this holiday season.
YOUR CHRISTMAS WISH LIST:
– Call Advantage Legal at 1-877-MEDIATION
– FREE consultation with Advantage Legal
– Monthly savings!
– Peace of Mind!
– Holly Jolly Christmas!
Ready to schedule a consultation? 425-452-9797 Or Contact Us Here
Who Says Life’s Not Fair? Two Things to Know About the Fairness Act
Okay. Okay. So, life’s not fair. It’s true. However, when things come around like the Washington Foreclosure Fairness Act, life seems to seem a little fairer, a little brighter. This act or law helps bring homeowners back from the brink of foreclosure by forcing lenders to enter into face to face negotiations. There are two things to remember about the Washington Foreclosure Fairness Act:
1) You MUST have representation to advocate for you. You cannot make use of the Washington Foreclosure Fairness Act without good representation. Why? Because you must have someone ( your attorney/representation) make a referral on your behalf so that Washington State commerce stops the foreclosure long enough for you to enter into negotiations with the bank’s lawyers. The reason you can’t do it yourself without an attorney is because they want you to be prepared. This is an adversarial process. The attorneys on the other side are not there to help you, therefore it’s imperative to have someone there who is.
2) It often takes more than just one meeting. The Washington Foreclosure Fairness Act actually only provides for one three hour mediation session, but it usually takes two or three of these sessions. In these sessions your attorney presents a package to your bank’s lawyers and lets them know how much you make for a living and what you can afford. They then negotiate back and forth until an agreement is made.
Ready to schedule a consultation? 425-452-9797 Or Contact Us Here
Taxes and Student Loans in Bankruptcy
There are certain kinds of debt that can be discharged in bankruptcy.
A Chapter 7 bankruptcy is a great way to reduce or eliminate many debts. A Chapter 7 bankruptcy can help discharge credit card debts, medical debts and many other types of unsecured debt. A Chapter 7 bankruptcy may allow you to reduce or eliminate credit card debts or other unsecured debts, thereby enabling you to focus your debt repayment efforts on tax liabilities and student loans.
Taxes and Student Loans – Dealing With Non-dischargeable Debts in Bankruptcy
Some debts are difficult or impossible to discharge through bankruptcy. Debts that are difficult or impossible to discharge include:
- Student loans
- Child support arrears
- Certain types of taxes owed to the government
Not all unsecured debts can be eliminated in bankruptcy. While exceptions to discharge cover debts range from child support to back taxes, rules differ depending on factors like the nature of the debt, the age of the debt, or your ability to present a hardship case.
Non-dischargeable debts come in many forms. Some are by definition non-dischargeable, while others are subject to discharge unless the creditor files a specific objection. Examples of non-dischargeable debts include the following:
- Lawsuit damages related to drunk driving, willful or malicious conduct, or fraud
- Child support or alimony
- Taxes that are less than three years old or for which no return has been filed
- Most student loan obligations
- Certain credit card debts incurred under circumstances indicating an intent to defraud the issuer
Certain types of state and federal taxes, as well as student loans, fall into the category of debts that are generally not dischargeable. However, some types of tax obligations can be discharged. Talking to a lawyer can help you to determine which type you have.
There are also debt relief services available to people suffering from an unmanageable tax debt or student loan debt. For example, a Chapter 13 bankruptcy may allow you to pay back other debts over a longer period of time and therefore increase your ability to handle your current tax or student loan debt load.
Many old tax debts can be discharged in bankruptcy
Many people will tell you that tax obligations are non-dischargeable debts. This is only true of taxes that have been assessed and payable for less than three years.
If you owe taxes for which you’ve filed the returns more than three years ago, or that have been in collection for at least that long, you can discharge them in bankruptcy like other unsecured claims unless enforceable tax liens are in place against property with enough value to meet them.
Student Loan obligations in bankruptcy
It used to be that a hardship argument could convince a bankruptcy court to excuse you from repayment of student loans.
Today, recent amendments to the Bankruptcy Code have made it more difficult to prove hardship as a basis of discharge. In order to prove hardship, it is now necessary to demonstrate that your education has little or no value in helping you generate income for reasons beyond your control. It is also important to note that if you have been excused from your student loans there are many jobs that you will be unable to apply for because you have been excused from repayment of student loans.
Why You May Need an Experienced Lawyer During Foreclosure
Life, unfortunately, isn’t always full of brightly colored rainbows and delicate butterflies and we might end up finding ourselves in a position where we are unable to pay our mortgage and fear the potential of facing the Foreclosure process. While it is believed that this process comes and goes with no possible way out you often don’t think that you will need any legal help, however, that isn’t necessarily the case. By using an experienced team of lawyers you will be able to look into multiple different options that are available to you as well as discuss in detail and ultimately decide which option is the best fit for you and your family. Mortgage Mediation, Mortgage Modification, Short Sales and even Bankruptcy are all options when you are facing a Foreclosure.
Fighting battles alone can often lead to success, although the changes may be slim, but when you have people fighting along side you, you have a better chance of winning. The main thing to understand is that your options are not limited. As individuals, we are scared of the notices we may see being plastered to the front door of our home, however, one thing to cling to is that many of these notices are simply scare tactics and aren’t legally able to advance the process whatsoever. By hiring the right team to support you, you will be able to fully understand what notices to look for, what notices are just scaring tactics, and what each notice means and how to proceed. Don’t let the multiple notices on your door fool you and discuss each notice with a professional so you are fully knowledgeable and aware of how the processing is accelerating and at what speed.
There are three different notices that will be posted that you will need to keep an eye out for:
Notice of Pre-Foreclosure Options, Notice of Default, and finally, Notice of Trustee Sale. Notices with any other titles will not hold a legal merit and will likely be there as an attempt to make the process go faster by your foreseeable forfeit of your home. To ensure you stay ahead of the game, contact legal professionals before these notices are posted when and if at all possible. You will be aware if your mortgage payments haven’t been made so contacting a legal team before the process starts will allow you to have more time to discuss the processes and ask questions so that you don’t feel rushed once the ball starts to roll.
[Related Post: The Difference Between Selling to an Investor VS. with an Agent]
Not only will you be able to ask questions, get answers and have a team fighting for you but you will also get the best representation during your Foreclosure. Stay on top of the game and be ready to catch the curve balls that are thrown your way. Facing Foreclosure is not the end and it is most certainly not the only way to resolve the problems you are facing. If you are in Seattle, Bellevue, Tacoma, Everett, King County, Snohomish County or Western Washington, click here to get in contact with the lawyers that are standing by to assist you.
Having a great team behind you is important if you are planning on avoiding a foreclosure but there may be other options. Having an investor buy your home outright may also be a viable option. – Thank you to Peter Westbrook REI for our guest post this week. Peter buys properties as-is in any condition throughout northern California.
Why Do Mortgage Investors Deny Loan Modifications
The care of your loan is much more complicated than it appears. To some, this may sound funny because many of us do not think of a mortgage as simple on any level. Usually, when making your monthly payments you only deal with the servicer. They are responsible for taking payments, crediting the accounts, and taking the steps for foreclosure if the loan is in default. There is another party involved in your loan you may not be aware of.
This other party is generally invisible to loan holders because they do not communicate with you. This silent party has the biggest stake in what happens in your mortgage and that is the investor. They own the mortgage and earn a profit on the interest paid. Many homeowners don’t realize there is another party involved with the mortgage until there is a financial hardship and payments have not been made when the servicer relays information that the investor will not allow modification.
So why would an investor deny an attempt to make a new payment agreement through modification?
The modification of a loan requires the permanent change of one or more of the loan terms. Some of those changes may come in the form of lowered interest rates, longer loan terms, principal reduced, and lowered monthly payments. All of these things can mean less money for the investor.
Usually, when an investor denies the request for modification it is because they believe they can make more money if they foreclose on the loan instead of modifying. Making money is the reason the investor owns the loan and it is strictly business so they are going to look for the option to make more money.
If you have a Fannie Mae or Freddie Mac loan or your lender is another GSE they are required to let the servicer consider you for the government’s Home Affordable Modification Program more popularly referred to as HAMP. Other big banks that received government funds in the big bailout are also required to consider homeowners for HAMP.
Private investors, however, can play by a different set of rules and it can be more difficult to get a modification from them. They are not bound to the government requirements so when and if they give a modification it can be less helpful.
What can you do if your mortgage investor has denied your loan modification?
Get the help of an experienced attorney that deals in loan modifications. Usually, when you speak with the servicer you may be speaking with someone that does not know all the programs available out there or your rights as a homeowner. There is so much information to know about the modification process and the best thing you can do is to have an experienced loan modification attorney on your side who knows all the information and can help you get the best results.
Being denied a modification does not have to be the end of your attempt to stay in your home. You can reapply after rejection. For more information on how legal representation can help with your modification please contact the team at Advantage Legal Group.
Check out this week’s video blog: