Blogs
People file for bankruptcy protection for a number of reasons: overdue credit card debts, tax obligations, mortgage issues, and more. One benefit of filing for bankruptcy is the ability to modify the terms of your car loan and pay it off through a court ordered repayment plan.
If you’ve got a car and want to handle a particularly difficult car loan, you’re going to look to a repayment plan under Chapter 13 of the US Bankruptcy Code. Depending on your situation you may be able to reduce your interest rate, lower the balance of the car loan, or both.
Reduce the Car Loan Balance
As the chart below shows, an average automobile loses half of its value in the first four years of life.
“Depreciation car” by João Pimentel Ferreira – Own work.
Licensed under CC BY-SA 3.0 via Commons
With low down payments required for most new car loans, it’s easy to see how the loan balance can easily exceed the value by a long shot. Under certain circumstances, you may be able to reduce the balance on your car loan to the current value. Given the fact that most cars aren’t worth nearly the amount due on the loan, this could end up saving you a lot of money.
The bankruptcy law allows you to achieve this huge money saving result if:
- the car loan was a refinance of another car loan, or if the vehicle merely secures another personal loan; OR
- the outstanding loan was taken out more than 910 days before you file for bankruptcy; OR
- the vehicle is used for only business purposes or is driven by someone other than you.
If your situation matches up with any of these conditions then you will be able to bring down the balance on the car loan. Even if you don’t qualify to do so, there’s still one more way to save money using the bankruptcy laws.
Reduce the Interest Rate
Even if you can’t lower the balance of the car loan, Chapter 13 bankruptcy gives you the right to modify the terms of the promissory note between you and the car lender. If you’re paying a high interest rate on your car, this could end up saving you thousands of dollars.
Just how low does the interest rate go? Way down. As in, the interest rate on your vehicle loan can be lowered to 1.5% above the prime rate.
If you’ve got excellent credit you may not be paying a high interest rate. Most people struggling to get out of debt, however, may not have the best credit score – and that usually translates into a high-cost vehicle loan.
When you go into a repayment bankruptcy, you can reset the interest rate using a formula established by the US Supreme Court in the Till case. In that case, the Court took the prime rate of interest and added an extra 1.5 percent premium to account for the lender’s risk of nonpayment.
You can find the Wall Street Journal prime rate here. The prime rate was 3.25% as of October 2015, which translates into a Till rate of 4.75%.
Consider how much you’d save on your car if you walked into bankruptcy with a 10% vehicle loan and were able to walk out with a rate of 4.75%. That leaves a lot of money left over for paying student loans, balancing your household budget, and starting to invest for retirement.
After the Case, Get Your Title
Regardless of the benefits you’re able to reap on your car loan, you’re still going to need to pry the title from your lender’s clutches. The bankruptcy court doesn’t have your car title, nor does the trustee assigned to divide your repayment funds among your creditors.
It may not be easy to get your title from the lender, but take these 5 simple steps to make the process as smooth as possible:
- Get hold of a copy of the Proof of Claim filed by the car lender in your Chapter 13 bankruptcy case. This will show the balance due on the car as of the date of the bankruptcy filing.
- Obtain copies of the Chapter 13 Plan and Confirmation Order. These documents, when taken together, will show the amount you proposed to pay as well as the judge’s Order that those payments were sufficient.
- Fetch copies of all motions filed in your bankruptcy case in connection with the car. That includes any motions made to reduce the interest rate, the loan balance, and motions made by the lender to lift the automatic stay. These will prove that your payment stream was backed by logic and the balance due on the loan.
- Obtain a copy of the Trustee’s claims register. This shows how much the trustee paid out during the bankruptcy.
- Get a copy of the bankruptcy discharge. This document proves that you made your Plan payments and the case ended satisfactorily.
You need to contact the lender directly to get your car title after bankruptcy. If they give you any hassles, go through the above steps and provide the lender with all the information they need to prove you’re entitled to your car title.
In the worst case scenario, you may need to get the court to force the lender to give up the vehicle title. But considering the savings, it’s a small price to pay.
The post Use This Simple Bankruptcy Trick To Slash Your Car Payments appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
Prior to implementation of the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” (BAPCPA), debtors were able to discharge private student loans in either Chapter 7 or Chapter 13 bankruptcy. Since then, young Americans have continued to struggle due to: Steep increases in college tuition; Mounting student loans debt; Bleak job prospect after graduation, […]
The post Student Loans – A Modern Day Debtor’s Prison? Government Considering Change Bankruptcy Laws to Allow Discharge of Private Student Loan appeared first on Acclaim Legal Services, PLLC.
Tenants and landlords are no exception to the ever growing number of individuals filing bankruptcy. A bankruptcy can be a very stressful situation. Bankruptcy becomes even more stressful when real estate is involved, especially when it involves your home. Anything that could potentially threaten your shelter, a necessity of life, should be taken seriously. It is important that both tenants and landlords know their rights during a bankruptcy effecting real estate.
What we are seeing today in the real estate industry is an increase in real estate bankruptcies. Families are falling on hard times and are unable to pay rent. Many families are filing for bankruptcy in an effort to stop the eviction process. When a landlord is not receiving rental payments on time, he or she begins to fall behind on the rental property’s mortgage payments. Some landlords cannot pay the rental property’s mortgage payments at all. The landlord will then face foreclosure and/or bankruptcy. In some cases, the landlord may try to reduce the monthly rental amount; however, as much as this method may help a family keep a roof over their heads, it also creates bankruptcy risk for the landlord.
Tenant and Landlord Lease Contracts in Real Estate Bankruptcy
When a tenant or landlord files bankruptcy, two things can happen to the lease contract: 1. The lease is allowed to continue in effect as normal. 2. The lease is cancelled.
If the lease is “assumed” (allowed to continue as normal) and the landlord has filed for bankruptcy, then the tenant promises to keep paying rent and to keep the real estate property clean. When a tenant has filed for bankruptcy, the landlord promises to keep the real estate property safe and habitable, providing adequate water, power, and heat.
If the lease is cancelled by the tenant, the landlord can serve a “Notice to Vacate” to the tenant. This means the tenant must evacuate the real estate property within a certain number of days, usually 30. If the tenant does not leave the premises, the landlord can file for eviction. When this happens, the tenant will be responsible for all rent due per the lease agreement through its original expiration date.
If the lease is cancelled by the landlord, the tenant can file a claim in the landlord’s bankruptcy for damages from early lease termination. The tenant may be able to remain in the real estate property for the remainder of the lease. The tenant can have rental payments reduced due to damages suffered from the landlord’s bankruptcy, such as not providing included heat, electric, or water.
Tenant and Landlord Rights During Eviction in Real Estate Bankruptcy
If the tenant is filing for bankruptcy and the landlord has not served an acquired eviction notice, then the tenant can file for bankruptcy protection. Once a bankruptcy is filed, an automatic stay is in place, meaning creditors cannot seek monies from debtors during the bankruptcy process. This automatic stay will prevent the landlord from evicting the tenant. Remember, if the landlord already obtained an “Order of Eviction” prior to the tenant filing bankruptcy, a tenant’s bankruptcy WILL NOT stop the eviction process.
There are only two ways to stop a tenant eviction. Within 30 days of filing bankruptcy, the tenant must file a certification with the court and to the landlord stating that under the state landlord-tenant laws, the tenant is allowed to fix the problem that caused the eviction. And, the tenant must deposit monies with the court in the rental amount that would be due during the 30 days after the tenant filed for bankruptcy; or pay all back rent due before the bankruptcy was filed.
Contact Our Tenant Landlord Real Estate Bankruptcy Lawyers
Tenant Landlord bankruptcy laws are extremely complicated, especially when it comes to contractual lease agreements. It is imperative that you hire an experienced real estate law and bankruptcy attorney to assist you. If you are a landlord or tenant considering real estate bankruptcy, know your rights. Contact the real estate and bankruptcy attorneys at Wynn at Law, LLC. You can reach our real estate bankruptcy attorneys by phone at 262-725-0175 or by email via our website’s contact page. Wynn at Law, LLC has convenient office locations throughout Southeastern Wisconsin, including: Lake Geneva, Delavan, Muskego, and Salem.
*The content and material on this web page is for informational purposes only and does not constitute legal advice.
We call these Zombie homes. This is the home you move out of when you can no longer afford the payment or the home is in terrible disrepair. These homes typically have no equity–they are worth far less than what is owed on the mortgage–and it may not seem possible to sell the home. Real estate agents balk at listing the home for sale until repairs are made, and the homeowner may not be in a position to afford the expense. So, the home sits vacant, sometimes for years.
The problem with vacant homes is that you still own them. You are responsible for cutting the lawn and shoveling the snow. Home association dues continue to accrue even after filing bankruptcy. Home insurance should be maintained in case someone is injured on the property. In some neighborhoods thieves will cut out the plumbing, air conditioners and fixtures. Vandals may break windows or spray paint graffiti on the exterior. The city inspector may impose fines for failure to maintain the home and they may even issue criminal citations if the problems go uncorrected. Owning a vacant home is a serious burden.
Homeowners are often shocked when banks do not immediately begin foreclosure after they stop making mortgage payments. There are many reasons a bank may delay foreclosure. Sometimes they have lost the mortgage documents and they cannot legally start the process. Sometimes they are swamped with foreclosures and can only process so many at a time. In some cases they don’t want to foreclose because the home is condemned or damaged and is considered a liability to own. I’ve seen homes that have sat vacant for nearly a decade.
A new option to deal with this problem is to use a Chapter 13 Plan to transfer ownership of the property to the bank. That is exactly what one homeowner did in the Minnesota bankruptcy court recently. (See In Re Stewart, 2015 Bankr. LEXIS 2948; 536 B.R. 273.) The Chapter 13 Plan contained the following language:
Upon confirmation of this Chapter 13 plan, the Property shall vest in OneWest Bank, and the Confirmation Order shall constitute a deed of conveyance of the Property when recorded at the Registry of Deeds . . . . All secured claims secured by the Property will be paid by the surrender of the collateral real property and foreclosure of the security interest.”
Over an objection filed by the Trustee, the Minnesota court approved the plan and allowed the debtor to quitclaim the home to the bank.
Other cases support this new trend in bankruptcy courts as well. The bankruptcy court for the Eastern District of New York has recently ruled that debtors have the right to surrender and convey a home to the bank over the bank’s objection. In Re Zair, 235 B.R. 15 (2015).
The Zair case is significant and the court does an excellent job of explaining the Catch-22 situation debtors find themselves in when a bank refuses to foreclose:
If Debtors were not able to divest themselves of ownership of the Property, they would be left in limbo while HSBC decides whether and when to proceed on its foreclosure action, thus incurring the continued liabilities associated with the property ownership, such as accruing property taxes.”
Other courts have ruled that the bank must agree to the surrender. (See In re Rosa, 495 B.R. 522.) It seems like the better reading of the Code allows a home to be conveyed over the bank’s objection.
If you have a home that you wish to surrender and efforts to sell the home appear futile, consider using a Chapter 13 Plan to transfer ownership of the home to the bank.
Image courtesy of Flickr and Nicholas A. Tonelli
Commencing December 1, 2015, nearly all of the Official Bankruptcy Forms will be replaced with substantially revised, reformatted and renumbered versions. Having reviewed these forms thoroughly, I can only say that these changes will likely substantially increase both the cost and effort involved for potential bankruptcy filings. The changes will likely be a disaster for self-filers for two reasons. First, they may now have to complete an additional thirty pages of paperwork on their own. Second, while some of the sections appear to be easier to fill out, they force debtors to answer questions in such a way that every unprotected dime both real and imagined will be made much easier for a Trustee to discover.
The changes in the Bankruptcy Forms and Schedules appear to benefit both the Courts and Trustees, but I am not sure what the changes do for debtors. If you are contemplating filing bankruptcy or have already retained us and are in the process of getting ready to file, please contact me so that we can determine how these changes might impact you. The changes do not go into effect for another two months so lets get ahead of this issue.
The original post is titled Changes to Bankruptcy Forms and Schedules in December 2015 , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .
The United States Trustee appointed Mike Malaier as a Chapter 13 Bankruptcy Trustee effective October 1, 2015. Mr. Malaier served as the principal staff attorney for the Chapter 13 Trustee for years before taking over. He will be the Trustee for all Chapter 13 cases arising from Clark, Cowlitz, Pacific, Skamania, Wahkiakum, Pierce, Lewis, Mason, Thurston and Grays Harbor counties. All hearings will continue to be held in Tacoma and Vancouver.
A seamless transition is expected. None of the contact or payment information for the Chapter 13 Trustee office has changed. If you have any questions at all about how the change might impact your case, please feel free to give me a call.
The original post is titled New Chapter 13 Bankruptcy Trustee for Vancouver and Tacoma , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .
ConAgra announced today that it was cutting 1,500 jobs from its Omaha workforce and that it would move the company headquarters to Chicago. 1,200 workers will remain in Omaha for now, but over time those jobs will probably disappear as well. That giant sucking sound you just heard was about $100 million of payroll leaving the city. And that is just the impact at ground zero. There will be waves of economic consequences rippling through the Omaha community over the next year. This is a big loss for Omaha.
I’ve seen many cycles of corporate layoffs over the past twenty years in Nebraska. There are common themes to these cycles, and now is a good time to share some of the insights we have collected over the years.
Here is what ConAgra employees need to consider right now, especially those who already carry a hefty debt load:
- Retirement Accounts. Do not touch that retirement account. It’s temping to tap into retirement savings when you are between jobs. Bad idea. You think it is a temporary situation and that you will replenish the funds when the new job arrives. Retirement withdrawals come with tax consequences and an extra 10% tax penalty for those who are under age 59 & 1/2. I’ve seen countless people over the years who have burned through hundreds of thousands of savings trying to maintain the mortgage, auto and credit card payments only to wind up in bankruptcy when the account ran dry. Remember this, retirement accounts are protected from creditor claims. Retirement accounts are protected in bankruptcy and outside of bankruptcy. Keep the money in the retirement account.
- Downsize Now. Some ConAgra workers will find comparable jobs quickly, but most won’t. Fortune 500 jobs don’t come around every day. Take a close look at your monthly housing and auto expenses and ask yourself this question: If your income drops by 50% can you still keep the home and car? Start living the new normal today. Consider selling the home and trading in for a cheaper car now.
- Be Prepared to Earn Less. You’ve got years of experience. You wrote the book on how things get done. You are not going to compromise and accept a demeaning job working with people half your age for half of what you were earning before. Think again. If you are a middle aged worker you will face a lot of age discrimination in seeking a new job. Younger managers feel threatened and uncomfortable with hiring older, smarter, more-experienced employees. Waiting for the right job to come along is a mistake. The longer you go without being employed the worse it looks. Employers shy away from hiring people with long gaps in their employment history. Be willing to take a lower paying job now to maintain a continuous employment history. You can always upgrade jobs later.
- Be Willing to Move. Omaha now has 4 Fortune 500 companies left, and one of them, Union Pacific Railroad, has been eliminating jobs recently as well. Chances are you will need to be willing to move to another state to find a similar job.
- Stay Fit. With layoffs come depression. The tendency is to hole up and watch movies, eat donuts, etc. Start moving. Set specific goals and consider getting a trainer to reach them. You are used to structure in your daily life. That is a good habit to maintain.
- Network. This should be obvious. Take every opportunity to communicate with the people in your life. Press the flesh. Do lunch, chat with Facebook friends, update the LinkedIn profile.
- Volunteer. It is important to stay working. Helping others always leads to better things and it offers a chance to network. You have vital skills that will benefit others and it keeps you mentally alert and fills in gaps in the resume.
- Add up the Debts. Now is the time to make an inventory of every debt you owe. How bad is it?
- Consult with a Debt Professional. I can’t tell you how many people I meet that I could have steered away from bankruptcy had they only talked with me sooner. If a debt problem already existed before the layoff it is time to meet with a professional in debt management. Maybe it is time to clear the debts in bankruptcy while your income is low. Perhaps you did not qualify for bankruptcy because of your high-paying job at ConAgra, but now you have options. Maybe debt settlement is a better option if a large severance package is coming your way. You have options. Talk with a professional about what option is best.
Well, congratulations to Chicago for taking our beloved ConAgra away from Omaha. Hey Governor Ricketts, since your family owns the Chicago Cubs, can you move them to Omaha? Just a thought.
What is your advice to ConAgra employees? Let’s hear it.
Image courtesy of Flickr and Ali Eminov.
There comes a time when you start looking at picking up extra jobs to improve your financial situation.
For example, Megan Fox used to dress up as a banana. Whoopi Goldberg did time as a phone sex operator before her career took off. Brad Pitt donned a chauffeur’s cap to be a limo driver for strippers.
It’s called a side hustle, and lots of people do it. When I opened my practice I had a side hustle working nights as a word processor at Morgan Stanley in midtown Manhattan. It helped me pay the bills as I started building up a client base, and offered a free ride home in a black Lincoln Towncar each night.
These days there are lots of ways to make extra cash on the side. But none are as strange as what UFC star, Ronda Rousey did for money in middle school.
She beat the hell out of random guys in Los Angeles for Frappuccino money.
According to an interview with Sports Illustrated:
“Me and my friend Jackie, after school, we would walk over to the Promenade, and Jackie was like my Paul Heyman. She would be like, ‘I bet my girl right here could beat you up for $10.’ And then some guy would be like, ‘Ehhh, whatever. I’ll take that bet,'” she told the magazine.
“I would throw him to the ground, either give him a choke or an arm bar. We would get him to say he gave up, then take his money and go buy Frappuccinos.”
This is three years before Rousey qualified for the 2004 Olympic Games in Athens and won a gold medal at the World Junior Judo Championships in Budapest.
Here’s the Rousey interview (warning – explicit language):
Necessity is the mother of invention. But if Ronda Rousey offers to fight you, walk the other way.
Starbucks image courtesy of Basheer Tome/Flickr (modified)
The post Would You Fight Ronda Rousey for a Frappuccino? appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
The following snippet is from the Legal Action television show which airs on Comcast Cable in the suburban Chicago market. Attorney David Siegel talks about the types and amounts of property that can be kept while filing for Chapter 7 bankruptcy relief. Interviewer: When I do Chapter 7, fresh start, is there any property that+ Read More
The post Protecting Property In A Chapter 7 Bankruptcy Filing appeared first on David M. Siegel.
Talk to people with federal student loans and it’s unlikely that you’ll hear praise for companies responsible for overseeing their loans. Now a report issued by the Consumer Financial Protection Bureau confirms what many borrowers have known all along – the system is broken.
The bureau found, “a wide range of sloppy, patchwork practices that can create obstacles to repayment, raise costs, cause distress and contribute to driving struggling borrowers to default.” With public outcry at an all-time high, borrowers as well as servicers are urging new rules to be implemented.
More than 41 million Americans owe student loan debt, with the total doubling from $516 billion to more than $1.2 trillion in the last eight years. The average student loan debt has grown by nearly 60 percent during the same period, rising from about $18,000 in 2007 to nearly $30,000 in the third quarter of 2015.
At the same time, delinquencies have skyrocketed to the point where nearly 1-in-4 student loan borrowers in repayment are delinquent or in default. Given the fact that only 89.5 percent of federal student loans are in repayment – the rest are in some form of deferment or forbearance – a full 3-in-10 outstanding student loans are really past due.
Student loan servicers act as the intermediary between borrowers and lenders. Servicers manage borrowers’ accounts, process monthly payments, manage enrollment in alternative repayment plans, and communicate directly with borrowers, including borrowers in distress. With such explosive growth in the number of borrowers as well as the the total amount of debt they’re called on to manage, it’s easy to see how even the best system can break down.
None of this would be a problem if there were industry standards in place to help borrowers and servicers understand policies and guidelines. Unfortunately, no consistent, market-wide federal standards for student loan servicing exist.
In fact, servicers generally have discretion to determine policies related to many aspects of servicing operations in spite of the fact that they are all under contract with the U.S. Department of Education. The report, based on over 30,000 comments the federal watchdog group received from borrowers, revealed the widespread problems that resulted from these operational problems.
Payments were routinely lost, resulting in late fees and negative credit notations. Military borrowers had a hard time getting the Servicemembers Civil Relief Act interest rate cap of six percent. Older borrowers as well faced an uphill battle in repaying their student loans.
In addition, reports indicate that only 13 percent of borrowers have elected one of the income dependent repayment plans designed to keep them out of default by reducing payments to a portion of income.
Now, at last, the government is attempting to improve the system for all.
The Departments of Education and Treasury, in conjunction with the CFPB, issued a Joint Statement of Principles on Student Loan Servicing to begin to address the problems uncovered. The statement provides as follows:
The Departments and the Bureau intend to work closely with one another, consistent with their respective authorities, to strengthen servicing protections for student loan borrowers, and will seek to ensure that student loan servicing is, where appropriate:
- Consistent. Student loan borrowers and servicers alike would benefit from a clear set of expectations for what constitutes minimum requirements for services provided by student loan servicers and servicer communications with borrowers, including adequate and timely customer service. Student loan borrowers should expect effective student loan servicing, including, but not limited to, conduct related to payment processing, servicing transfers, customer requests for information, error resolution, and disclosure of borrower repayment options and benefits. Such conduct should account for and recognize variations in loan features, terms, and borrower protections.
- Accurate and Actionable. Student loan borrowers often depend on servicers to provide basic information about account features, borrower protections, and loan terms. It is critical that information provided to borrowers by student loan servicers be accurate and actionable. Information, including explanation and instructions regarding borrowers’ loans and repayment options, should be presented in a manner that best informs borrowers, helps them achieve positive outcomes, and mitigates the risk and costs of default.
- Accountable. Student loan servicers, whether for-profit, not-for-profit or government agencies, should be accountable for serving borrowers fairly, efficiently and effectively. If servicers fall short and violate federal or state consumer financial laws, the HEA, contractual requirements, or federal regulations, borrowers, federal and state agencies and regulators, and law enforcement officials should have access to appropriate channels for recourse, as authorized under law.
- Transparent. The public, including student loan borrowers, may benefit from information about the performance of private and federal student loans and the practices of individual student loan lenders and servicers, including information related to loan origination, loan terms and conditions, borrower characteristics, portfolio composition, delinquency and default, payment plan enrollment, utilization of forbearance and deferment, the administration of borrower benefits and protections, and the handling of borrower complaints. The federal government already makes much of this information available for federal student loans, and private-sector lenders and servicers should follow suit. Portfolio performance data, including data at the individual servicer level, should be available for all types of student loans.
The CFPB report as well as the Joint Statement of Principles on Student Loan Servicing are all part of President Obama’s Student Aid Bill of Rights, which directed federal agencies to improve student loan servicing and help make paying for higher education an easier and fairer experience.
For millions of borrowers, this is a step in the right direction. With consistent standards, not only will those paying for college be better protected but they will also be assured of a more accurate and fair means of having their loans serviced.
The post Government Report Reveals Widespread Student Loan Servicing Problems appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.