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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.
You know the best way to avoid debt is to have money in your savings account. But it feels impossible to fund a savings account when you’re barely making ends meet.
I know how it feels because I’ve been there, and because my clients roll their eyes at me whenever I talk about the importance of saving money for the proverbial rainy day. I can almost hear them thinking, there is no way I’m going to be able to put away any money on my salary!
That’s why I was excited when I first heard about Digit, a free service that helps you save money by looking at your income and spending, finding small amounts of money it can safely set aside for you in a separate savings account.
To use Digit, all you do is sign up and connect your checking account. From there, it’s supposed to analyze your spending patterns and start automatically saving you money.
Too Good to Be True?
As good as Digit sounds, I was skeptical.
It seemed too easy to let the application worry about my savings and make decisions based on an algorithm. What if someone was barely scraping by financially – would Digit be able to accomplish anything?
I was also nervous that it would overdraft someone’s checking account and leave them saddled with fees and bounced checks. Most of the people I work with don’t have a lot of wiggle room in their budgets, and an overdraft fee could cause a domino effect of financial ruin.
Digit has a no-overdraft guarantee, which means it shouldn’t ever overdraft your account. If it does, Digit will reimburse you for the overdraft fees.
But if Digit was the real deal, I owed it to myself and my clients to learn about it. With that in mind, I signed up to check it out.
Dipping a Toe Into the Digit Pool
I didn’t want to risk much on my experiment so I connected Digit to a checking account I rarely use. Making random deposits and withdrawals each week, I was looking to trick the system into making a mistake.
If the account was overdrawn, it wouldn’t cause any problems with my finances. And given the fact that my test account was reflective of someone with a tight financial situation, Digit would need to have a robust algorithm in place to find savings.
It Won Me Over, Big Time
After two months it was clear that Digit was doing something right.
My test account never went into negative balance range, and my Digit savings account slowly began to grow. $5 here, $7 there – the numbers were small enough that I didn’t miss the money, but it added up.
Even better was the fact that I hadn’t done a thing. Digit did it all for me, automatically and without any involvement on my part.
Satisfied, I connected my main checking account to Digit and sat back to watch the results.
The results have been impressive. I’ve seen my savings grow without any involvement on my part, and never once have I missed the money deducted from my checking account.
Each morning I receive a text message with my checking account balance, which helps keep me up to date on how much I’ve got available in my account.
Whenever Digit makes a transfer, it sends me a text message with the amount of the transfer as well as how much I’ve got in my Digit account. If I want to view my Digit savings balance at any time, all I do is text SAVINGS to Digit and it lets me know.
In fact, there’s a whole list of text commands to help me manually transfer money to savings, view upcoming bills, review recent checking transactions, pause my savings, and even make a withdrawal from my Digit savings account.
When you want your money, just text WITHDRAW to Digit. There are no fees or limits to your ability to withdraw money, and it will show up back in your checking account the next business day.
I Love Saving Money By Mistake
My Digit account won’t fund your retirement, and it won’t help you save for a trip around the world.
What Digit will do is jump start your savings efforts even if you’re not making a lot of money. By taking small amounts from your checking account, Digit makes sure that you don’t realize you’re putting away money month after month.
Before you know it, you’ll have enough for a vacation with your family or a few extra payments towards those nasty student loans.
In the end, you’ll be more financially secure and start feeling the satisfaction of knowing you finally have that elusive cushion of money to help you get through life’s unexpected twists and turns.
My opinion? A total no-brainer. Give it a try and let me know what you think.
One thing – when you click the links in this article to go to Digit, I’ll get a $5 bonus if you sign up. It doesn’t cost you anything, but it’s the company’s way of thanking their customers for letting other people know about it. If you don’t want to use the links in this article, just click here to sign up on your own. Either way, you should try it out and see if it works for you.
The post How Digit Can Help You Effortlessly Grow Your Savings Account appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
If you’ve got federal student loan debt, making the monthly payments can feel like an exercise in futility. With low post-graduate incomes relative to the amount of debt they carry, it’s no wonder.
The average class of 2015 graduate with student-loan debt will have to pay back about $35,000, according to an analysis of government data by Edvisors. And according to CNBC, average starting salaries for college graduates range from $80,600 for petroleum engineering majors to $43,852 for liberal arts/ general studies grads. Reports indicate that a number of early career salaries come in at $35,000 or less, including athletic training ($35,000), human services ($33,800) and child development ($32,200).
That’s to say nothing of the millions of graduates who leave college only to find a minimum wage job or, even worse, no employment at all.
By now the federal government has done a fair job of getting the word out about the various income dependent federal student loan repayment options – income-based repayment, income-contingent repayment, and Pay-As-You-Earn. These programs allow you to bring your monthly payments in line with your income, and lead up to a discharge of the unpaid balance after 20 or 25 years depending on the repayment plan you choose.
These plans are often called Obama Student Loan Forgiveness by the various companies that charge borrowers upwards of $1,000 or more for the privilege of completing the simple (and free) forms that are freely available from the U.S. Department of Education. It’s one of those bait-and-switch terms that ignores the fact that sometimes forgiveness isn’t quite forgiveness.
It’s the tax implication at the end of the income dependent repayment options that strikes some people as the major problem. You get a tax form at the end of the repayment term for any unpaid balance, and you may have to pay income taxes on that amount.
Financial commentators such as Suze Orman have come out against the income dependent repayment options for that reason. By lowering your payments, Orman says, you’re allowing the balance to balloon over the repayment period and possibly obligating yourself to a tax burden later on.
But Orman misses a few critical points.
- You’ve Got To Have a Financial Hardship to Qualify. A borrower qualifies for one of these programs only if their income qualifies them for a hardship under federal guidelines. Those who can afford to make their federal student loan payments aren’t permitted to opt for one of the income dependent programs. That removes the possibility of someone getting into an alternative payment arrangement as a matter of convenience, and limits participants to those who would otherwise not be able to make their federal student loan payments.
- Payments Rise When Your Income Goes Up. Payments under the program adjust annually based on your income, and rise when you make more money. The payment is capped at the 10-year repayment amount. If your income rises significantly, your participation in the program isn’t saving you any money.
- There are Benefits to Interest Accrual. Though it’s true that interest continues to accrue on your loans, it probably won’t end up making things worse for you. If your reduced payment doesn’t cover the interest, the government will pay that interest on your Subsidized Stafford Loans during your first three years in an income dependent program. Interest that does accrue after that time won’t compound (which is the opposite of what happens when you’re in a hardship forbearance). Compounding interest make the loan balance rise more quickly and allows the government to effectively charge interest on interest.
- You’re Allowed to Pay Your Loans In Full. There’s no reason you can’t decide to pay off your federal student loans when your income rises. Rather than continuing to make payments for 20 (or 25) years, you can write a check to the government and make the balance disappear without paying anymore interest or risking the tax consequences of discharge of the unpaid balance.
- Remember True Forgiveness Plans. Finally, there are a number of federal student loan forgiveness programs that allow you to wipe out the unpaid balance without tax consequences. The best known of these program is Public Service Loan Forgiveness, but there are a number of others. If you’re working towards one of those tax-free forgiveness programs it makes sense to elect an income dependent repayment program early on.
Don’t dismiss income dependent repayment plans for your federal student loans. Not only will they reduce your payments but they allow you more freedom to pay your loans in the way that’s most effective and efficient for your personal financial situation.
The post 5 Reasons To Embrace Income Based Student Loan Repayment Options appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
Julie, Over the past few years I have been working with Cindy Millns for my case. She has been so easy to work with and helpful, that I cannot express enough gratitude for her professionalism and courtesy during my troubling times. She took the time to answer phone calls and emails when I needed answers […]
The post Peter from Royal Oak, MI appeared first on Acclaim Legal Services, PLLC.
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