Blogs

Central Valley California -- There are primarily two types of personal bankruptcy that you can file under the Code:  Chapter 7 and Chapter 13.  Chapter 7 is a great tool to get rid of credit card debt.  But if you are behind on house payments, Chapter 13 is the best tool to save your house from foreclosure.

Chapter 13 bankruptcy is considered the repayment plan.  The goal is to create a plan that is approved by the bankruptcy court to repay creditors over 36 or 60 months.  

Let's say that you are $10,000 behind on mortgage payments.  Your lender sends out a foreclosure notice saying that you have 90 days to cure the default.  In other words, you have to pay the lender $10,000 in 90 days.  If you do not, then the lender can foreclose on your ownership interest in the house.

Chapter 13 bankruptcy protects homeowners from the 90 day pay, or be foreclosed scenario.  By filing Chapter 13, you can propose a plan to the court that extends the 3 months foreclosure to 60 months.  It works out that instead of paying an additional $3,333.33 to catch up on payments, you can lengthen payments so that you only have to pay $166.66 dollars per month.

You will have to also make your regular monthly mortgage payment.  Also, do not forget about attorney fees and trustee fees for advising, preparing and administering the plan.  Presently, trustee's command a 6% commission and attorney fees are approximately $4,000.  These expenses are incorporated in the plan payment.  Expect the extra $166.66 plan payment to increase to about $220 per month.    

Chapter 7 bankruptcy will stop a foreclosure sales date, but only temporarily.  Chapter 7 bankruptcy in itself does not create a plan to repay past due mortgage.  A homeowner will be left with hopes of modifications, but this is not guaranteed and can result in the continuation of the foreclosure shortly after filing chapter 7 bankruptcy.

If you fall behind on your student loan, you may not be in default.
The answer depends on whether the student loan is federal or private. But first, you need to understand the concept of default.
What Is Default?
A default is, technically speaking, a failure to meet the legal obligations of a loan.
The simplest type of default occurs when you fail to make your payments on time. But default can technically happen if there’s any obligation whatsoever in a loan agreement that you fail to make.
For example, mortgage loans may require you to maintain homeowners’ insurance. Fail to keep the policy in place and you’re considered to be in default of your obligations.
When Does A Student Loan Go Into Default?
Federal student loans don’t go into default when you miss a payment. In fact, If you repay your loan monthly, then default occurs when you fail to make a payment for 270 days. For the rare FFEL loan that requires payments to be made more often than once a month, you go into default if you fail to make a payment for 330 days.
Private student loans are different – remember, they’re no different than any other installment loan or consumer debt. You’ll need to look at the loan agreement to determine when default occurs, but it usually happens as soon as you miss a payment.
How To Prevent Default
When it comes to private student loans, you can avoid default only by making your payments on time. If you can’t meet that obligation, you’ve got no legal way to prevent yourself from going into default.
For federal student loans, however, there are programs available to keep you out of default. Consider deferment or one of the extended or income-based repayment options to make it easier financially. Start by calling your student loan servicer to investigate your alternatives. If that doesn’t work, calling a student loan lawyer like me may shed some light on the situation.
If You’re In Default
Default comes with some severe consequences.
For federal student loans, those consequences come without the need for a lawsuit and include tax refund offset, bank account freezes, and wage garnishment. Read more about the consequences of defaulting on your federal student loans here.
Private student loan default triggers collection activity and often a lawsuit. The lawsuit, if you don’t fight it, yields a judgment that can also cause wage garnishment and other enforcement actions.
If you find yourself in student loan default, keep an open line of communication with the lender as well as any collection companies. Work with the lender to come to an agreement on structuring payments, but if that fails then it’s time to talk with a lawyer and protect yourself before it’s too late.

Medical Debt There is no question that a chapter 7 bankruptcy case will eliminate medical debt. However, if you only have one debt, you may not need to file bankruptcy at all. This is all going to depend upon the aggressiveness of the debt collector as well as your tolerance for ongoing collection efforts. In+ Read More
The post I Have One Huge Medical Debt. Is Bankruptcy The Answer? appeared first on David M. Siegel.

Should I File for Bankruptcy?You lost your job and were living on credit cards to make ends meet.  You suffer from medical bills.  You are separated/divorced from your spouse.  These are real life issues that have made you wonder whether to file for bankruptcy.  This is a very personal decision.Considering Bankruptcy ChecklistIf several of the following apply in your situation, you might consider bankruptcy:

• Your salary is garnished or your bank account is attached
• Most of your bills are credit card bills, hospital or doctor's bills, etc.
• Your bills is more than you could reasonably pay over three years
• Collection agencies are calling you at home and/or at work
• Your payments are more than 30 days behind 
• You are being sued by creditors
• You owe income taxes that you are currently unable to pay
• You have few assets
• You have little or no savings
• You have had property repossessed (such as a car)
• Your mortgage lender has threatened or started foreclosure proceedings against your home.

Morgan at Flickr