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The Percentage Will Depend Many clients want to know what percentage is going to get paid back to creditors if they file chapter 13 bankruptcy. The answer to this question depends on a number of different factors. First, the debtor’s income is factored into the equation right from the start. Second, we have to take+ Read MoreThe post What Percentage Gets Paid Back In A Chapter 13 Bankruptcy? appeared first on David M. Siegel.

You never want to put all your eggs in one basket, but for many Oregonians  behind on their mortgages, it sometimes feels like they don’t have any choice.  Do they  put all my effort into modifying their mortgages, or do they  file Chapter 13 bankruptcy to stop the lender from either initiating or completing the foreclosure process and then try to modify the mortgage later once they are safely under the protection of the bankruptcy court?
For Oregonians who are already in default, it’s obviously risky to assume that the mortgage modifications are going to go through prior to foreclosure. Sadly,  it often seems like the lenders hold out the carrot of modification up to the date the property is sold off on the courthouse steps. With this in mind, let’s consider a couple of the risk factors  associated with modification that argue for taking an aggressive approach with respect to seeking bankruptcy relief.
First, if you have already been denied for an application and there really hasn’t been much of a change in your financial circumstances, it’s probably time to consider options outside of modification. Sometimes the filing Chapter 13 provides the change of circumstances that you will need to ultimately modify the mortgage. Sometimes lenders faced with the prospect of being repaid mortgage arrears at zero percent interest over three to five years become a bit more reasonable about granting modifications.
Second, if you have equity in an Oregon property, you will probably have less of a chance of modifying your mortgage than if you were upside down. Kind of counterintuitive, but if you think about it, the real incentive for lenders to modify is to not lose money. If you have equity in your home, the lender gets it’s money back in the foreclosure so it does not have as much incentive to modify. If, however, you are completely upside down in your mortgage, your lender has every incentive to modify. After all it will take a loss  in the foreclosure and likely a pretty massive one once its legal and servicing costs are added to the total. The lender on the cusp of taking a real loss is going to be much more amenable to giving Oregon borrowers a second chance.
One important thing to remember is that in Oregon a Chapter 13 Plan can often be approved that gives you six months to work out a modification with your lender. This may represent the best of both worlds. First, you stop the unnecessary fees, interest and costs from being added to the total by filing the Chapter 13 case. Second, you cut off your lender from initiating or completing a foreclosure. Third,  you give yourself six months to work something out with a lender before you become obligated to pay back the arrears over three to five years. Finally, you put yourself in a different and arguably superior class of modification candidates
The original post is titled To Modify a Mortgage, File Chapter 13 Bankruptcy or Both in Oregon , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .

How much money can I keep when I file bankruptcy?The goal of Chapter 7 bankruptcy is a fresh start after suffering from financial turmoil. The Chapter 7 trustee is not going to demand the shirt off your back after filing bankruptcy.  However, if you have a lot of assets, it may mean that you will need to surrender these assets to the trustee.  There is a balancing act of providing you a fresh start and providing a resource for creditors to become partly whole.     You need to know how you’ll manage and what you’ll have to manage with.Funding that fresh start is what exemptions are all about.  Exemptions protect certain property property you own that bankruptcy permits the debtor to keep from unsecured creditors. For example, in Fresno and the rest of California, you may be able to exempt all or a portion of the equity in your home, up to $150,000, or some or all “tools of the trade” used by you to make a living.  If you are an auto mechanic, you can exempt roughly $7,000 of your auto tools.  The same goes for any trade, including dentists, hair stylists, and even attorneys.  
We are talking here about California.  The exemptions rules outside of California are different.   
So ... How Much Cash Can I Keep?
The answer is not so simple.  California has two distinct exemption schemes that you can choose from.  And you have to choose one or the other.
The Homestead ExemptionThe exemptions originally enacted in California were big on protecting homes.  That is a good thing if you have a lot of equity in your home.  I think California has a great home exemption.  The amount you can exempt from your home ranges from $75,000 to $150,000.  As the real estate market improves, this exemption is becoming more important.  
Unfortunately, this generous exemption has its drawbacks.  If you elect this exemption, your other exemptions to protect equity in cars and cash is very minimal. It is an attempt by the legal system to be fair for to creditors.  

The Wild Card ExemptionHave you ever played cards?  The nickname for this exemption comes from card games.  "Jokers are wild" in a card game means that you can turn a Joker into another card to help your hand of cards out.  The same theory applies in bankruptcy.  Let's say that you are an auto mechanic and you have $10,000 in "tools of the trade".  That means $3,000 of your tools are not exempt.  The trustee has every right to seize the $3000 of your tools, sell them, and use those proceeds for the benefit of your creditors. By using the "wild card" exemption, you can apply an extra $3000 of wild card exemption to protect all of the tools of your trade.  
Presently, the big money "wild card" exemption is $26, 425.  Thus, if you have no equity in your home, and everything is protected by other exemptions, you can protect $26,425 in your checking account.  That’s a pretty good nest egg.
Money photo credit: flickr: MiranCard table credit: flickr: dcjohn

Almost without exception my clients who are subject to wage garnishment in Georgia report that they feel “violated” or “horrified” by discovering that 25% of their take home pay 1 has been seized by a creditor.  I can certainly understand this emotion – especially if you depend on every penny of your paycheck to cover monthly expenses like rent, utilities, car payments and insurance costs.How Wage Garnishment Happens in GeorgiaWith limited exceptions, you can only be wage garnished in Georgia if your creditor has first filed a lawsuit and obtained a judgment.  More than a few of my garnishment clients claim that they do not remember being sued – this is an issue for another blog post but anytime you find out that a sheriff’s deputy or process server is looking for you, it is time to take action because this means that you have been sued.Most collection lawsuits are not answered and go into default.  If you do not respond to a lawsuit, the creditor wins automatically and gains the legal right to seize 25% of your take home pay and 100% of any other liquid asset he can find (such as bank accounts).How to Stop Wage GarnishmentsOnce the garnishment has started, you do have options to stop it but you need to move quickly.One option is called a “collateral attack” on the judgment that gave rise to the garnishment.  In a collateral attack you must file a lawsuit in the court that issued the judgment and prove that there was a defect in procedure – usually a problem with service of the lawsuit.  For example, if the lawsuit was actually served on another person with your name, and you can prove that you were never served, you can go into court after the fact and “undo” the judgment.The collateral attack approach has several drawbacks.  First, you must have legitimate grounds to attack the judgment.  It is not enough to go into court and claim that you did get served.  Evidence can be a problem.  Secondly you will need to hire a lawyer to pursue your collateral attack on the judgment.  This type of litigation can get expensive and the garnishment will continue until such time as you can get into court and convince a judge to grant your motion.The second option is the bankruptcy option.  Assuming that bankruptcy otherwise makes sense, you can file Chapter 7 or Chapter 13 and stop the garnishment immediately thanks to the automatic stay in bankruptcy.  Our experience has been that many (but not all) creditors will voluntarily return garnished funds upon notice of the bankruptcy filing.  If the creditor will not cooperate, you can file a complaint in bankruptcy court under some circumstances to force the creditor to return your money.As always, it is much easier to prevent a garnishment than to get your money back, so it is in your best interest to seek legal advice as soon as you become aware of a wage garnishment.If your wages are being garnished and you would like to discuss your options with an experienced bankruptcy and debt relief lawyer, please call Susan Blum or Jonathan Ginsberg at 770-393-4985.  We do not charge for phone consultations and we are standing by to help you.

1. Click here to review the details about wage garnishment in Georgia. ↩

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