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How Fast Can You File Bankruptcy?
As little as 20 minutes. It is called a barebones filing. You file just enough documents to get a case number and put the automatic stay into effect. Since an attorney can file a case electronically, you file the case and get a case any day, any time. However, you should only do a barebones filing if it is a true emergency, and you need to stop a creditor’s collection action immediately.
The advantage of a barebones filing is pretty clear. If it is Thursday afternoon and foreclosure is schedule for the next morning, then you don’t have a lot of time. If you are being garnished, you don’t have a lot of time. You need bankruptcy fast, and you can literally file bankruptcy in about 20 minutes with the help of a Seattle bankruptcy attorney.
There are also disadvantages to a barebones filing. First and foremost, bankruptcy is a serious step. You should not file bankruptcy if you do not intend to complete the bankruptcy process or if you do not intend to comply with the bankruptcy process.
Second, your options are limited by a barebones filing. Your attorney will not have time to properly evaluate your case and determine whether all of your property is covered by an exemption. You cannot voluntarily dismiss a chapter 7, and so most attorneys will strongly advise that you file a chapter 13. This is because a chapter 13 case can be voluntarily dismissed. Finally, you have to be able to pay your bankruptcy attorney their upfront fees and costs before they will file the case.
A fully developed bankruptcy filing requires about a week’s worth of preparation. It is possible to do a bankruptcy on the fly, but I only suggest a barebones filing if it is a true emergency. If you do a barebones filing, you have to be prepared to work with your bankruptcy attorney after the case is filed. The court will set a deadline for you to turn your barebones filing into a complete filing. If you miss that deadline the case can be automatically dismissed.
So the bottom line is that yes, you can file a bankruptcy very quickly. However, you must be prepared to work with your bankruptcy attorney to make sure that everything goes smoothly after the filing. In addition, you must be prepared to accept the risk of filing a bankruptcy before your attorney has had a chance to completely evaluate your financial situation.
While there are many and varied reasons that people file a bankruptcy case or settle a debt, certainly an improved credit score is a desired result. Unfortunately, post bankruptcy and post debt settlement credit reporting is often not accurate. A Creditor May Continue to Report a Debt The most common way in which credit reporting [...]The post File Bankruptcy or Settle a Debt? Check your Credit Report. appeared first on National Bankruptcy Forum.
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A Tamaroa, Illinois man was recently sentenced to three years’ probation for concealing assets when he filed bankruptcy in 2009. David E. Woodside, 37, pled guilty to the charge after he waived an indictment by a federal jury back in December 2012. The United States Attorney who worked on the case, Stephen R. Wigginton, says [...]
Keep Property Without Signing Reaffirmation Agreement
When you file a chapter 7 bankruptcy, you will have the option of reaffirming your secured debts. The most common reaffirmation is done on a car loan. Many of my clients have questions about reaffirmation agreements; and whether it is in their best interests to sign a reaffirmation agreement.
What Is A Reaffirmation Agreement?
A reaffirmation agreement takes the debt out of the bankruptcy. When you reaffirm a debt you are saying that even though the debt is discharged, you agree to treat the debt like it was never part of your bankruptcy. This can have some serious consequences for you, but it also has some pretty good benefits.
You can only reaffirm secured debts. This is because secured debts are treated differently in bankruptcy. When a debt is secured, there are actually two parts to the claim that goes into the bankruptcy: 1) your personal liability on the contract, and 2) the creditor’s security interest in the collateral. A security interest in collateral is the right to repossess or seize property in the event of default, i.e. repossession or foreclosure.
This means that if you want to keep property that is covered by a security interest, you have to keep paying the secured claim. The secured creditor is only allowed to get the value of their interest, which is equivalent to the balance due on the contract. So basically, when you have a secured debt in bankruptcy and you want to keep the property, you have to keep paying even though the actual “debt” was discharged in bankruptcy.
You don’t have to sign a reaffirmation agreement to keep secured property. For example, you can keep your car if you don’t sign a reaffirmation agreement. However, there are reasons you might want to sign a reaffirmation agreement.
If Your Reaffirm A Debt
If you reaffirm a debt and then default on that debt, the creditor can repossess the collateral, sell it at auction, and hold you liable for any deficiency. A deficiency is the difference between the amount you owe and the amount they get at auction. For example, if you owe $14,000 and the collateral sells at auction for $6,000, then you are personally liable for an $8,000 deficiency.
If you reaffirm a debt, then the creditor will usually start reporting your payment history to the credit bureaus. If you are able to stay current on the payments, then this will help you rebuild your credit. Of course, if you miss payments it will hurt your credit.
If you reaffirm a debt, the creditor may only repossess the collateral if you default on the loan.
If You Do Not Reaffirm A Debt
If you do not reaffirm a debt and the creditor repossesses the collateral, they cannot hold you liable for the deficiency. This is because the debt was discharged in bankruptcy and was never reaffirmed.
If you do not sign a reaffirmation agreement, making on time payments will not help your credit score. However, late payments will not hurt your credit score. This is because the lenders will not report payment history on accounts, unless there is a signed reaffirmation agreement.
There is some risk if you decide not to file a reaffirmation agreement on a personal property loan, most commonly a car. The Bankruptcy Code says that if the debtor does not sign a reaffirmation agreement on personal property, the secured creditor may repossess their collateral at any time, regardless of payment history.
So in theory, you could make all of your car payments on time and they could repossess your car right before it was paid off. In practice, I have never actually heard of this happening. If you do not sign a reaffirmation agreement and you remain current on your payments, it is unlikely that you will have to worry about your car being repossessed. Even though the law allows it, it is unlikely. This is because car lenders don’t want cars, they want car payments.
You do not have to sign a reaffirmation agreement on mortgages or home equity lines of credit. This is because Washington State foreclosure law prevents a lender from foreclosing on a loan that is not in default. Additionally, it is – in my opinion – a bad idea to reaffirm a mortgage because you are increasing the risk that you will be held personally liable for a very large debt. As long as you do not default on your mortgage, you can keep your house.
Conclusion
If you have a car loan, or other personal property loan, that needs to be reaffirmed, then you should carefully weigh the pros and cons of signing the reaffirmation agreement. You can keep your car if you do not sign a reaffirmation agreement. You can also decide to sign a reaffirmation agreement. There is risk both ways. I can help you evaluate that risk and help you decide whether a reaffirmation agreement is right for you.
Last week, I gave an update on the status of foreclosure mediation ordinances in St. Louis City and St. Louis County that are currently being challenged in the courts by lenders in Missouri. On the other side of the river in Illinois, the Illinois Supreme Court has adopted new rules allowing its courts to [...]
A borrower who is establishing credit or has less than perfect credit may have a cosigner help them obtain a loan. A cosigner agrees to pay outstanding debt when the borrower is unable to make payments. It is common to have a cosigner present when applying for a loan on a vehicle, student loan, or [...]
Saw three couples this month who needed to file bankruptcy, because they were getting sued–garnished in one case–by the second mortgage after a short sale.
It was surprising that they were surprised. At the peak of the crisis, for or five years ago, second mortgages would take what they could get at a short sale and let the rest of it go. But they don’t often do that anymore. (At least not without intense negotiation. I’ve seen it once in the last year.)
And usually they make you sign that you KNOW that you still owe the money. So, where’s the surprise?
Sadly, some real estate agents are less than candid about what to expect from the second mortgage. Here’s a link to a guy who calls himself Virginia Short Sale Advice. A lot of what he says here is really good. Including why a short sale is better for your credit than a foreclosure.
But he says it’s a “myth” that “you could be sued after the close of a short sale for the deficiency.” He explains that in “many states” you can’t get sued. That’s true in many states, but he’s writing to people here in Virginia! Here you can. (Bloomberg says they can sue in 39 states.) So the “myth” is actually the truth. And his Virginia Short Sale Advice is, well …..you can figure it out.
What’s my advice? Well, at least if you hang tough, you can sometimes get the second mortgage to agree to forgive the debt. But you will be under intense pressure from all the other parties to the deal, the first mortgage, the buyer, and “your” real estate agent, to cave in. You need to tell your agent up front you will not do a short sale if the second mortgage won’t waive the deficiency.
Tell your agent, up front, you will NOT do a short sale that leaves you owing that second mortgage.
If you can’t afford to pay that second mortgage now, you won’t be able to pay it afterwards, either. So you will end up talking to a bankruptcy lawyer, eventually. Talk to a lawyer now.
If you at least talk to a bankruptcy lawyer, your bargaining position on the short sale is much improved. Negotiations are won by people who can walk away form the table.
When you get pushed by everyone who wants the short sale to go through, you can push back. ”I’ve talked to a bankruptcy lawyer–and if we can’t do a short sale on my terms–no second mortgage deficiency–I’m ready to file bankruptcy instead.”
Is there any reason to actually file bankruptcy BEFORE the shortsale, rather than wait and see what they do safterward? Yes, a big one.
You can easily lose your eligibility to file bankruptcy Chapter 7 if you wait until after the shortsale. Why is that? Your eligiblity depends on the “means test” of what you can afford to pay. If you own real estate, they figure what you can afford, based on what your mortgage payments actually are–and yours are high of course, or you wouldn’t be trying to short sale this house. When you are a renter, you get the rental allowance, regardless of what your actual rent is. And they figure your ability to pay based on that.
When you own the house, that second mortgage payment is one of the things you are allowed to count, to show why you need to file bankruptcy. But once the short sale has gone through, you can’t count it anymore. Now that second mortgage is just one of the debts you have to pay, because the “means test” budget using the rent allowance shows you have plenty of money left over.
That’s what happened to one of the three couples I saw this month. Have to pay that left over seconed mortgage–more than fifty thousand dollars, that they could have easily gotten rid of filing bankruptcy first, and then doing the shortsale.
So, did they protect their “good credit” with the short sale? Nope, the “settled” notation on the first mortgage helped them–but the past due, judgment, garnishment on the second sure didn’t.
If you can’t afford that second mortgage while you are living in the house, don’t expect you can afford it after you move out. And if you can’t pay all your bills on time…it’s time to talk to a bankruptcy lawyer.
Getting Sued After Short Sale? Getting sued after a short sale is highly probable. Saw three couples this month who needed to file bankruptcy, because they were getting sued–garnished in one case–by the second mortgage after a short sale. It was surprising that they were surprised. At the peak of the crisis, four or [...]The post Getting Sued After a Short Sale? appeared first on Robert Weed.
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