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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.
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for April 30, 2013 Kelly Rutherford Faces Bankruptcy During Expensive Custody Battle Kodak Spinoffs Clear the Path for Emergence From Bankruptcy Supreme Court won’t hear Charter Communications bankruptcy case
Hiding assets and personal property when filing bankruptcy not only jeopardizes the outcome of your case, you may face criminal prosecution and your debt may not get discharged. Not withholding details about personal property cannot be stressed enough as doing this may hurt your chances of discharging debt in subsequent bankruptcies. Many debtors fear they [...]
Eighty percent of success is showing up, according to Woody Allen. So, too, in matter concerning debt collection lawsuits.
You owe a debt to a credit card company. You fall behind, and the credit card company sells the debt to some other company.
Happens all the time, don’t look so shocked.
The company buys the debt for something on the order of 25% of the outstanding debt. In exchange for the right to collect, they get a computer file with your name and other information.
What the debt buyer does not get is a copy of the application, old statements, or charge slips. In other words, no proof that is admissible in a court of law.
Debt Buyers File Thousands Of Lawsuits
Debt buyers are in business to collect overdue bills, and they pay millions of dollars each year for the ability to do so.
When people don’t pay voluntarily, the debt buyer sues. And because there are a lot of accounts out there, the big players file lots of lawsuits.
In fact, last week I was in Chatsworth (which is where the Los Angeles collection lawsuits are heard) I stood next to a process server who was filing a stack of lawsuits about 12 inches high. Conservatively, that’s about 250 collection lawsuits.
For a single day. And a single debt buyer.
Remember, They Don’t Have The Goods
It doesn’t take much for someone to sue you for money – just a check for a filing fee an a few pieces of paper. Legally you’ve got to have a good faith belief in your ability to win the case, but there’s nothing saying that you’ve got to have lock solid proof in order to walk into court.
That’s the problem – the debt buyers don’t have proof.
They have no proof of the amount due.
They have no proof of whether the numbers are correct.
They have no proof that the debt they bought is yours.
They have no proof. Period.
Don’t Let Them Roll Over You
If you’re sued for a debt, you need to show up – just like Woody says.
Get a lawyer, or do it on your own. File an Answer, and do it on time. Make the debt buyer prove the case.
But don’t ignore the lawsuit. Because if you do, there’s a 100% chance that you will lose.
Image credit: Luiz Fernando / Sonia Maria
Why You Should Remember Woody Allen If You’re Sued For A Debt was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.
Janice Dickinson, 58, also known as the world’s first supermodel, filed for bankruptcy protection after owing creditors close to $1 million. Her creditors include the Internal Revenue Service (IRS) and unpaid bills from plastic surgery performed by multiple doctors. Dickinson is known as one of the most successful models in the world when her modeling [...]
In the state of Washington, your Chapter 13 Plan Payment may be largely dictated by how you fare on the Means Test. In simplest form, the completion of the Means Test calculation determines how much you can afford to pay back to your unsecured creditors. This number is derived by taking a six month total of your gross income and then subtracting a series of both real and IRS approved deductions. One of the major IRS approved deductions is the “Car Ownership Allowance.”
The problem is you don’t get the Car Ownership Allowance deduction without a car payment. So if we take two bankruptcy filers and one has a car payment and the other doesn’t, they might each ultimately have the same payment for the same period of time, but one of them is going to pay off a car during that time period and the other one is going to pay more money to her credit cards.
This is not to say that you should immediately head out to the car lot to buy a car prior to filing. You should always consult with your attorney before making this purchase because there are additional factors that determine whether purchasing a car will have any significance on the amount that you will have to pay back in your Chapter 13.
At the same time, if you are driving a beater now and you see yourself needing a car within the next two years or so, buying the car prior to filing is probably going to be a much smoother and cheaper process than waiting until after the case has been filed.
Again, the key is checking in with your attorney prior to heading out to the car lot. Please feel free to give me a call anytime at either 206-674-4559 or 503-860-6868 if you have any questions at all, thanks.
The original post is titled Buying a Car Before Filing a Chapter 13 Bankruptcy in Washington , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
In Lynchburg, VA, James Gordon Fields, 47, recently plead guilty to multiple charges of fraud including bank fraud, aggravated identity theft, false statements made pertaining to a loan, and false statements made under oath during bankruptcy proceedings. Fields was a fugitive on the run for over a year after admitting he ran from authorities when [...]
Chapter 7 is a liquidation fresh start type of bankruptcy whereby a person who has very little in the way of assets and a lot of unsecured debt can file a Chapter 7 and get a fresh start. Under Chapter 7, debtors typically keep all of their properties such as houses, cars, personal belongings provided+ Read MoreThe post What’s the difference between a Chapter 7 and a Chapter 13 bankruptcy? appeared first on David M. Siegel.
Filing bankruptcy differs from law firm to law firm, from city to city. The only thing that remains constant is the filing fees with the court. At the time of this writing, the filing fee for a Chapter 7 bankruptcy is $306. The filing for a Chapter 13 bankruptcy is $281. Chapter 7 bankruptcy fees can vary anywhere from $750 in a simple case up to $3000 in a complex case or a corporation case. The level of experience of your bankruptcy attorney is what you want to look for, not necessarily the lowest price. Going with the lowest price can often get you a lesser service, a lesser attorney and open up your case to potential problems.
I’ve been practicing bankruptcy for over 21 years. I have seen all kinds of things happen between my clients; other clients that came to me after another attorney handled their case. I’ve heard stories from the trustees; I’ve been in court and heard from the judges. I’ve read on the subject for 21 years. Trust me when I tell you, you do not want to go to a bankruptcy attorney simply based on price. You want to make sure that the attorney that you hire has the requisite experience knowledge and ability to take the information that you provide and ask you the right questions, by the way, and put that into a bankruptcy petition which is going to pass the scrutiny of the trustee and the court. There is nothing worse than seeing someone who was with another attorney file a bankruptcy case and then lose property. There are certain prebankruptcy requirements that must be fulfilled. There are certain activities that must be done before you want to file a bankruptcy and you want to have a seasoned attorney to help you. So don’t go just on price.
As far as Chapter 13 bankruptcy cases are concerned, the courts in this area have what they call a Model Retention Agreement. The Model Retention Agreement basically states that attorneys can charge a certain dollar amount at the time of this writing it’s $3500 total over the life of the case, and the attorneys do not have to itemize for their time. This flat fee arrangement is the arrangement that 95% of all bankruptcy attorneys in this area use because it’s reasonable, it’s fair and it provides for a great value to the client without the attorney having to document time and go for the court for approval of their fees. So Chapter 13 fees, under the Model Retention Agreement, are basically going to be the same for most attorneys.
With that being said, that does not mean that all the law firms are equal. You want to make sure that the attorney you hire for Chapter 13 is experienced in Chapter 13 and handles Chapter 13 bankruptcy cases on a daily basis. If you go and meet with the attorney and ask specific questions to garner what they have in terms of understanding, you will be in a better position to make a determination on which attorney you want to hire to handle your Chapter 13 bankruptcy case.
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