Short Sale and Bankruptcy?

Many clients asks me this very important question and truthfully my answer has always been the same. Short sale is a bad idea but it has good ramification. It can prolong your foreclosure process while you can legally stay free in your home and not obligated (at least legally) to pay your mortgage payments. There are some potential problems with short sales.

First, a Chapter 7 discharges the underlying mortgage debt, as well your personal obligation for your second mortgages, HELOCs, equity lines, etc.) A liquidation bankruptcy would discharge all of your debts including the principal balance as well as HELOC.

Second, if you’re in bankruptcy, you can’t do a short sale without Court approval. This often means that you have to pay your lawyer more money to do something that has no financial benefit for you. Again, a short sale may be rejected by the bankruptcy as a collusive transaction.

Finally, even though you’re in bankruptcy, the lender may still issue a 1099-C. This means that you will need to file a Form 982 to avoid having to pay income taxes on the forgiven debt.
It is a good idea to negotiate that the lender would not come after you and file a deficiency judgement.

How Chapter 13 can be used to stop foreclosure?

How Chapter 13 Can Be Helpful In Stopping Foreclosure?
Foreclosure are on the rise in Nevada, and especially in Las Vegas. Chapter 13 is one of the appropriate remedy. When should Chapter 13 be filed? Benefits of Chapter 13 in stopping foreclosure.
My clients quite often asked me one very important question whether they should continue to seek
mortgage modification, or go ahead and file a Chapter 13 to stop a foreclosure. It is of course a very
pertinent question. There is a very slow pace of lenders’ response to modification applications on one pretext or the other. Let me analyze it with more emphasis this time.
1. First of all, You need to know what kind of modification you are applying for. Again, your modification does not stop the foreclosure process. In fact, both are dealt by two different sections of the same bank and have virtually no liaison with each other. If that is the case, you may have a very limited time in which to deal with a foreclosure if you are turned down for a modification. Other programs, like the HAMP program, require that lenders stop foreclosures while they process modifications. It is important to know whether your lender is proceeding with foreclosure in parallel with a modification application, or suspending foreclosure. If the latter is the case, you will have more time to respond, but you still may have to respond quickly.
2. It is has to be determined right away by your lender and you should know as well whether you are likely to qualify for modification under the application guidelines. For example, the HAMP program requires that you show that you have sufficient income to make the reduced payments in order to get approval. If you just lost your job, and you have no income, you aren’t going to qualify for that particular program. If you can predict with a fair amount of accuracy whether you will be accepted or rejected for modification, you can plan accordingly.
3. Please read this blog quite often as I update this continuously even on holidays and please educate yourself about the foreclosure process where you live, and where your case is in that process. I have a tremendous amount of information which is free of course and I never hide anything from Nevada residents. I like them to be fairly educated and make their own smart decisions in this regard. Please do not wait until the last minute to talk to a knowledgeable foreclosure defense attorney in this regard. Time, is of course, the essence in these matters. There can also be differences in what a lender considers to be “in foreclosure” and what a lawyer would describe as “in foreclosure.” The best way to determine what the process is and where you are in it is to consult with a seasoned attorney who handles such matters in your jurisdiction. Your options are very limited if the home is foreclosed.
4. You may want to consider whether you have defenses to foreclosure. First of all, most modification agreements that I have seen contain some language that says that you are waiving any defenses to the mortgage. Know what you are giving up before you sign such a release. Further, you may also want to consider defending a foreclosure action as a third alternative to modification programs or Chapter 13. Many attorneys who handle such matters report that the most meaningful modifications that they see are those that are the result of settlement negotiations where defenses to foreclosure have been raised.
5. There is nothing wrong with Chapter 13 filing when nothing else works or if your lender has become very stubborn. Deal with him in any way possible and stop the foreclosure on your home. This is your fortress and if it is foreclosed, next home purchase is too far away. Fight back, and don’t procastinate.

Can You Keep Your Car in Bankruptcy?

Can You Keep Car If You File For Bankruptcy?
[Law office of Malik Ahmad can be contacted to get free consultation for bankruptcy]
I have been asked many times about keeping car after declaring bankruptcy. The simple answer is yes, you can keep your car. But also it this is a white elephant, and you are fed up making the huge monthly payments, you can get rid of too. The federal plan for bankruptcy does not like to wipe out everything you have. You still can keep a job, and of course driving from to work and back to home. A car is an indispensable tool, and one cannot live without it. You have to drive to work. So let’s handle this questions once and for all. Debtor who file bankruptcy can keep one car in Nevada up to $15,000. worth of equity. Again, you have to think if you can afford the payment and like to continue the car. The most important questions is that if you can afford the car payments.
By filing bankruptcy, you erase your personal obligation to pay debt. When a debtor reaffirms debt, she is agreeing to continue being obligated for the debt, as opposed to discharging it as part of the bankruptcy. As a condition of keeping the car, your lender will make you reaffirm the obligation to make your car payments. After you have executed the reaffirmation agreement with the help of your attorney, you will continue to make car payments and use your car exactly as you did before bankruptcy. Reaffirmation agreements must be taken seriously because once you sign, you have taken the obligations to make the payments as agreed. The Court will not approve your reaffirmation of your car loan if to do so would constitute an undue burden. Therefore, the consumer must be able to demonstrate that she can continue to make her car payments before the Bankruptcy Court will approve the reaffirmation.
Is Your Car Worth to Keep It?
One of the common misconceptions about bankruptcy is that you will lose all of your property if you file. This is simply not the case. Many people who file bankruptcy retain all of their property through the process through the use of the exemption laws. However, it is important to meet with a knowledgeable bankruptcy attorney to discuss your state’s exemption laws. Additional equity can be protected by using the state wildcard exemption. If you owe more than your car is worth you need not worry about exemptions since you have no equity in your car. The bankruptcy trustee will only seek to liquidate property that has equity which exceeds the amount of your allowed exemption. Keep in mind also that you would likely have the option of paying the Trustee the amount of the non-exempt equity in order to retain your car. To summarize, if you can afford to continue to make your payments and do not have non-exempt equity in your car, you will be able to keep it through the bankruptcy process. If you have fallen behind on car payments and need time to get caught up, chapter 13 bankruptcies may be an option to get you the car back.

Should A Reaffirmation Plan Be Signed?

A reaffirmation agreement revives and consolidates a debt back into life that could have been discharged in a Chapter 7 bankruptcy. Mostly such agreements are often made to protect a house or vehicle. In a Chapter 7 proceedings, a debtor is forfeiting bankruptcy protection in exchange for the creditor promising not to repossess the property.It seems straightforward and simple at this stage. You continue to make payments, if you want to keep using the property. A client gets to keep his property and possibly rework the terms of the new contract to make repayment more affordable. What’s so strange here?

Here is what I recommend my clients about reaffirmation agreements:

The problem is once you sign, you are in a hornets nest. One can no longer free to surrender the property without being personally liable. Anytime, you miss a payments, your creditors would come back and haunt you. Again, why to reaffirm the same terms and conditions. Why not to negotiate the terms and ask the creditors to cut down the principal and cut the monthly income in exchange for reaffirmation. Again, you have to decide if you are a good candidate for repayment and a reaffirmation would help you and not eradicating the benefits of your chapter 7 liquidation bankruptcy. An attorney must be careful that he is not enhancing your financial liabilities and that you would be continuously able to make your payments. The court, however, can still reject the reaffirmation plan, if you reaffirm it. Courts has to see and check it independently.

The rule of caution is that one should never sign the agreement unless debtor have restructured the terms to be decidedly in your favor. In other words, try to cut the principal and interest, or stretch out the payment length. Again, one can also revoke the agreement within 60 days if they change your mind.

You have leverage. Use it to the best advantage. Most creditors do not want your property and do not want to take the legal steps necessary to take it back and sell it. If you really want to keep the property, in most cases, the creditor is satisfied with you voluntarily making the monthly payment according to the terms of the discharged debt, without requiring a reaffirmation agreement.

What is statement of intention: Reaffirmation, Redemption, Surrender, Other?

What is a statement of intention when it comes to secured property in bankruptcy code?

In every exempted property, the debtor likes to keep after bankruptcy, they have to file a statement of intention. Section 521(a) (2) requires the debtor in chapter 7 cases to file a statement of certain intentions with respect to property securing debts and with respect to personal property leases. The debtor need not state his or her plan on this statement. All that is required is a statement:

(i)whether the debtor intends to retain or surrender the collateral,
(ii) whether it is claimed as exempt, and
(iii) whether the debtor intends to reaffirm the debt.

However, the debtor is not required to choose redemption, surrender, or reaffirmation in every case. The debtor may choose other options besides those listed on the form. In practice, the choice of Other is commonly used in Nevada. It has different ramifications which can be discussed only with a qualified bankruptcy attorney. A debtor may also choose to simply continue paying an automobile loan without either redeeming or reaffirming the debt. With respect to leases of personal property, the debtor must state whether the debtor intends to assume the lease.

Duration of Filing: The statement of intention must be filed within thirty days of the filing of a chapter 7 petition or on or before the date of the meeting of the creditors, whichever is earlier. The statement must be served on trustee and all creditors named in the statement on or before the date it is filed. Thereafter he debtor may amend it as of right at any time up to the time when performance is to take place under Code section 521(2(B). Section 521((2) also requires that the debtor “shall perform his intention,” within thirty days after the first date set for the meeting of creditor or such additional time as the court for cause within that period allow. In most cases this is quite simple, if the debtor states intent to retain exempt property that has long since been accomplished. If the debtor’s intention is to surrender the property, there is no requirement to deliver it or to execute a deed to effectuate the surrender, because the Code provisions was not designed to provide a substitute for normal state proceedings to enforce a creditor’s rights to collateral.

Although the chapter 7 trustee is supposed to “ensure that the debtor shall perform” the stated intention, the Code provides no mechanism for the trustee to use. The statement of intention thus seems designed primarily as a way for secured creditors to obtain notice of what the debtor plan to do, and as a guideline to when redemption and reaffirmation should occur. However, because substantive rights are expressly left unaffected, the debtor change his or her mind about what is planned and apparently would not have to file a new statement of that happened.

Is there any sanctions if debtor does not follow his statement of intention?
There are no sanctions provided for failing to carry through on stated intention’s however that conduct would give a secured creditor an additional argument in seeking relief from the automatic stay, or it may result in the termination of the automatic stay with respect to certain personal property.

The debtor has other options in addition to reaffirmation, redemption, or surrender under the Code.

What is the right of redemption in chapter 7?The Code also provides that for certain secured consumer debts the security interest may be eliminated upon payment to the creditor of the value of its collateral. The purpose of this section is to avoid creditors taking an unfair advantage of the debtor’s situation. The redemption provision provides a simple procedure, within the chapter 7 case, for the debtor ro remove a creditor’s lien by paying the creditor the real value of the property. This is available to only individual debtor and only with respect to certain property and certain debts.

Shoud You Walk Away From Your Underwater Home?

I have dwelt on this topic in one of my previous column, but this topic keeps coming back as more and more people calling me and asking me this questions. However, my stand remains the same and again I am addressing this issue one more time. In fact, I had seen some unending debate on this topic, and even NY Times in its latest issues has dwelt on it. Basically, it depends on your standards of morality and accountability.

It is not my place to tell people to just leave their home and rent somewhere. It is akin to telling a soldier to surrender in the face of a tough fight. My suggestion is fight back, and it has always been that way. Why? Because this is your American dream? If you walk away, you are going to leave lots of body bags, and spoils of war for someone else to become rich. This home of yours has the pictures of your family, your loved one, and you had good memories. If you walk away, you are going to leave everything. When would you be able to buy another home? No one knows the answer.

You are sending a wrong message to your family and to your kids. Homeowners has responsibility to their family and to your neighbors as well. We see voluntary defaults and they are a new phenomenon. It was not too long ago, when Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. It is widespread that most of the homeowners are making a calculated decision to hang on their money and let their homes go. Is this irresponsible?

Our neighborhood are going to be depressed, the for sale sign everywhere mushrooming, and U-Haul truck roaming in our neighborhood. The government has done lackluster job. The new kid on the block, i.e, the much coveted Treasury Secretary is a bogus leader in this economy. He should be let go by Obama. He is an abysmal failure. Let someone better come. The home market is getting depressed everyday. The lenders has still the filthy and flimsy excuses of not doing enough, and their lists of excuses is getting longer and longer. NY Times, as usual my favorite papers has written and dealt extensively on this topic.

http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?ref=magazine

Myths and Mysteries About Bankruptcy: Should You Believe?

 

Five Bankruptcy Myths, You Should Not Believe:

If you are considering bankruptcy, but have serious misgivings that are preventing you from making a decision to proceed, prepare to be enlightened. Here is a list of the top five big bankruptcy myths.

Myth #1 – Everyone will know I’ve filed for bankruptcy.

Don’t be offended, but almost nobody will know (or care) that you have filed for bankruptcy. Unless you’re a big shot in your town or someone the media likes to highlight from time to time, it is very unlikely that anyone other than your creditors and perhaps a few close friends and family members will know you have filed.

Yes it is true that bankruptcy is a public legal proceeding, but the fact is there is no single place that you can find an up-to-date list of people who have recently filed for bankruptcy. The number of people filing for bankruptcy is so high that very few publications have the manpower or motivation to assemble and update this information.

Myth #2 – When you file a Chapter 7 bankruptcy all your debts are wiped out.

This is simply not true. Certain types of debts such as child support, alimony, government-issued or government-guaranteed student loans, and debts incurred as the result of fraud will not be forgiven. Also most judges will not discharge legal judgement amounts you’ve been assessed as the result of someone suing you.

Myth #3 – Everything I own will be taken away from me.

This is a major misconception that frightens many people from filing bankruptcy. They assume they will be thrown out on the street with no house, no car and no money in the bank. But this is not the case. If it was, almost nobody would file for bankruptcy.

Actual bankruptcy laws vary from state to state, but every state has exemptions that protect certain kinds of assets. These include your house, your car (up to a certain value), household goods and clothing and money in qualified retirement plans. In many cases a person will pass right through bankruptcy and essentially keep everything they have. That includes their mortgage and car loans as long as they keep on making the regular payments.

Myth #4 – I’ll never get credit again.

Believe it or not, it won’t be long before those eager beaver credit card companies will be sending you offers again. In fact there are companies that target high risk borrowers and people who’ve had credit problems. They charge exorbitant interest rates but that is the price you pay for needing credit in such circumstances.

For this very reason most people are advised not to start running up bills again, and should most certainly stay away from acquiring a number of high interest rate credit cards. While it is true that most people who need a car loan will be able to find someone prepared to give them one, the rate will be very high. That is why it is best if you are thinking of buying a house or car to get these set up before you file and while your credit score still looks presentable.

After bankruptcy, those loans will be tough to get and the higher interest rate will have a significant effect on your payments. Also, if you have a credit card with a zero balance on the day you file for bankruptcy, you don’t have to list it as a creditor since you don’t owe any money on it. That means you might be able to keep that card even after the bankruptcy.

Myth #5 – When you’re married, both spouses have to file for bankruptcy.

Not necessarily. It depends whether one or both spouses are liable for the debt. Usually if both spouses are liable the creditor will try to get payment out of either or both. And if one spouse files, the other one is still vulnerable to being required to pay the whole amount.

On the other hand if a significant amount of debt is in the name of one spouse only, the other spouse is not liable for that debt and is probably not advised to file for bankruptcy. This would typically be the case when one spouse has suffered losses from a business which the other spouse has no involvement in.

Contact the bankruptcy lawyer at FastbankruptcyNevada.com They had helped many people and they can help you too. Article source: The Link Builder Network.

 

Article Source: http://EzineArticles.com/?expert=Rick_Hendershot

How Many Types of Bankruptcy?

There’s two types of bankruptcies; there’s the chapter 7 bankruptcy which gives you a fresh start, and the chapter 13 which allows you to pay back a portion of your debt, sometimes 100 percent, sometimes as low as 10 percent, within three to five years.

In most cases, people prefer chapter seven bankruptcy. Basically chapter seven allows you to get rid of all your unsecured debt, that’s most of the time credit card, loans that were given out without getting a lien on anything, medical bills. Now, some things that actually do not go away in chapter seven are taxes that you owe the government and that were owed within the last three years, tickets such as parking tickets, those don’t go away, lawsuits that were filed against you for injury that was caused from drunk driving, and domestic support, child support also doesn’t go away.

Another thing that stays after chapter seven bankruptcy are liens that are on your property. So if there’s a lien on your house and you choose to keep your house and not surrender it, you actually still have to pay those liens on the house, and any other assets such as a car that you want to reaffirm and keep after the bankruptcy you still have to pay that secured debt on those loans.

What you can keep In chapter seven you can keep your house even though there’s a lien on it. All you have to do is just keep making those payments on the house, and the same goes for a car that you want to keep. You can just keep making those payments and make a reaffirmation agreement, which is basically a contract saying that I will keep on being obligated for the payments on the car even after the bankruptcy. Now, you do have the option of surrendering the house and the car. If your mortgage is much more than the value of the house, you might want to actually choose to surrender your house since you can buy a similar kind of house for less value later on down the years. But for some people, even though the mortgage may be more than the value of the house, they still choose to keep their old house, because it’s their own house and they have been living in it for some time.

Same goes for the car, you might owe much more for the car than the true value of the vehicle, you might want to actually choose to surrender it instead of reaffirming it and being obligated to making those payments even after bankruptcy. Sometimes, bankruptcy can give debtors a way out of bad deals that they might have gotten themselves in prior to filing the bankruptcy.

Debtor also has one more option he can call the financing company where the loan was taken out, and negotiating with them. Debtor or the debtor’s lawyer should inform the creditor that the debtor is willing to reaffirm on the debt for a smaller balance on the debt.

Article Source: http://EzineArticles.com/?expert=David_Siegel

Chapter 7 Vs. Chapter 13–the Insider’s Factors, You Should Need to Know:

Bankruptcy is a federal court process that can help consumers eliminate overwhelming debts or establish a plan to repay them. Depending on your income and circumstances, bankruptcy laws may give you a way to erase many financial obligations and start afresh.

Personal Bankruptcy Choices Chapter 7 And Chapter 13

For personal bankruptcy there are basically two ways to get bankruptcy protection, they are chapter 7 and chapter 13 filings.

Both chapters are a judicial process whereby someone declares that they are unable to pay their debt under Title 11 of the United States Code.

Bankruptcy is a process by which a debtor can obtain relief from his debts, through the courts. This relief may come in a variety of forms, including full or partial discharge of the debt, or the imposition of a payment program consistent with the debtor’s financial means.

Lets look at specifics.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is known as “straight bankruptcy” and is the preferred option for people with little or no property and a lot of unsecured debt.

This is the most common type of bankruptcy proceeding filed and it is the “liquidation” bankruptcy where most debts are discharged without requiring the debtor to make any payments. The term “liquidation” refers to the process where a petition is filed with the bankruptcy court detailing the individual’s property, debts, and financial situation.

The trustee then takes your items of value ells them to repay your creditors a portion of your debt. If there is any debt left you will no longer be responsible for it.

For a person with little or no assets this is the quickest way to eliminate financial worries.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is also known as a reorganization bankruptcy and it provides a better solution for those consumers who have a regular income, secured debts and do not which to loose their property.

Chapter 13 bankruptcy less common than Chapter 7 however it allows the consumer to submit a plan to the bankruptcy court to repay the debts that are secured. This plan us usually executed over a three to five year period of time.

It is important to note that Chapter 13 bankruptcy serves not to discharge you from your debts but rather to reorganize them and repay them within the three to five year period.

This means that this option is probably best for people with property and assets that they want to keep. Plus it means that they also have a predictable source of income allowing them to repay their debts and still maintain a standard of living.

Chapter 7 Vs Chapter 13 Bankruptcy Which Is The Best Choice For You

Bankruptcy can do wonders if you are in financial jeopardy, but filing is not a decision to be taken lightly. The fact is that Bankruptcy is a complex legal process, which means you should gain as much understanding as possible before you jump in. In fact did you know that Bankruptcy doesn’t work on some kinds of debts?

Fortunately there is a great free resource you can check out to get your Bankruptcy Questions answered. Click to http://www.bankruptcyreports.info a popular info site for those considering bankruptcy to relieve the stress of debt.

Article Source: http://EzineArticles.com/?expert=James_Lassider

Seven Cases When Filing Chapter 7 Bankruptcy is NOT the Right Choice

In certain situations, filing Chapter 7 bankruptcy can offer financial relief from the burden of debt. But individual cases vary greatly, and Chapter 7 is not the best way to address all financial difficulties. Consider some of these cases, in which filing for Chapter 7 bankruptcy is not the best course of action.

1. You own luxury items you’re not willing to part with.

Chapter 7 bankruptcy is sometimes called “liquidation” because the bankruptcy trustee can liquidate, or convert to cash, any of a filer’s possessions that aren’t exempt under state law. Generally, states allow petitioners to keep life necessities like a home, clothes, books and work tools.

If you’ve got non-essential items (like a fancy “toy” car or lots of jewelry), it’s likely that your trustee could sell it and use the proceeds to pay off your creditors.

2. You only want to discharge certain debts.

If you’d like to be excused from only particular debts (such as back child support, alimony, taxes or student loans), Chapter 7 bankruptcy is not the right choice for you.

First of all, some debts are considered non-dischargeable in Chapter 7, meaning that the court does not have the power to forgive them. The debts listed above are all examples of non-dischargeable debts.

Secondly, bankruptcy affects the entirety of your finances – it can’t be used on only a selection of your debts. Filing bankruptcy is a big decision in part because it has such widespread impact on your financial life.

3. You’ve figured out how to “hide” property or otherwise “get around the rules.”

Fraud alert! Bankruptcy is governed by federal laws, which means that if you’re caught cheating (e.g. by giving your second car and boat to your nephew before filing), you could face federal penalties, including hefty fines (up to $250,000) and jail time (up to five years).

But not all bankruptcy fraud is committed maliciously. What happens when one of your creditors is a family member or close friend? While it may seem natural (and even noble) to pay back certain creditors in full before filing for bankruptcy, this sort of action is generally not permitted in court.

Legally, you’re obligated to all of your creditors, not just the ones you know and like. The court’s job is to make sure your available funds are distributed equitably among all your debts.

4. You’ve got money coming your way.

If you’re expecting to receive a significant amount of money in the next few months (from a lawsuit settlement, insurance policy, inheritance, pension, etc.), Chapter 7 bankruptcy may not be the best course for you.

5. You own property jointly with family members.

The laws concerning “tenancy in common,” or jointly-owned property, depend on where you live. But in some cases, a bankruptcy filing by one joint owner can impact other owners. Consult with a bankruptcy attorney if you find yourself in this situation.

6. Your income is significantly greater than the median income for a family of your size in your state.

In order to file for Chapter 7 bankruptcy under BAPCPA, you must pass the Chapter 7 means test, which compares your income to the median income level where you live. If you make substantially more than the median family of your size, you’re unlikely to qualify for Chapter 7 protection.

In fact, if you have a steady, regular income, you may benefit more from a Chapter 13 filing. Your bankruptcy lawyer will be able to help you make this determination.

7. You can’t afford the attorney’s fees required to file Chapter 7 bankruptcy.

Unfortunately, because of certain BAPCPA-mandated changes to bankruptcy law, attorney’s fees, administrative fees and new requirements cost bankruptcy petitioners more than ever before.

If you can’t afford the more than $1,000 in costs associated with a bankruptcy case, it may not work for your situation.

www.fastbankruptcynevada.com