Bankruptcy – Saving Your Home

Posted on June 2, 2011 by admin

Do you own a home? Are you considering filing for bankruptcy? You need to take steps to protect your home if you want to keep it. First off, you can keep your home if you file a chapter 13 and have enough income to cover the monthly payment for three to five years until your debts are paid. For instance, if you owe two or three months of mortgage payments and say you owe two years back property taxes, you can save your house by filing a chapter 13.

You will need to have enough income to pay your monthly living expenses and enough leftover to pay the monthly bankruptcy payment. If you are filing a bankruptcy chapter 7, you need to be current on your mortgage payments and have very little equity in the home. The mortgage company holds the title to the home and the courts cannot make the sale to pay debts. You can save your house before filing for a chapter 7, by paying on time payments and keeping up with your property taxes before anything else. If you owe back payments on the house, you might lose the home if the mortgage company cannot agree on a payment.

If you have a large amount of unsecured debt and just a car loan or house payment, you could save your home during a chapter 13. You will need to keep up your monthly payments, insurance and property taxes to satisfy the mortgage company and the courts. Before you take the step to saving your home, make sure you will have enough income to pay the monthly expenses and the monthly payments to the trustee. It is very important that you do not send your monthly trustee payments in late. If you have late payments, you could void the agreement made to the creditors and the court.

Saving your home during a bankruptcy is up to you. If you make an agreement with the creditors and the court, you need to continue keeping that agreement for the time of the bankruptcy repayment plan. It is important that you not default on any payments. Keeping your home during a bankruptcy is not as hard as some people think. It is better to talk with a bankruptcy attorney before things get out of hand. You can get help and take the steps to save your home before filing for bankruptcy.

After talking with a lawyer and paying your down payment, you should not discuss any details with the mortgage company. Your lawyer will take care of all the communications so that there are no misunderstandings. Your lawyer and the trustee will work with you and the creditors to set up the payment plans and you should not receive any calls from the mortgage company after that unless you are late with your mortgage payment again. Since you have more than likely dealt with the mortgage company trying to resolve the problem before looking into a chapter 13, you know they can be a little unreasonable.

 

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Automobile Insurance Online Purchase

Posted on May 31, 2011 by admin

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Chapter 7 Bankruptcy Exemptions

Posted on May 28, 2011 by admin

Federal and state bankruptcy laws reflect the public policy value that no one should be deprived of all of their property.  The federal bankruptcy laws, as well as the state laws where you reside, therefore, both allow for certain “exemptions.”  Federal exemptions are the same for all bankruptcy filers nationwide, while state exemption limits vary from state to state. The debtor may choose whether to use the federal or state exemptions; in general it’s best to use the federal exemptions because they are more ‘generous’ (that is to say, higher).

How your assets will be treated with respect to these exemptions depends on how much ‘equity’ you have in the property. Equity for all property that is not collateralized (that is, there are no liens against it) is simply the fair market value of the property.  Equity for property that does have a lien against it (the most common examples being a house or a vehicle) is calculated simply by subtracting from the fair market value of the property any amounts you owe on loans secured by that property.  For example, let’s say your house has a fair market value of $200,000, and that you have a first mortgage outstanding balance of $150,000, and a second mortgage (or home equity loan) balance owed of $30,000.  Your equity would be calculated as:

            Fair market value:                                                         $200,000

            First mortgage balance:                                                $150,000

            Second mortgage balance:                                            $30,000

            Total debt secured by home:                                         $180,000

            Equity in home:                                                            $20,000        

Bankruptcy exemptions set a certain dollar limit on the amount of equity that you can have in a specific type of asset. If you have more equity than what the prescribed exemption allows, the bankruptcy trustee may seek permission from the court to ‘administer’ the property, that is, to sell it in order to distribute the proceeds among your creditors. 

And that raises the very important question, what are the exemption limits for the various types of property?  To help answer that question, below are listed the federal exemption dollar limits for the most common asset types.  Bear in mind, these figures are for a single debtor.  To calculate the figures for a married couple (that is, for joint debtors), simply double the dollar amounts indicated:

Real property                                                         $ 20,200

Vehicle                                                                  $   3,225

Household goods (clothes, appliances, etc.)             $ 10,775

Jewelry                                                                 $   1,350

Retirement accounts (401K, 403B etc.)                     unlimited

“Wildcard”                                                              $   1,075*

* There is actually a second, and much larger, “wildcard” exemption available, but it’s a function of what amounts the debtor has used in other categories and is therefore a little more complicated to calculate – you’d be well advised to talk to an attorney about this one.

In sum, then, the above should give you at least a rough idea of whether you are within the limits – as far as assets are concerned – for qualifying for a Chapter 7 bankruptcy.  If you’re not, don’t despair – this might just mean that you’ll need to consider filing under Chapter 13 instead.

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