When clients come to my office, the Law Office of Phillip Myer, contemplating either a chapter 7 or chapter 13 bankruptcy filing, they are often embarrassed to file for bankruptcy. They think they are doing something wrong; that they have failed themselves and their families; that filing for bankruptcy will make things worse; that they even will be put in jail! My best advice is: "Don't be embarrassed." The purpose of the bankruptcy laws is to give people and companies a fresh start. The concept of forgiving debts goes all the way back to the Old Testament. In Deuteronomy the Israelites were instructed to forgive the debts owed to them by others every seven years. And this seven-year timeline was used by the bankruptcy courts in the US until the reform act of 2005. It is a very old concept.
Some of you may be surprised to learn that many famous successful people have filed for bankruptcy and came out on the positive end of the process: Abraham Lincoln; Henry Ford; Milton Hershey, Walt Disney; Burt Reynolds; H.J. Heinz; P.T. Barnum and Donald Trump, to name a few.
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Wednesday, June 29, 2011
Monday, June 13, 2011
REAFFIRMING A HOME LOAN, OR NOT?
At the Law Office of Phillip Myer, our clients often ask me whether they should sign a reaffirmation agreement for their home mortgage loan. The answer depends on the type of loan you have, and your particular circumstances.
There are, generally, two types of mortgage loans: recourse and non-recourse. A recourse loan is one where the lender can come after the borrower if the loan is not paid and the security is insufficient to retire the debt. What that means is that the mortgage company can come after you if you don’t pay the mortgage, the house is foreclosed upon and there isn’t enough money received from the home to pay off the loan.
A non-recourse loan, on the other hand, means that the lender can’t collect any money from the borrower if, after a default, the house doesn’t pay off the loan. So, don’t ever reaffirm a recourse loan because, if you do, the lender can come after you even though you have filed bankruptcy.
But, there are some situations where my clients want to reaffirm a non-recourse loan. Although it doesn’t make any difference to the lender to have such a loan re-affirmed since they can’t proceed against the borrower personally anyway after the bankruptcy, many banks are asking to have these signed.
The problem my clients are experiencing is that if they don’t sign a reaffirmation agreement on their mortgage, the lenders are refusing to report payments to the credit reporting companies, and therefore my clients get no benefit to their credit score by making those payments! This is annoying since making regular payments is the fastest and surest way to rebuild your credit.
In some states, like California, almost all loans used to purchase a home are non-recourse, and there can be no personal liability of the borrower. But your state may differ. It is always best to check with a qualified bankruptcy or real estate attorney in your state.
But, there are some situations where my clients want to reaffirm a non-recourse loan. Although it doesn’t make any difference to the lender to have such a loan re-affirmed since they can’t proceed against the borrower personally anyway after the bankruptcy, many banks are asking to have these signed.
The problem my clients are experiencing is that if they don’t sign a reaffirmation agreement on their mortgage, the lenders are refusing to report payments to the credit reporting companies, and therefore my clients get no benefit to their credit score by making those payments! This is annoying since making regular payments is the fastest and surest way to rebuild your credit.
In some states, like California, almost all loans used to purchase a home are non-recourse, and there can be no personal liability of the borrower. But your state may differ. It is always best to check with a qualified bankruptcy or real estate attorney in your state.
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Friday, June 3, 2011
When Should I Consider Bankruptcy?
Many people are in over their heads these days. They wonder if a bankruptcy lawyer can help them. The economy has been bad for 2 years and there is no good news which leads me to believe this will improve any time soon. Unemployment is still over 9%. Housing prices are still going down. 2.5 million homes are in foreclosure and over 1 million more are 90 days past due - headed for foreclosure.
Are you having trouble making your monthly payments on your bills? Are you borrowing just to meet your monthly expenses? Are you losing sleep worrying about your finances? Is your house worth less than what you owe on it? Have the banks jacked up your credit card interest rates because you've missed a payment? These are all danger signs which you should not ignore.
CONSULTING A BANKRUPTCY LAWYER SOONER RATHER THAN LATER.
It is natural to try and solve your problems by yourself. It is also natural to want to pay your bills and to delay even thinking about filing for either a chapter 7 or a chapter 13 bankruptcy. But I have seen, over and over again, that I could have saved my clients a lot of money if only they had come to see me sooner rather than later. Every month you only make a minimum payment on your credit cards is another month that the bank gets your money and you are only "treading water" and not actually improving your financial situation.
If your house is upside down and you have a second mortgage, in many cases the bankruptcy court can remove the second mortgage from your house so you only have to pay the first mortgage.
GETTING A FRESH START.
The sooner clients take positive steps to consult an attorney to consider their bankruptcy options, the sooner they can get back on the road to financial health. The bankruptcy court is the place for many people to get a fresh start.
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Are you having trouble making your monthly payments on your bills? Are you borrowing just to meet your monthly expenses? Are you losing sleep worrying about your finances? Is your house worth less than what you owe on it? Have the banks jacked up your credit card interest rates because you've missed a payment? These are all danger signs which you should not ignore.
CONSULTING A BANKRUPTCY LAWYER SOONER RATHER THAN LATER.
It is natural to try and solve your problems by yourself. It is also natural to want to pay your bills and to delay even thinking about filing for either a chapter 7 or a chapter 13 bankruptcy. But I have seen, over and over again, that I could have saved my clients a lot of money if only they had come to see me sooner rather than later. Every month you only make a minimum payment on your credit cards is another month that the bank gets your money and you are only "treading water" and not actually improving your financial situation.
If your house is upside down and you have a second mortgage, in many cases the bankruptcy court can remove the second mortgage from your house so you only have to pay the first mortgage.
GETTING A FRESH START.
The sooner clients take positive steps to consult an attorney to consider their bankruptcy options, the sooner they can get back on the road to financial health. The bankruptcy court is the place for many people to get a fresh start.
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Thursday, June 2, 2011
I have heard that you cannot discharge Student Loan debt in bankruptcy. Is this really true? Can it be discharged under any circumstances?
Under the bankruptcy code, student loans are generally NOT dischargeable. This means that if you have student loans and file bankruptcy you will continue to be liable for the full payment of these obligations in most cases. Unfortunately, courts do not really care about the amount of your student loan debt or how long you’ve had these loans.
The Undue Hardship Standard
However, student loans can be discharged under some circumstances. The only way you can discharge your student loans is if a bankruptcy court determines that they cause an “undue hardship” on you. Be advised that this is a narrow exception and that the undue hardship standard is very stringent, meaning that very few people qualify. Although you may believe the amount of your student loan debt causes you an “undue hardship”, the term has a legal meaning that extends beyond a normal understanding of hardship. Legally speaking, the term denotes a three-part test that courts use to determine whether or not your student loans can be discharged.Undue Hardship Test One
First, your current income must be low enough so that if you are required to repay your student loans, you will not be able to sustain a minimal standard of living. While it is difficult to define what a minimal standard of living is, it is likely that if you can provide some acceptable form of shelter for you and your dependents, such as an apartment, and have enough money for basic things such as food and clothing, you are probably not going to pass the minimal standard of living test. Basically a minimal standard of living probably means something less than living paycheck to paycheck. However, given the variance by which courts have applied this standard it is important to contact your attorney.Undue Hardship Test Two
Second, your inability to maintain a minimal standard of living must NOT be a temporary situation; rather, there must be a sufficient likelihood that this inability will continue over the period of the loan. This means that even if you currently fall below a minimal standard of living, you will not pass the second part of the test if your situation is only temporary and likely to improve in the future.Undue Hardship Test Three
Third, you must have made a good faith effort to repay your loan. While this does not necessarily mean that you must have made payment on your loans, a court could find a lack of good faith if you attempt to hide money that could have been used to help pay off your student loans. Also if you are buying luxury items, such as new T.V’s or computers, a court may take this as evidence of a lack of good faith.Conclusion
As you can tell the “undue hardship” standard is very tough, and very few debtors actually qualify for a discharge of their student loans. It is important to consult an attorney who can advise you whether you have a chance of discharging these types of loans. Unfortunately, since courts determine on an individual basis whether a debtor meets the undue hardship standard, it is extremely difficult to predict whether your specific situation will meet the court’s standard. Nonetheless, an attorney can ensure you have the best chance of discharging your student loans in bankruptcyIf you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Wednesday, June 1, 2011
How Bankruptcy Can Help With Foreclosure
If you’re facing foreclosure, and you can’t seem to strike a deal with your lender, filing bankruptcy may be able to help.
If you fall behind on your mortgage payments, your lender may take steps to foreclose on the property – meaning it may take back your home and sell the property at a public auction.The foreclosure process doesn’t happen overnight. In California a foreclosure typically starts after you fall behind on your payments for at least two months, and often three or four. This window of opportunity (commonly the reason behind a “strategic default”) will provide some time for you try alternate methods, such as loan forbearance, a short sale, or a deed in lieu of foreclosure.
If you’ve already tried these options, filing bankruptcy may provide another option to avoid or stall foreclosure. Here are some examples of how filing for bankruptcy can help you –
The Automatic Stay Delays Foreclosure
When you file either a Chapter 13 or Chapter 7 bankruptcy, the court automatically issues an order (called an “Order for Relief”) that contains a powerful tool known as the “automatic stay.” The automatic stay is a shield that legally forces your creditors to cease all of their collection activities immediately – no excuses. If your home is scheduled for a foreclosure sale, the sale will be postponed by the Bankruptcy Court while your bankruptcy case is processed, which typically takes three to four months. However, there are two important exceptions to this rule:Motion to Lift the Automatic Stay.
If the lender obtains the bankruptcy court’s permission to proceed with the sale by filing a “Motion to Lift the Automatic Stay”, you may lose the customary three to four months. But even then, your bankruptcy filing will typically postpone the sale for at least two months (or more), depending on the speed with which your lender files its Motion to Lift the Automatic Stay.
Foreclosure Notice Already Filed.
Unfortunately, bankruptcy’s automatic stay won’t stop the clock on the advance notice that most states require before a foreclosure sale can be held (or a Motion to Lift the Automatic Stay can be filed).
How Chapter 13 Bankruptcy Can Help
Many people will do almost anything to stay in their homes for the indefinite future. If this describes you, and you’re behind on your mortgage payments with no feasible way to get them current, the only way to keep your home is to file a Chapter 13 bankruptcy.How Chapter 13 Works.
Chapter 13 bankruptcy lets you pay off the “arrearage” (late, unpaid payments) over the length of a repayment plan you propose (usually five years). You will need to demonstrate to the court that you earn enough income to at least meet your current mortgage payment at the same time you’re paying off the arrearage. Assuming you make all the required payments up to the end of the repayment plan, you’ll be able to avoid foreclosure and keep your home.
Stripping Off Second and Third Mortgage Payments.
Chapter 13 may also help you eliminate the payments on your second or third mortgage. This is because, if your first mortgage is secured by the entire value of your home (which is possible if your home has dropped in value recently), you may no longer have any equity with which to secure the later mortgages. In this scenario, the bankruptcy court may allow you to “strip off” the second and third mortgages and re-categorize them as “unsecured debt.” Then, under your Chapter 13, you’ll be able to discharge these debts after successfully completing your Chapter 13 plan.
Canceling Debt.
Chapter 7 bankruptcy will also cancel all the debt that is secured by your home, including your mortgage, as well as any second mortgage(s) and home equity loans.
Canceling Tax Liability for Certain Property Loans.
Thanks to a new law, you no longer face tax liability for losses your mortgage or home-improvement lender incurs as a result of your default, whether you file for bankruptcy or not.
However, the new tax law doesn’t shield you from tax liability for losses the lender incurs after the foreclosure sale if:
- Your loan is not a mortgage or was not used for home improvements (such as a home equity loan used to pay for a car or vacation); or- Your mortgage or home equity loan is secured by property other than your principal residence (for example, a vacation home or rental property).
This is one way Chapter 7 bankruptcy helps. It exempts you from tax liability on losses the lender incurs if you default on these other loans.
Chapter 7 Cannot Cancel the Foreclosure.
With all this debt being cancelled, you may be wondering why the foreclosure on your home won’t be cancelled too. The trouble is, when you bought your home you probably signed two documents (at least)—a promissory note to repay the mortgage loan, and a security agreement that could be recorded as a lien to enforce performance on the promissory note.Chapter 7 bankruptcy will discharge your personal liability under the promissory note, but it doesn’t remove the lien. Chapter 7 will get rid of your debt but not the liens – you’ll still probably have to give up the house under the lien because that’s what your pledged as collateral for your loan.
If All Else Fails: Relief From Debt and Tax Liability
If you’re certain you won’t be able to propose a Chapter 13 repayment plan that a bankruptcy judge will approve, and Chapter 7 will provide only a temporary delay from the foreclosure sale, then what’s the point of either?If you have to lose your home, you can at least view bankruptcy as the best way to get out from under your mortgage debt and tax liability. Bankruptcy also offers a way to save some money, which will help you find new shelter and weather the process of re-building your credit.
Considering filing for bankruptcy? Contact our offices in Pasadena and Altadena today for a free consultation.
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Thursday, May 26, 2011
Should I File Bankruptcy Without an Attorney
When Congress changed the bankruptcy laws in 2005, they made filing for bankruptcy extremely complex and complicated. The fact is that is it is extremely difficult to file for bankruptcy without an attorney. Recent figures indicate that about nine out of ten self-prepared bankruptcy petitions are dismissed because the “pro-se” debtors did not properly fulfill their obligations under the new bankruptcy laws. “Pro-se” is the Latin legal term for someone who is representing himself or herself without a lawyer. Filing Bankruptcy in Los Angeles County without an attorney is further complicated because in addition to attending to obligations under the federal bankruptcy laws, you must also adhere to the Local Bankruptcy Rules for the Central District of California. Representing Yourself in Bankruptcy is Often A Mistake Filing for bankruptcy is much more involved than reading a “How to File Bankruptcy” book. It takes a keen understanding of federal and state law. Many debtors who represent themselves are not aware of what assets they can protect, and what assets they cannot protect. I have seen many a case where the trustee has taken assets from a pro-se debtor because they were not exempt and protected. The Means Test Can Be Very Complicated Every person filing bankruptcy must complete the means test and must do so properly. The means test is the court's determination that you qualify to file for bankruptcy. If the means test is not prepared the right way, it can constitute grounds for the Bankruptcy Court to dismiss your case. The means test is one of the most involved and controversial aspects of filing bankruptcy today. Documents Must Be Filed with the Court and Provided to the Trustee The new laws also require that a debtor provide a number of documents to the trustee in a timely fashion. I have observed that with a great number of pro-se Chapter 7 filings, the trustees have refused to examine the debtor because the debtor failed to provide the proper documents. In addition, I have never, ever seen a Chapter 13 pro-se debtor who provided all of the necessary documents to the Chapter 13 trustee when they were required to do so. Finally, if you do not file other mandatory documents with the court on a timely basis, the court will dismiss your case. You Must Know What Information Must be Provided in the Bankruptcy Petition The petition itself is rather complicated. With most of the cases we file, the petition is close to 50 pages long. You must also understand what particulars about your financial situation to include. Retaining an Experienced Bankruptcy Attorney is a Wise Investment An experienced bankruptcy attorney will know how to quickly and efficiently put together your petition, file your case in the proper way, and then represent you in Court. When it comes to seeking to eliminate a substantial amount of debt, it makes sense to do it the right way. Many experienced bankruptcy attorneys, such as my Pasadena Bankruptcy Law Office, offer free consultations. If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas. | draft |
Wednesday, March 16, 2011
CONSIDER INCOME TAX IMPLICATIONS BEFORE ENTERING INTO A SHORT SALE OR FORECLOSURE
Cancelling mortgage debt, either through a short sale, foreclosure, or loan modification, can lead to a painful income tax bill if you don't follow IRS rules. Usually when a creditor cancels a debt, such as unpaid student loans or credit cards, the amounts forgiven are treated as ordinary taxable income. You have to declare it as income on your tax returns and pay taxes on it. Congress passed a law creating an exception covering distressed home mortgages. But you don't automatically qualify for special tax treatment when a lender writes off part of your mortgage debt. The cancelled debt must have been used by you "to buy, build or substantially improve your principal residence." If the debt is not on your principal residence, or if you took out money to use for something else other than the purchase of the home or to substantially improve it, (such as paying off other debts, taking a vacation, buying a car, etc.) then you won't qualify for the special tax treatment. You could end up owing a lot of money to the government even after you lost your house.
For a more detailed discussion on this issue, follow the link below for the complete article from the Los Angeles Times.
http://www.latimes.com/business/realestate/la-fi-harney-20110313,0,6669801.story
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
For a more detailed discussion on this issue, follow the link below for the complete article from the Los Angeles Times.
http://www.latimes.com/business/realestate/la-fi-harney-20110313,0,6669801.story
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Friday, March 11, 2011
Debt Consolidation or Bankruptcy: Which is Better?
One of the most frequently asked questions I hear from potential clients is whether they should file bankruptcy, or use a debt consolidation company to make payments towards their debts. For those lucky debtors who qualify for Chapter 7 (which requires no repayment of debts but allows in most cases for discharge of all dischargeable debts), the decision is markedly easier to make.
But what about those who have the ability to make some monthly payments to their creditors and don’t qualify for chapter 7? Their primary bankruptcy option in many cases is Chapter 13, which allows for, usually, a partial repayment of the debt. Armed with this choice, most people decide that debt consolidation, rather than filing a Chapter 13 bankruptcy case, is their optimal solution. However, this is almost never true.
In Chapter 13, the amount you have to repay to your creditors will almost always be less than what you will have to repay outside of bankruptcy. This is true even if you are required to repay 100% of your debts in a Chapter 13 case. Depending on various factors–primarily your income and expenses– you can get a discharge of your debts in a Chapter 13 case repaying anywhere from 0% to 100% of your unsecured debts for 36-60 months.
Why is it better to repay 100% in a Chapter 13 rather than doing debt consolidation? Because you do not have to pay for interest accrued on unsecured debts in a Chapter 13. Even under the best consolidation deal outside of bankruptcy there is going to be interest paid. Also, in Chapter 13 your repayment plan will be for a maximum of 60 months (and in many cases can be as little as 36 months). This can result in significantly less paid out over time than if you paid off your debts under a consolidation arrangement.
So if you are in a position where you may have too many assets or income to qualify for a Chapter 7 case, but are having trouble managing your monthly payments on your credit cards or other unsecured debts, you should consult with a bankruptcy attorney about the possibility of filing a Chapter 13 case. You very well may be able to pay off all your unsecured debts with affordable monthly payments in less than 5 years!
But what about those who have the ability to make some monthly payments to their creditors and don’t qualify for chapter 7? Their primary bankruptcy option in many cases is Chapter 13, which allows for, usually, a partial repayment of the debt. Armed with this choice, most people decide that debt consolidation, rather than filing a Chapter 13 bankruptcy case, is their optimal solution. However, this is almost never true.
In Chapter 13, the amount you have to repay to your creditors will almost always be less than what you will have to repay outside of bankruptcy. This is true even if you are required to repay 100% of your debts in a Chapter 13 case. Depending on various factors–primarily your income and expenses– you can get a discharge of your debts in a Chapter 13 case repaying anywhere from 0% to 100% of your unsecured debts for 36-60 months.
Why is it better to repay 100% in a Chapter 13 rather than doing debt consolidation? Because you do not have to pay for interest accrued on unsecured debts in a Chapter 13. Even under the best consolidation deal outside of bankruptcy there is going to be interest paid. Also, in Chapter 13 your repayment plan will be for a maximum of 60 months (and in many cases can be as little as 36 months). This can result in significantly less paid out over time than if you paid off your debts under a consolidation arrangement.
So if you are in a position where you may have too many assets or income to qualify for a Chapter 7 case, but are having trouble managing your monthly payments on your credit cards or other unsecured debts, you should consult with a bankruptcy attorney about the possibility of filing a Chapter 13 case. You very well may be able to pay off all your unsecured debts with affordable monthly payments in less than 5 years!
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Tuesday, March 8, 2011
Using Credit Cards to Bide Time
This personal bankruptcy story was posted on the internet recently as a comment in a discussion on bankruptcy: “…My husband was a foreman in construction and made a lot of money. Then 9-11 happened and due to economic slowing, he got laid off and has been unable to find a steady job since…Now he is in trucking – and gets paid by the mileage – some weeks it is good pay – other weeks not so much. We really struggle. Many of our credit cards have gone into collections and we just do what we can to get by. We have started paying just minimum payments on everything…”
The debtor in this personal bankruptcy illustration lost income and replaced it with credit card debt in order to bide time. This practice is relatively common, and so are the results of getting so far into debt that you are "robbing Peter to pay Paul." As a general rule of thumb, you are financially bankrupt if your current sustainable income will not pay all of your living expenses, pay interest on outstanding loans, and reduce some of your principal on those loans while paying on them for five years. Five years is the maximum legal number of years a United States Bankruptcy Court allows an individual to work their way out of bankruptcy protection. This is called a Chapter 13 bankruptcy case.
In 1980, the federal government passed a special law which allowed national banks to ignore state usury limits and peg the rate of interest at a certain number of points above the federal reserve discount rate. In addition, specially chartered organizations like small loan companies and installment plan sellers have their own rules. This means that the banks can charge ridiculously high interest rates which keeps you from ever paying off the account. As a result, in many cases, about the only way a person can relieve exhorbitant debt from various banking institutions is through filing bankruptcy
.
If you put $30,000 on your credit card and the company has a 24% APR attached to it with a 2% minimum payment, your minimum payment will never reduce your debt. If you pay $600 a month for the rest of your life, at our current federal maximum rate legally allowed, you will never pay down any of the $30,000 of credit card debt. That is why the debtors in our illustration are really financially struggling. They are making the minimum payments on many of their cards. This practice is a recipe for making a bankruptcy happen.
Using credit cards to bide time until you can replace the income you have lost may not always be a wise decision, and paying the minimum payment on credit cards may also cause you heartache in the long run. If you have found yourself in the situation of having recently lost income, you are using credit cards paying the minimum payments, and you cannot reduce your debt load within a five year period, you may be a candidate for filing a bankruptcy. Choosing the appropriate bankruptcy to file can be a complicated and tricky process, and common sense indicates you will need a bankruptcy lawyer in order to properly understand how complex bankruptcy laws may apply in your situation.
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Tuesday, March 1, 2011
Chapter 13 Bankruptcy Overview
What Does Chapter 13 Mean?
In a chapter 13 proceeding under the U.S. Bankruptcy Code, the consumer reorganizes their finances with the approval of and under the supervision of the bankruptcy court. The debtor agrees to a repayment plan which allows creditors to be paid in a timeframe of 3 to 5 years. Those that file under Chapter 13 bankruptcy must have the ability to accommodate the repayment plan via a regular income. The repayment plan does not necessarily repay the total amount due to the creditors. In most situations the unsecured creditors, such as credit cards, are paid a reduced percentage of the total amount due.
Chapter 13 is often used to save the consumer's house. It gives the debtor time to repay the past due mortgage payments over the 3-5 year life of the repayment plan. The mortgage holder normally cannot proceed with foreclosure during the plan, assuming the debtor is making his plan payments and current mortgage payments on time.
A chapter 13 bankruptcy filing differs from a Chapter 7 bankruptcy filing. In chapter 7 the debtor is asking the court to discharge all of his unsecured debts. In a chapter 13 the debtor is repaying his creditors over time and needs some "breathing room.". In many chapter 13 cases a debtor who has a second mortgage on his house can have the bankruptcy court eliminate the second mortgage after successful completion of the repayment plan.
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
In a chapter 13 proceeding under the U.S. Bankruptcy Code, the consumer reorganizes their finances with the approval of and under the supervision of the bankruptcy court. The debtor agrees to a repayment plan which allows creditors to be paid in a timeframe of 3 to 5 years. Those that file under Chapter 13 bankruptcy must have the ability to accommodate the repayment plan via a regular income. The repayment plan does not necessarily repay the total amount due to the creditors. In most situations the unsecured creditors, such as credit cards, are paid a reduced percentage of the total amount due.
Chapter 13 is often used to save the consumer's house. It gives the debtor time to repay the past due mortgage payments over the 3-5 year life of the repayment plan. The mortgage holder normally cannot proceed with foreclosure during the plan, assuming the debtor is making his plan payments and current mortgage payments on time.
A chapter 13 bankruptcy filing differs from a Chapter 7 bankruptcy filing. In chapter 7 the debtor is asking the court to discharge all of his unsecured debts. In a chapter 13 the debtor is repaying his creditors over time and needs some "breathing room.". In many chapter 13 cases a debtor who has a second mortgage on his house can have the bankruptcy court eliminate the second mortgage after successful completion of the repayment plan.
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Friday, February 25, 2011
STATES NEED OPTION TO FILE FOR BANKRUPTCY
Better off Bankrupt
January 27, 2011Los Angeles Times
During the 2008 financial crisis, the federal government reacted in a frantic, ad hoc fashion, tapping taxpayers for bailouts galore, running roughshod over the rights of bondholders and catching the American people unaware and unprepared. In contrast, we still have time to prepare for the looming crisis threatening to engulf California, Illinois, New York and other state governments.
Wednesday, February 23, 2011
Chapter 7 Bankruptcy FAQ's
A Pasadena-Los Angeles bankruptcy lawyer answers questions on Chapter 7 bankruptcy.
What is Chapter 7 bankruptcy?
The main purpose of this bankruptcy is to get rid of your debts so you can start their life fresh. Your belongings are liquidated, turned into cash, and paid to your creditors. In California, most, if not all, of the average debtor's property is exempt from being liquidated, and you can keep all of these "exempted" assets. Usually this includes all of your household goods, clothing personal effects, motor vehicles, pension plans, 401k benefits, and IRA's. Usually, the unsecured creditors receive no money and the debts are wiped away by the bankruptcy discharge.
How do I qualify for bankruptcy?
You must make below the median income for your state, or if you make more than that, there are certain steps you can take to qualify. This is where the expertise of a knowledgable bankruptcy attorney, such as the Law Office of Phillip Myer, can help.
When should I file?
Most people wait too long. It is natural to try and solve your financial problems without involving a court. Many people feel embarrassed and attach a stigma to filing for bankruptcy. Bankruptcy laws were put in place by Congress to give people a fresh start. The longer you wait and try and juggle the credit cards in the air, "robbbing Peter to pay Paul", the more money you are needlessly paying to your creditors -- money you and your family could use instead to get your fresh start.
What are the steps I need to take to file?
When thinking about filing for Chapter 7, consult a knowledgable experienced bankruptcy lawyer. If he/she determines you are qualified to file, they will discuss your options with you.
What does my future look like?
Filing bankruptcy is the first step towards your new financial future. Your credit score can be built back up, and you are on your way to a more secure future for your family. Instead of paying exhorbitant interest rates to the credit card companies you can use this money to secure your family's financial future.
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
What is Chapter 7 bankruptcy?
The main purpose of this bankruptcy is to get rid of your debts so you can start their life fresh. Your belongings are liquidated, turned into cash, and paid to your creditors. In California, most, if not all, of the average debtor's property is exempt from being liquidated, and you can keep all of these "exempted" assets. Usually this includes all of your household goods, clothing personal effects, motor vehicles, pension plans, 401k benefits, and IRA's. Usually, the unsecured creditors receive no money and the debts are wiped away by the bankruptcy discharge.
How do I qualify for bankruptcy?
You must make below the median income for your state, or if you make more than that, there are certain steps you can take to qualify. This is where the expertise of a knowledgable bankruptcy attorney, such as the Law Office of Phillip Myer, can help.
When should I file?
Most people wait too long. It is natural to try and solve your financial problems without involving a court. Many people feel embarrassed and attach a stigma to filing for bankruptcy. Bankruptcy laws were put in place by Congress to give people a fresh start. The longer you wait and try and juggle the credit cards in the air, "robbbing Peter to pay Paul", the more money you are needlessly paying to your creditors -- money you and your family could use instead to get your fresh start.
What are the steps I need to take to file?
When thinking about filing for Chapter 7, consult a knowledgable experienced bankruptcy lawyer. If he/she determines you are qualified to file, they will discuss your options with you.
What does my future look like?
Filing bankruptcy is the first step towards your new financial future. Your credit score can be built back up, and you are on your way to a more secure future for your family. Instead of paying exhorbitant interest rates to the credit card companies you can use this money to secure your family's financial future.
If you would like more information on this topic or other bankruptcy topics, please contact our Pasadena office at 888.368.8941 (toll free) or 626.389.8575. Mr. Phillip Myer will be happy to answer your questions for you. . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help! Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/ to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.
Tuesday, February 22, 2011
Welcome to the Pasadena-Los Angeles Bankruptcy Law Blog
On the Pasadena-Los Angeles Bankruptcy Law Blog, from The Law Office of Phillip Myer, our goal is to bring residents of Pasadena, Los Angeles County, Glendale and the San Gabriel Valley relevant bankruptcy news, advice and stories of interest. We will be writing about a broad range of bankruptcy issues, but focusing our coverage on:
Bankruptcy is neither a sign of failure nor a personal shortcoming. Especially in this economy, even those who have watched their finances closely and spent money carefully are finding it a struggle to remain afloat. For many, bankruptcy represents a chance to start over.
We hope this blog sheds some light on questions of bankruptcy, mortgage options and debt reduction and we welcome your questions and comments on the blog.
- Chapter 7 bankruptcy for individuals and small business
- Chapter 13 bankruptcy (personal reorganization)
- How to stop foreclosure
- How to eliminate or reduce credit card debt
- Mortgage options (including mortgage modifications and getting rid of liens)
- Taxes and Bankruptcy
Bankruptcy is neither a sign of failure nor a personal shortcoming. Especially in this economy, even those who have watched their finances closely and spent money carefully are finding it a struggle to remain afloat. For many, bankruptcy represents a chance to start over.
We hope this blog sheds some light on questions of bankruptcy, mortgage options and debt reduction and we welcome your questions and comments on the blog.
If, however, you would feel more comfortable speaking with us directly, you can contact us online or call 626-389-8575, or
Toll Free: 888-368-8941.
Toll Free: 888-368-8941.
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