The treasury department handed down Supplemental Directive 10-02 in June of 2010 which states that homeowners "in active Chapter 7 and Chapter 13 cases are eligible for HAMP (Obama) modification on the basis of a bankruptcy filing, whether filed before, during, or after a trial plan. This is a marked departure from Treasury’s prior guidance in HAMP Supplemental Directive 09-01 that borrowers in bankruptcy were eligible for HAMP modifications “at servicer’s discretion." This is great news for homeowners that may have been unable to obtain a loan modification under the Home Affordable Modification Program (HAMP). Previously if you were in bankruptcy most servicers would deny borrowers a loan modification. This was particularly troublesome when the homeowner was denied a loan modification because their back end ratio of debt to income exceeded the 55% percent allowed. This meant that if your debt payments were more than 55% of your income you could not qualifiy for a loan modification. Many homeowners need to file for bankruptcy to eliminate some of their debt payments to qualify and among Supplemental Directive 10-02 things, to be able to afford their new mortgage payment.
Under the new Directive the mortgage servicer also has to send written notification to the borrower if the servicer determines they may be eligible for a loan modification and are behind on the mortgage two or more payments. This new Directive only applies to mortgages that are not owned by either Fannie Mae or Freddie Mac (Non-GSE Mortgages).
The Directive also states that a mortgage servicer may not refer any loan to foreclosure or conduct a scheduled foreclosure sale unless, among other things, the borrower is evaluated for HAMP and is determined to be ineligible for the program.
It should be interesting to see whether or not and to what extend the servicers comply with the Supplemental Directive.
The first step in the process of filing for bankruptcy is consulting with an experienced, knowledgeable attorney who can meet with you and take the time to discuss all of your available options. I understand that people hit rough patches in their lives and sometimes a bankruptcy is the only option to get back on track. Once you fall behind on your debt it is almost impossible to catch up. When the credit card companies raise your interest rate it is almost impossible to pay back your debt within a reasonable amount of time.
At the initial consultation I will provide you with a questionnaire to fill out that I would need to prepare your case. I will also provide you with a checklist of documents that I would require in order to file. Once you have everything in order and are ready to move forward you can give me a call and we will make time for you to come in at your earliest convenience. I will then prepare your petition within a short period of time which in most cases is only a day or two. You will then have to come back to my office to review and sign the paperwork. After signing, I will have your case filed usually the same day. As you can see, the process moves quickly and orderly.
Approximately one month after your case is filed you will have to attend a court conference called the Meeting of Creditors. Even though it is called the Meeting of Creditors in the vast majority of cases no creditors will ever appear. At this court appearance the trustee assigned to the case will ask you questions for just a few minutes. I will be sitting next to you the whole time to answer any legal questions that may arise.
In a chapter 7 usually there is only one court appearance and in the vast majority of bankruptcies the case will be closed. In a chapter 13 there is an extra step involved which is a confirmation hearing. At the confirmation hearing the trustee should confirm your case based upon the repayment plan submitted. The debtor does not appear at the confirmation hearing and only the attorney needs to attend.
In most chapter 7 bankruptcy cases approximately two months after you go to court your case will be closed and your debt will be forever discharged, meaning your creditors can never attempt to collect the debt again.
The Benefits of Filing For Bankruptcy
A major benefit to filing a petition in bankruptcy is the automatic stay that prevents most collection actions by creditors against the debtor or the debtor's property. As long as the stay is in effect creditors may not initiate or continue lawsuits, garnish your wages, call you, harass you or attempt to collect the debt in any way. It allows you a fresh start to your financial life and allows you to start over with a clean slate.
Of course, even when the collection agencies are pounding at your door and you can't pay your mortgage, electricity, cable, and credit card bills all in the same month, bankruptcy may still be your last option. At the initial consultation we will go over all possible options and devise the best strategy for you to take. For most people, if you are considering bankruptcy the chances are good there are no more options available.
One major benefit to filing bankruptcy is that in most cases you will be able to keep your home and car, even in a chapter 7 bankruptcy. With changes in the bankruptcy law in January of 2011 debtors are now allowed to have more than $330,000 equity in their home or more than $12,000 in personal property, including cash. If you have no equity in your home or you do not own a home you can elect to take the federal exemptions which for most people protects all of their assets.
No one even has to know that you filed for bankruptcy. Your friends, family and co-workers don't ever have to know you filed. Bankruptcy is a matter of public record but unless someone specifically inquires into whether you filed for bankruptcy it would never come up.
Bankruptcy also prevents your utilities from being cut off and your car from being repossessed. It will stop a foreclosure and pending sale date and will buy you time to work with your creditors and stay in your home as long as possible. While bankruptcy will allow for the discharge of a number of debts others remain non-dischargeable according to federal law. Non-dischargeable debts include family support, matrimonial judgments, student loans, certain types of taxes, restitution and criminal fines.
Additionally, it is important to remember that chapter 7 bankruptcy does not relieve a co-signer from any responsibility to pay back debt. The creditor has the right to enforce the co-signer's obligation. Chapter 13 on the other hand will protect a co-signer as long as the debtor complies with the bankruptcy plan.
Bankruptcy can serve as a Fresh Start and set you up for a successful financial future. Debt worries are a terrible burden to carry. Wouldn’t you like to have:
Most people with severe debt problems are eligible for bankruptcy relief. But anyone that has debt issues should consult with a bankruptcy attorney who can advise you if bankruptcy is an option for you and how it will affect your assets.
There are several different kinds of bankruptcy cases. We refer to these different types of cases as “Bankruptcy Chapters.” The actual bankruptcy law is officially called Title 11, United States Code. It is divided up into a number of different “Chapters” that offer different types of relief.
Each of the bankruptcy chapters is designed for a different purpose. Chapter 7, often called straight bankruptcy, is intended to relieve you from the burden of most ordinary debts, such as credit cards and other unsecured debts. Chapter 13 and Chapter 11 are reorganization cases. They allow the restructuring of certain types of debts and then let you pay them under new terms while giving you and your property court protection from creditors.
An experienced bankruptcy attorney can guide you towards the remedy that will work the best for your situation. The whole point of bankruptcy is to give you a Fresh Start. Misfortune and financial mistakes can strike anyone. Why spend the rest of your life paying for yesterday’s mistakes, if you don’t have to? Let us show you a better way, if there is one.
Life After Bankruptcy
You have a fresh start, and some new challenges. Your credit rating, which probably wasn't all that great already, will be impacted by filing for bankruptcy. Filing for bankruptcy will have a short term negative impact on your credit rating, but not filing for bankruptcy may be worse. Not filing for bankruptcy and continuing to incur late fees, legal charges and judgements will continue to bring down your credit until you do something about it.
You really need to ask yourself several key questions including, 'how did I get here? What could I have done differently and what should I do differently in the future? And what have I learned from all of this? Your answers will help you create a better financial afterlife in the wake of a bankruptcy.
Many of my clients tell me that they were able to obtain a new car loan immediately after filing a chapter 7 bankruptcy, even while it is still on their credit report. FHA guidelines also allow you to get a mortgage two (2) years after filing a ch. 7 bankruptcy. You will also get solicited for new credit cards almost immediately because you can only file for a chapter 7 once every eight (8) years. The creditors know you have to pay back your debt to them so they will make credit easy to obtain, although at slightly higher interest rates. Generally, you do not want to incur more credit card debt, however you may want to get one credit card for emergencies or for contingencies such as booking plane tickets or car rentals. Remember, the whole point of filing for bankruptcy in the first place was to rid yourself of debt and get a fresh start, not to get into debt all over again.
After your bankruptcy has been discharged, you need to re-establish your good credit. You need to do so right away for a chapter 7 or after reorganization for a Chapter 13. Obviously, continuing to pay your other bills on time such as your mortgage and utilities will help to build up your credit. You may also want to get either a secured or unsecured credit card and pay it off every month. There are reputable companies available who will help you to build your credit back up. This can be explained more during your free initial consultation.
You are only able to receive a discharge in a chapter 7 bankruptcy after eight (8) years have passed since the commencement of the last case in which you received a discharge. You generally can file another chapter 13 case sooner (usually 4 years) if the need arises. Thus, you should not file a bankruptcy if you need the option of doing it again in the next few years. The case may arise if the reason you are filing bankruptcy is to discharge medical bills and you may have to incur additional medical bills in the future.
Questions About Bankruptcy?
1.) What is the difference between a chapter 7 and chapter 13 bankruptcy?
A chapter 7 is a "liquidation" bankruptcy that discharges your debts and you do not pay any of them back. Not all debts are dischargeable though such as some tax debts, criminal fines and most student loans. A chapter 13, on the other hand, is a wage earner's bankruptcy where you pay back anywhere from a fraction of what you owe up to the full amount. Debtors may file a chapter 13, as opposed to a chapter 7, for various reasons such as not passing the means test or they are trying to save their home and repay mortgage arrears.
2.) How long does a chapter 7 bankruptcy take before I receive a discharge?
Generally, once a ch. 7 is filed you will have one court appearance where you meet with the bankruptcy trustee assigned to your case. This is called the 341 Meeting of Creditors. Although it is referred to as the Meeting of Creditors, in most ch. 7 bankruptcy cases the creditors will not appear. The court appearance is usually only a few minutes long and in the vast majority of cases your 341 meeting will be closed by the trustee. Sixty (60) days after this your bankruptcy case should be closed and you will then receive a discharge of your debts. The discharge means you no longer owe the debts listed in your bankruptcy.
3.) Do I have to stand before a judge in a courtroom?
Nope, you will meet with the trustee assigned to your case at the court appearance where he will ask you questions for a few minutes. You will be prepared for the types of questions beforehand and you will feel comfortable by the time your court date arrives.
4.) I thought chapter 7 bankruptcy stopped the foreclosure? Can the bank still take my house?
When you file Bankruptcy, you receive an "automatic stay" on court actions such as foreclosures and sheriff's sales. A creditor can still go into court and ask the bankruptcy judge for a "relief from stay", and if granted the creditor can proceed with a court action to foreclose.
5.) Can I keep some of my debts out of my bankruptcy?
Nope, you must list all of your debts as well as assets in your bankruptcy petition. Debtors are not allowed to pick and choose whom they want to pay back. You may still voluntarily pay back a creditor, such as a family member, car loan or mortgage once your bankruptcy is discharged although you are under no legal obligation to do so.
6.) Can I change my Chapter 7 to a Chapter 13 and vice versa?
Yes, in most cases you are permitted using a "motion to convert." In certain instances you may want to do so if you can no longer afford your chapter 13 plan payments. You may want to convert to a chapter 7 to discharge the debt. A trustee may also make the motion to convert if he feels you have money to pay back some of your debts in a chapter 13. This may happen in rare instances such as if a debtor fails to disclose all of his or her income in the bankruptcy.
7.) Do my spouse and I have to file jointly?
Nope, the decision to file individually or jointly depends on your situation. For instance . . .
8.) Are my family, friends and co-workers going to find out that I filed for bankruptcy?
It is a matter of public record that you filed for bankruptcy but in most cases only your creditors are notified that you filed. No one else will know unless you tell them or they do a search in the public court records.
9.) What does it mean to reaffirm a debt such as a car loan?
This means you would become personally liable for the debt again. Sometimes you may reaffirm a debt such as a car loan. The bank may require it or they can repossess your car, even if you are current with the payments. Bankruptcy may be considered a default under your loan terms and some financing companies may repossess the vehicle. I will explain during your free initial consultation whether or not I think it is a good idea to reaffirm depending on your particular case.
hat is the cost for filing Bankruptcy with a lawyer?We can give you a price range for Chapter 7. The cost for filing Bankruptcy cases in will typically run somewhere between $1000 and $2000 for the lawyer fee for Chapter 7. (Chapter 13 fees depend on so many factors that there is no point trying to figure out the fee without seeing you in person for a consultation.) The court filing fee will be another $335, and court credit counseling should run about $15. But the exact cost for filing bankruptcy depends entirely on the facts your case. There is only one good way for you to find out. You need to see a bankruptcy lawyer for a personal consultation. Unless you do that, you are just fishing around and wasting your time.
Bankruptcy Court Filing Fees Explained.
The amount of court filing fees might be confusing. Many people thing a filing fee is an extra fee that goes to your lawyer. It isn’t. Filing fees are money collected by the court. The money for filing fees is used to pay the operating costs of the court. The filing fee for Chapter 7 bankruptcy is $335. The filing fee for Chapter 13 bankruptcy is $310. Normally, these fees are paid at the time you file your papers.
2. But some lawyers advertise a flat fee for everybody, don’t they?Yep. We see those ads just like you do. And we don’t believe them. We represent many clients who came over to us after they already went to those places. “Bait and switch” advertising has been around for a long time. (Think mortgage brokers, car dealers, jewelry stores, appliances stores, mattress stores, etc.) That’s because a new sucker is born every minute. And, bait and switch ads work on suckers. Going to a lawyer who plays “switcheroo” games on your fee is just asking for trouble later on.
We offer a completely free bankruptcy consultation.How much does it cost to file bankruptcy? Come see us and find out. You will meet with a bankruptcy expert having years of experience. You will get all your questions answered. We will explain how everything works. We will tell you if we see any troublesome problems. We will not recommend bankruptcy unless you need it. We will offer you a flat fee for any work we recommend, and we will put our fee in writing. Our fees are reasonable. Also, we consider ability to pay. We will reduce our fees for anyone with an extreme hardship.
3. An adequate bankruptcy evaluation will normally take anywhere from 30 to 60 minutes of office time.Without spending the time, a lawyer might not have enough information to tell you how much it will cost to file bankruptcy. Here are examples of some things a bankruptcy lawyer should know before quoting you the fee.
“How do I pay you?”Once you know the cost to file bankruptcy, paying it is the #1 problem most clients have. I wish I had a dollar for every time someone asked, “How do I pay you?” Some people who need bankruptcy will never be able to pay a lawyer. However, most people will be able to afford a lawyer if they come to us. Without an experienced lawyer , you are running some big risks. Some of the problems we see in such cases are very serious where people file without a lawyer:
What can be done to make it easier to pay the cost for filing Bankruptcy?
There are ways that make it easier to pay the cost to file bankruptcy. There are things that lawyers can do. And there are also some things that clients can do.
At my law firm, we struggle to stay affordable. There are several ways we do this. For one thing, we don’t waste client money paying for fancy offices. We don’t have oriental rugs on the floor. We don’t have fancy furniture. We keep our offices simple and functional. The biggest cost advantage that our clients benefit from is our experience . We can do most things in a fraction of the time it takes a less experienced lawyer. The cost savings is passed on to you.
If you are struggling with debt and looking for a way out, it is wise to explore your options. You have probably seen or heard advertisements for debt consolidation services that promise to work with your creditors to consolidate your debt and significantly lower your monthly payments. We urge you to use caution before contacting one of these services. Like most promises that sound too good to be true, they often are. At The Brooke Law Firm we will help you explore all of the debt relief options available to you. We are a bankruptcy firm, but we do not push our clients into bankruptcy if we do not think it is the best option for them. We are committed to helping our clients resolve their debt problems, achieving true debt relief and avoiding potential debt consolidation scams.Call (631) 397-0042or contact us online for a free consultation with a Long Island bankruptcy lawyer. It could be your first step on the road to debt relief.
Is Debt Consolidation Right for You?
If you hire a debt consolidation service, the best case scenario is that they will act in good faith and attempt to work with your creditors to consolidate your debt and negotiate lower payments. The question is: How are they going to get your creditors to go along with the plan?
In many cases, debt consolidation services have no leverage and no means of providing lenders with incentive to agree to a debt consolidation. If, after months of waiting, the company is not able to help you, you will be left with all of the debt plus months of interest and/or late fees. Plus, you probably paid good money to the debt consolidation service. More often than not, the fees are more excessive for less relief than a discharge in a bankruptcy.
The above scenario is based on the assumption the consolidation service is acting in good faith. Since these companies are largely unregulated, consumers are putting themselves at risk by handing money over to them. A bankruptcy law firm is backed by the power of the federal bankruptcy code. When you file for bankruptcy, you do not have to get your creditors to agree to the plan. It is enforced by the bankruptcy court.
Bankruptcy is not right for everyone, but those who it can help are usually at a disservice by hiring a debt consolidation service.
The credit industry wants to discourage debtors from filing for bankruptcy protection. In an effort to collect on debts, creditors can be aggressive and frequently try to frighten hardworking people. At The Brooke Law Firm, we want to make sure those in financial distress understand the truth about filing bankruptcy.
From our office in Brightwaters (next to Bay Shore in Suffolk County), our firm has helped thousands of clients get the debt relief they need through Chapter 7 and Chapter 13 bankruptcy. During a free initial consultation, will meet with you and answer all your questions about bankruptcy and how it can affect your life. Do not let the credit industry scare you. Get the facts.
Did You Know?
Here is some information you may not know about bankruptcy :
If you are behind on car or mortgage payments, which are classified as secured debt, and you want to keep the property after filing a Chapter 7 bankruptcy, you may be thinking about a reaffirmation agreement. By reaffirming the debt you owe, you are able to keep your vehicle or personal property recently purchased, provided you are able to make the payments.
However, reaffirmation agreements can be complex. To get all the information you need to make a sound decision, speak to us at The Brooke Law Firm. Our firm has helped thousands of individuals throughout Long Island achieve debt solutions that work for them. Meet with us to discuss your situation during a free consultation.
How Does a Reaffirmation Agreement Work?
Since home mortgages and car loans are considered secured debt, if you have defaulted on your payments, the lender can take the property from you. With a vehicle, it is referred to as repossession . With a home, it is a foreclosure action.
By reaffirming the debt, you are essentially promising the lender that the debt will not be discharged in bankruptcy. It involves entering into a new contract with the creditor for the remaining amount due. There are certain benefits to reaffirming a debt such as being reported on your credit report as being paid which will help you rebuild your credit.
Should I Sign a Reaffirmation Agreement?
If you wish to keep your vehicle you may need to sign a reaffirmation agreement. However, it is important that you understand that entering into that contract will make you personally liable for that debt, despite your bankruptcy relief. Therefore, it is critical that you can afford the payments established in the new creditor payment plan. The payments and interest rate stay the same, and are sometimes even lowered, and you are guaranteed the lender won't take the property as long as you are current with payments.
When the Financial Stakes Are High, Get Professional Advice
Reaffirmation agreements only apply if you file a Chapter 7 bankruptcy, not a Chapter 13 bankruptcy. To determine if you are eligible for Chapter 7 bankruptcy, you must pass the means test. We will meet with you in a free consultation to answer all your bankruptcy questions.
After working hard to improve your education, it can be frustrating to deal with massive student loan debt. Recent graduates often struggle to make ends meet, let alone pay down their loans. If your student loan debt is causing unmanageable financial hardship, it is time to talk with a bankruptcy attorney.
Generally, student loans are not dischargeable in bankruptcy. However, by filing either Chapter 7 or Chapter 13 bankruptcy, you can free up funds, making it easier to pay your student loans. At The Brooke Law Firm, we know the bankruptcy laws from the inside out and will explore every option available to get the relief you need.
Helping You Obtain an Increased Cash Flow
While you will most likely not be able to eliminate your student loan debt, there are ways to get the debt under control. By filing Chapter 7 bankruptcy, we can help you discharge your unsecured debts, such as credit card bills and medical expenses . Because you will no longer need to pay those debts, money is freed up to focus on your student loan.
By filing Chapter 13 bankruptcy, it is possible to reduce the amount of your monthly payment to something more workable without the threat of penalty. Your student loan could also be deferred for a period of time. To learn more about your options, call our office in Brightwaters (next to Bay Shore in Suffolk County) at (631) 397-0042 to arrange a free initial consultation.