Featured article

Credit Damage Myth

Posted on 06 March 2010 by Ted Agnick, The Lawyer

Continue Reading...

Bankruptcy Videos Comments (0)

Negative Home Equity In Phoenix Arizona

Phoenix ranks third in the nation for having the highest percentage of mortgage borrowers with negative equity, according to a recent MSN article titled: America’s Most Underwater Housing Markets.

According to that article, a Zillow economist indicated our country has never had this many homes with negative equity through out our country in history.  Apparently, this means even in the great depression, housing never went this far upside down through out our country.

One of the conclusions identified in the article is that these conditions will create more foreclosures due to their affect on the housing market.

According to the article, home prices in Phoenix “dropped more than 52 percent from their peaks through the third quarter of 2009. And as of the fourth quarter of last year, nearly 62 percent of single-family home mortgages were underwater .  .  .  .”

So, it appears things are not getting better anytime soon.  In fact, they may be getting worse as more and more people will find it harder to sell their homes to prevent foreclosure.  Bankruptcy is a tool that may be able to help you stay in your home or properly eliminate the debt and tax burden’s that can arise from a foreclosure sale.  For more information, visit ArizonaBankruptcyGuru.com.

Bankruptcy Options Comments (0)

Can I Keep My Recreational Vehicles And File Bankruptcy?

Are My Recreational Vehicles Exempt In Bankruptcy?

It depends. You can file Bankruptcy and keep your recreational vehicles if you are willing and able to pay the Bankruptcy Trustee the current market value of the vehicle (if you own it free and clear) or for any equity in it.  If you cannot afford to pay the Trustee the market value or equity you have in the vehicle then, you will lose your recreational vehicle when you file for Bankruptcy.

Recreational vehicles such as quads, sand-rails, dirt bikes, jet skis, boats and ATVs are non-necessity items. These types of vehicles are not considered necessary to you establishing a fresh start.  Therefore, they are not protected under the bankruptcy exemption statutes.  Consequently, they are subject to being taken in a bankruptcy proceeding if you do not plan for your bankruptcy properly.

In a Chapter 7 Bankruptcy, you generally are not allowed to keep a recreational vehicle.  In a Chapter 7 case, you must either: (1) surrender the recreational vehicle to the Trustee, or (2) buy the recreational vehicle back from the Trustee.  If you surrender the recreational vehicle to the Trustee, the Trustee will sell it and after withholding the administrative expenses of the sale, pay the remaining proceeds to your creditors.  One option you can pursue is to purchase back the asset, typically at a reduced price, from the trustee.  The Trustee will then take your purchase proceeds, less his administrative expenses and pay the creditors.

For example, if you had a quad that was worth $2,500, the Trustee could sell the quad at an auction and perhaps get $2,000 for it.  After subtracting administrative expenses for his efforts, as well as the cost of the sale, the trustee would be able to pay $1700 to the creditors.  Or, you may offer to purchase the quad back from the trustee for $1500 and keep the quad.  The trustee would then pay the $1500 less his administrative expenses to your creditors.

A better way to address the issue with your recreational vehicle would be perhaps to sell it before filing bankruptcy and place the cash proceeds into an exempt asset such as the equity in your home or your primary vehicle.  In this scenario you get to keep the cash, but lose the recreational vehicle.

In a chapter 13 case, you could keep your recreational vehicle.  However, you would have to pay the Trustee back the value of the asset over the life of the Chapter13 plan.  Chapter13 plans last 3 to 5 years.  So, for example, if the quad was worth $2,500, you would pay the trustee roughly $45 per month for five years to keep your quad.  Again, this assumes you own the quad free and clear.

Under either chapter 7 or chapter 13, if you owe money on the quad, you simply have to keep making the payment to keep it.  If you have a substantial amount of equity in the quad, and still owe money on it, you may have to pay the trustee an amount equal to your equity in order to keep the quad, or the trustee may take it and sell it if he believes there is enough equity in it to warrant the sale.  In a chapter 7, if you were going to pay the trustee for the equity, you would have to pay it all in one lump sum.  Whereas, in a Chapter 13, you can pay the value of your equity over time, in monthly payments, over the life of the Chapter 13 plan.

Exempt Property Comments (0)

Bankruptcy And Car Loans

Bankruptcy Options For Car/Auto Loans

A commonly overlooked benefit of bankruptcy is how it can modify the obligations you owe on your car or auto loans. Bankruptcy provides powerful options to consumers when it comes to car loans.  Bankruptcy can wipe out car loans or reduce the outstanding principal balance.

Many people who come to see me about bankruptcy have not thought about how bankruptcy options for the car loans can improve their situation.  Rarely do they bring this up unless they are in the process of having a vehicle repossessed.  Aside from stopping a repossession, there are other benefits bankruptcy can provide that will ease your auto or car loan financial obligations.

In both chapter 7 and chapter 13 cases, you can return a vehicle to the bank and eliminate 100% of the debt tied to the vehicle.  The bank will not be able to pursue you for any deficiency, ever, period.  This is a good option where you are upside down on your vehicle, meaning you owe more on the automobile than it is worth.

For example, suppose you owe $19,000 on a car that is worth only $8,000.  If you keep the car, you are $11,000 upside down with negative equity and you still have to make car payments.  Under either chapter 7 or chapter 13 bankruptcy, you can give the car back to the bank.  Your loan is eliminated and you get right side up immediately.

Another option would be to simply pay the bank, in one payment, the $8,000 that the car is worth.  You would then be able to keep the car and eliminate the $11,000 negative debt, i.e. the amount you are upside down on the car.   You could either borrow the $8,000 from a friend or relative or get a new loan from a financial institution for the $8,000.  There are financial institutions that specialize in making these types of loans for bankruptcy cases.

Another option that may be available to you under a chapter 13 bankruptcy, depending on how long you have owned the car, is to force the bank to accept the $8,000 for the vehicle and pay that $8,000 off over the life of the bankruptcy plan.  For example, you could end up with a payment as low as $135 per month.

Bankruptcy Options Comments Off

Will I Lose My Home Or The Equity In My Home If I File Bankruptcy?

Arizona Bankruptcy Laws Allow You To Keep Up To $150,000 Equity In Your Home!

The answer depends on whether you are current on your mortgage payments and whether you file chapter 7 or chapter 13 bankruptcy. Generally, people fall into two categories regarding their home.  They are either current or not current on their home mortgage payments.

If You Are Current On Your Mortgage And Have Less Than $150,000 Equity

If you are current on your mortgage, meaning you are not behind on any payments, you will be able to keep your home so long as you do not have more than $150,000 equity in it.  For example, if your house is worth $250,000 and you only owe $100,000 on it, you can file bankruptcy, keep your home and the $150,000 equity remains yours.

If You Are Current On Your Mortgage And Have More Than $150,000 Equity

If you are current on your mortgage payments and have more than $150,000 equity in your home, two things generally will occur.  The Bankruptcy Trustee can sell your home and pay you back $150,000 from the proceeds of the sale of your home.  Or, you may strike a deal to pay the Bankruptcy Trustee the difference between your $150,000 equity and the total equity of your home.

For example, if your home is worth $250,000 and you only owe $75,000 on your mortgage, then the first $150,000 of equity is protected.  But, the remaining $25,000 in equity is not protected.  Consequently you will have to make a deal with the Bankruptcy Trustee to pay back the $25,000 so you can keep your home or allow the Bankruptcy Trustee to sell your home and pay you $150,000 from the sale proceeds.

Option One: Pay The Difference

There are several ways to pay the Bankruptcy the difference.  You can get a loan for the difference or perhaps someone in your family can give you the money to pay the difference.  Another possibility is to pay off the difference over a period of three to five years in a Chapter 13 Bankruptcy plan.

There are several important things to remember when calculating the difference you will have to pay the Bankruptcy Trustee.  First, the market value of your home is somewhat negotiable.  So you may be able to reduce the amount you will pay back if you can establish your home has a lower market value.  Second, you can reduce the amount you will pay back by negotiating sale transaction costs out of the total equity, i.e., administrative expenses as well as marketing and real estate agent commissions.

Option Two: The Trustee Pays You For Your $150,000 of Equity

If you cannot pay the difference, as set forth above, then the Bankruptcy Trustee will likely sell your home and pay you your $150,000 in equity.  You can then use that $150,000 to purchase another home.  One key point to remember is the Bankruptcy Trustee must believe there is enough equity in your home to pay all the administrative expenses of acquiring and selling your home as well as paying you back your $150,000 equity.  So if you have a little equity over $150,000 and you cannot pay the difference, then the Bankruptcy Trustee may not sell your home if there is not enough equity to pay for administering the sale and paying you back your $150,000.

If You Are Not Current On Your Home Mortgage Payments

If you are not current on your mortgage you may still be able to keep your home.  This applies whether you have equity in your home or not.   In fact, many people file bankruptcy in an effort to keep their home when they are behind on their mortgage payments.  There are several bankruptcy options that apply which will help you keep your home when you are behind on your mortgage.

If you have equity in your home, one option is to sell your home and take your equity up to $150,000.  Other options apply whether you equity or not.  You can try and keep your home by pursuing bankruptcy options for delinquent mortgages. For more information on these options, see my article titled : Will Filing Bankruptcy Stop Foreclosure?

Exempt Property, Real Estate Comments (0)

Will Filing Bankruptcy Stop Foreclosure?

Yes, bankruptcy can stop a foreclosure sale!  However, the answer to whether bankruptcy can permanently stop a foreclosure process depends upon your unique situation and whether you file a chapter 7 or chapter 13 bankruptcy.

Temporary Financial Set Backs

If you are behind on your home payments, you likely will fall into one of three situations.  The first two involve you having fallen behind on your home payments due to a temporary economic set back.  This means you missed some of your home payments but, are now able to make the payments.  This could be due to an emergency medical situation or a temporary loss in your income.  If the set back is temporary, you may find yourself in a position where you can begin making your regular home payments again but are unable to make up the arrearages, usually because it has grown to a large figure, for example, $10,000.

If You Can Make Your Mortgage Payment But Need Time To Pay Your Arrearages

The first situation occurs when you have recovered from the temporary economic set back and can begin making your regular monthly mortgage payment, but you need a brief period of time to recover so that you are able to pay your arrearages.  Unfortunately, some banks may start foreclosure proceedings, unless you can pay them the arrrearages, which are $10,000 in the above example.  If you cannot, the bank will proceed to foreclosure.  So even though you can begin making your regular payments, you may find yourself in foreclosure proceedings.

A chapter 7 bankruptcy will temporarily stop a foreclosure proceeding or sale and may give you enough time to come up with the arrearages owed to the bank.  You can typically get 45 to 65 days after filing chapter7 to pay the arrearages.  This may become possible if you no longer have to pay your creditors because they will be wiped through bankruptcy.

If You Can Make Your Mortgage Payment But Cannot Pay Off Your Arrearages

The second situation applies if you can make your regular monthly payments but do not have the resources to come up  with the arrearages in a brief period of time.  For example, if you cannot come up with the total arrearages during the time frame allowed by a chapter 7, a chapter 13 may allow you to pay off the arrearages over a period of three to five years.  For example, if you are behind $10,000, you could pay that over time, in monthly payments of as little as $166,67.

Permanent Financial Set Backs

The third situation is where you have fallen behind due to a permanent or long lasting economic set back and are unable to recover.  This means you cannot currently make your regular monthly mortgage payment and have arrearages.  In this situation, bankruptcy will not save your home.  You will have to let the bank foreclose through the bankruptcy process.  However the bankruptcy will eliminate any deficiency debt that arises from the foreclosure sale of your home and the resulting tax consequences that arise from a deficiency sale.

Mortgage Relief Comments (0)

Can I File For Bankruptcy More Than Once?

Yes, you can file for bankruptcy more than once.  However, several situations separately control how soon you can re-file for bankruptcy.

Refiling After Your Previous Case Was Dismissed

The first situation applies if you previously filed a chapter 7 or chapter 13 bankruptcy and your case was dismissed without you receiving a discharge of debts.  In this situation, you can refile for Bankruptcy immediately.  There is no waiting period.  However, you must be aware that if you are refiling within 12 months of your case being dismissed, the automatic stay will only go into effect for 30 days.  Therefore, you will need to file for an extension on the automatic stay if you are refiling within 12 months of your case being dismissed.

If you had two or more cases dismissed within the last 12 months, the automatic stay will not go into effect at all.  However, you can apply to have the automatic stay instated.  Finally, be aware that if your previous chapter 7 case was dismissed because you willfully failed to abide by a court order or failed to properly prosecute the case  you can be barred from filing a new case for 180 days after your case was dismissed.

Refiling After You Previously Received a Chapter 7 Discharge

The second situation applies if you previously filed a chapter 7 bankruptcy that was not dismissed and you received a discharge of debts.  In this situation, you can file for chapter 7 again eight years from the date you previously filed your chapter seven bankruptcy petition.  If you previously filed a chapter 7 bankruptcy and received a discharge of debts,  that was not dismissed, and now wish to file under chapter 13, you can do so four years from the date you previously filed your chapter 7 petition.

Refiling After You Previously Received a Chapter 13 Discharge

The third situation applies if you previously filed a chapter 13 bankruptcy that was not dismissed and you received a discharge of debts.  In this situation, you can file for chapter 7 bankruptcy six years from the date you filed your previois chapter 13 petition.  You can file for chapter thirteen again two years from the date you filed your previois chapter 13 petition.

Bankruptcy Eligibility Comments (0)