Reestablishing their good credit score is a top priority for most debtors. One way to do just that is by paying your current obligations on time: your mortgage, your car note and any other secured debts that you may have. Responsible use of credit cards is another good way to raise your credit[…]
When you file bankruptcy it can help you obtain a fresh financial start. However, it can be difficult to know when the best time to file your case is. There is no magic formula for pin-pointing the best time to file a Chapter 7 or Chapter 13, but there are many warning signs that a bankruptcy filing should be considered.
A few examples of warning signs that a bankruptcy filing should be considered include:
Your mortgage lender is threatening foreclosure of your home
Your car, boat, ATV or other assets are being repossessed by creditors
Collection lawsuits are pending against you
You do not have insurance and your medical bills are overwhelming you
Your wages and/or your bank account is being garnished
You are being harassed by debt collectors
You are delinquent on your taxes
Most of your debt is unsecured (such as credit cards)
You do not have an emergency fund or any savings
Excluding your secured loans (mortgage, vehicle loan, etc), you cannot pay your total debt in full within five years
It May Be Difficult to Figure out the Best Timing to File Bankruptcy
Deciding whether to file a personal bankruptcy case is difficult, but figuring out the best timing can be even harder. The above list is just a few examples of the situations that may warrant filing for bankruptcy.
Collection Efforts Will Stop When You File a Bankruptcy Case
The good news is that whatever your circumstances, if you decide to file a bankruptcy case, the collection efforts against you will stop. The automatic stay is immediately effective when you file your petition, which prohibits any further collection activity against you. We can review your finances and decide if bankruptcy can provide you the debt relief you need.
Contact a Brevard County Bankruptcy Attorney today
A financial emergency may occur due to a sudden job loss or overwhelming medical bills. When you are struggling to pay your bills and considering filing bankruptcy, it is important to understand which type of filing is best for you.
In this blog, we’ll take a look at Chapter 7, Chapter 13 and breakdown how the automatic stay works in an bankruptcy.
Chapter 7 Bankruptcy
Filing a Chapter 7 bankruptcy, or liquidation bankruptcy can wipe out your general unsecured debt.
Comprehensive debt relief. Most, if not all, of your unsecured debts will be discharged or eliminated in a Chapter 7. The most common unsecured debts are credit card bills and medical debt.
Protection from creditors. As soon as you file your bankruptcy, the automatic stay is effective. The stay prohibits most collection activity from continuing against you while your bankruptcy is pending.
Timely debt relief. A typical Chapter 7 filing lasts four to six months, which is a relatively short period of time when compared to the three to five years a Chapter 13 case lasts.
Assets protected by exemptions. While a Chapter 7 filing is often called a “liquidation bankruptcy,” the reality is that most debtors do not lose their assets. Under the law, there are numerous exemptions that protect certain assets from being included in your bankruptcy estate.
Examples include protections for your home, vehicle, qualified retirement account and other types of valuable assets. In fact, it is common for a Chapter 7 debtor to discharge all of his or her debt while maintaining possession of all of his or her assets.
Affordable. A Chapter 7 case is generally less expensive than filing a Chapter 13 case. A Chapter 7 doesn’t last as long, so your lawyer’s fees and costs are usually lower.
Chapter 13 Bankruptcy
Filing a Chapter 13 provides you more flexibility in restructuring your debt and the following benefits:
Debt consolidation. Your Chapter 13 plan allows you to reorganize your debt and consolidate it into one monthly payment that you make to the trustee, who then disburses the funds to your creditors as set forth in the terms of your plan.
Elimination of debt. Your unsecured debt, such as credit cards and medical bills, is paid a percentage of what is owed under your repayment plan. The percentage depends on your income and debt, but most debtors pay pennies on the dollar owed, if anything at all.
Cure delinquencies. If you have fallen behind on your mortgage loan payments or your vehicle loan payments, you can include small payments in your Chapter 13 plan to be applied to curing your delinquencies. A Chapter 13 case lasts three to five years, which typically gives you plenty of time to cure your payment defaults and get your secured loan back on track.
Lien stripping of inferior mortgages. If you have a second or third mortgage on your home, you may be able to “strip” the lien and treat it as an unsecured debt. To qualify, the value of your home must be less than what is owed on the first mortgage. To learn more about lien stripping, please read out blog titled “Stripping Off Junior Mortgages in Bankruptcy.”
The Automatic Stay
One of the benefits of filing a Chapter 7 or Chapter 13 case is the automatic stay.
The stay is immediately effective upon your bankruptcy filing and it prevents creditors from taking any further collection activities against you. This can be very helpful when you are facing a financial emergency:
Foreclosure of your home. Whether your mortgage lender is threatening to foreclose or you already have a foreclosure lawsuit filed against you, a bankruptcy filing can halt (at least temporarily) your lender’s actions. At a minimum, your filing will allow you to have more time in your house.
Eviction from rental property. Depending on where you are in the eviction process, a bankruptcy filing may allow you to delay it.
Account or wage garnishment. If a creditor has a judgment against you, it is likely that a garnishment of your paycheck or your bank account has been filed against you. As soon as you file your bankruptcy petition, the automatic stay stops all garnishments. Additionally, it is possible the debt linked to the garnishment can be discharged or eliminated in your filing. In fact, it is possible that the creditor will be ordered to refund a portion of the funds previously garnished.
Disconnection of utilities. Even if your electricity has been turned off, a bankruptcy filing may allow you to get it reinstated. This can be a real advantage if you are in the middle of summer or a terrible winter and you do not want your utilities to be turned off.
If your financial struggles have put you in one of the above situations or a similar circumstance, it is time to consider your debt relief options. We can help you understand how filing a bankruptcy case will benefit you. We can also explain your other debt relief options. Call us to schedule a free consultation today.
Speak with an experienced Bankruptcy Attorney at Faro & Crowder, PA 321-784-8158
When you are past due on your mortgage and your lender is threatening foreclosure, it can be overwhelming. You may be wondering what you can do to try to save your home.
While no two cases are identical, most homeowners have several options available to them. Below are a few actions you may want to consider, but it is important that you confer with an experienced attorney to discuss which option is best for you.
Defend the Foreclosure Action
Many individuals do not realize that they can fight a foreclosure action. There are numerous defenses that may be available to you, including the lender having improper documentation to support the lawsuit. You may also be able to challenge unconscionable mortgage terms or unfair lending practices. There are numerous other possible defenses and we can help you explore all of them. If you are an active military member, you have special defenses available to you. In many cases, we can help you obtain a waiver of the deficiency balance, extend the sale date and even cash in exchange for your keys. If a settlement cannot be reached, we will take your case to trial.
Modifying your mortgage can provide significant financial assistance by providing you with more beneficial terms. Each lender has their own way of handling mortgage modifications and the process can be difficult, so it is important to seek assistance from an attorney experienced in handling modifications. One of the most significant factors is whether you have equity in your property because your mortgage lender is more likely to agree to a modification if the lender stands to lose money in a foreclosure. If you have equity in your home, the lender is more likely to make a profit or at least break even in a foreclosure. Mortgage modification can be obtained directly with the lender, however, success rates are exponentially higher in the context of a Chapter 13 bankruptcy.
If you are willing to sell your house, a short sale may be a good option. The short sale process involves the homeowner obtaining permission from the lender to sell the property for less than what is owed on the mortgage loan. There are several obstacles that must be overcome to successfully close a short sale, so having a knowledgeable attorney on your side can be extremely helpful. If the bank has not agreed to waive the deficiency, a short sale may not be in the borrower’s best interests. Once the property has been sold, the borrower has no leverage to obtain a waiver of deficiency. If you are attempting a short sale without the advice of an attorney, particularly if you are relying on a real estate agent, remember that there may be a conflict of interest.
The borrower obtains no benefit from a short sale with no waiver of deficiency. When the bank, usually at the last minute, refuses to waive the deficiency in writing, the real estate agent will often pressure the borrower to move forward anyway, claiming that the bank will be more likely to waive the deficiency after the short sale. Once the short sale has gone through there is no incentive for the bank to waive the deficiency. If the short sale does not close, however, the real estate agent gets no commission. This is not said to be critical of real estate agents, commissions are how they get paid for what they do. However, a real estate agent’s job is to put a buyer and seller together, not to solve a defaulting borrower’s financial problems.
One of the main concerns people have when they are facing bankruptcy or another negative financial event is whether or not they will ever be able to own a home again. You may have heard that it is not possible to buy a home after you have experienced an adverse financial event, such as a foreclosure or bankruptcy, but this typically is not true.
Bankruptcy Attorney serving Cocoa Beach, Florida
Before you give up hope consider the following:
It takes time. You may not be eligible to qualify for a mortgage immediately, but give it time. For example, if you completed a Chapter 13 bankruptcy and you have good credit afterward, you may be able to get a home loan after one year. However, after a foreclosure, you will need to wait seven years before you qualify for a conventional loan that can be sold to Fannie Mae or Freddie Mac. There are also several time frames between these two. The point is, don’t assume that filing for bankruptcy will prevent you from every owning a home again. It will take time and hard work, but you might be surprised at how quickly you can qualify for a mortgage again.
Work on your credit score. After a bankruptcy, foreclosure or short sale, it is important that you work on improving your credit score. This means making payments on time and showing financial responsibility. Additionally, you should review your credit report on a regular basis to ensure it is correct. If you discover any errors, you should immediately have them corrected.
Plan ahead. It is essential to understand what the consequences are of filing for bankruptcy protection or foreclosure or short sale of your home. A seasoned attorney can help you understand what to expect and to assist you in obtaining the necessary financing when you are ready to buy a new home.
If you have questions regarding how a foreclosure, bankruptcy or short sale will impact your ability to buy a new home in the future, contact Faro & Crowder today.
Don’t delay any longer. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.
Speak with an experienced Bankruptcy Attorney at Faro & Crowder, PA 321-784-8158
Foreclosure Attorney serving Brevard County, Florida
When you are seriously delinquent on your mortgage payments and foreclosure is imminent, do not ignore the problem! The faster you take action and contact us for help, the more likely you are to obtain a positive result. There are several options available for avoiding foreclosure of your home, which can preserve your ability to re-establish your credit score. In fact, you may even qualify to buy another home in the future.
Below are a few tips to consider when you first believe that your home is vulnerable to a foreclosure action:
Sell your house. Selling your home on your own prior to it being auctioned off by your mortgage lender is not only better for your credit score, but it may also allow you to keep any equity that remains in it. Where possible, you should take action to make your home appealing to potential buyers, even if it means reducing the asking price to below what you need to pay your mortgage loan in full. We can help you understand what a short sale requires or if paying the remaining deficiency is manageable for you.
Negotiate better payment terms. It never hurts to discover whether your mortgage lender is willing to work out a deal with you. This may include negotiating to reduce the applicable interest rate and/or to lengthen the term of your loan to lower the amount of your monthly payments.
File Chapter 7. When you file a Chapter 7 case, the foreclosure activity against you must cease, at least for a little while. During this time you can negotiate with your lender. If you decide to surrender your home in your bankruptcy filing, you can usually discharge any deficiency balance that is remaining on your debt after your home is sold at auction.
File Chapter 13. If you have a steady source of income and you want to keep possession of your home, filing a Chapter 13 case can allow you to catch-up on your past due payments. You can make small payments in your repayment plan that are applied to your deficiency so when you successfully conclude your Chapter 13, you are current on your mortgage loan.
Short sale. In order to short sale your home (sell it for less than what is owed on your mortgage), your mortgage lender must be involved and approve the sale. Many lenders will agree to this type of sale in order to avoid the time and cost of the foreclosure procedure. It is important that verify that the short sale of your home will be considered full satisfaction of your mortgage debt. Otherwise, you will remain liable for the deficiency balance.
Let us review your unique financial situation before you pursue any of the above options and help you understand which strategy is the most beneficial for you. We can make sure you understand the tax consequences, if any, of your decision as well as the other advantages and disadvantages.
Don’t delay any longer. Contact Us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida. We offer free initial consultations for bankruptcy and foreclosure defense.
Learn about your options when filing a Bankruptcy in Brevard County
An important benefit of filing for bankruptcy protection is that the automatic stay goes into effect immediately upon the filing of your petition. The stay prevents creditors from continuing any collection efforts against you while your case is pending. Thus, all harassing telephone calls, demand letters and collection lawsuits against you must stop. For a Palm Bay or Melbourne resident who has been harassed by collectors for a long time, this can provide significant relief.
Below are a few of the types of emergencies that the automatic stay can help a debtor handle:
If you have fallen behind on your mortgage payments and your lender is threatening a foreclosure action, filing a personal bankruptcy can immediately (but temporarily) halt the proceedings. At a minimum, it will buy you additional time to remain in your home. It will also allow you extra time to try to negotiate a settlement or a deed-in-lieu of foreclosure with your mortgage lender. Finally, it permits us to help you avoid negative tax consequences.
If you have missed payments on your electric, gas, telephone service, or other utilities, the automatic stay can prohibit your services from being disconnected for at least twenty (20) days. This may not seem very important, but when it is extremely hot or freezing cold outside, having electricity to run your air conditioner or heater is significant. While delinquent utility bills are not a sufficient reason to file for bankruptcy protection, they typically are a sign that you have other financial problems as well.
If a debt collector has obtained a judgment against you, it is likely that you have garnishments pending against your bank account and/or wages. The automatic stay stops all garnishments. Additionally, you may be able to eliminate or discharge the underlying debt linked to the garnishment action.
If you rent your home and you have fallen behind on payments to your landlord, filing for bankruptcy can provide you some relief from an eviction action. However, if your landlord has already been awarded a judgment against you, the automatic stay will not halt the eviction process. However, if your landlord has not obtained a judgment, the bankruptcy filing will provide us time to negotiate with your landlord.
The above are only a few examples of the financial emergencies that a bankruptcy filing can assist you with. We can review your individual situation and help determine if filing a Chapter 7 or Chapter 13 is the best debt relief strategy for you.
Bankruptcy Attorney serving Melbourne, Palm Bay and Brevard County
Although the housing market appears to be on the rebound, there are still many homeowners that are struggling to pay their mortgage payments. If you have fallen behind on your mortgage loan and you believe that a foreclosure is in your near future, you should consider filing for bankruptcy protection under Chapter 7 or Chapter 13.
Bankruptcy can be an effective tool for individuals who are trying to avoid a foreclosure action.
Individuals who file bankruptcy most commonly file under Chapter 7 or Chapter 13. Each type of case offers its own advantages and disadvantages. One of our seasoned bankruptcy attorneys can review your unique circumstances and assist you with determining which type of filing you qualify for or will be most beneficial for you.
Chapter 7 | Liquidation Bankruptcy
Chapter 7 is often referred to as the “liquidation” bankruptcy because your non-exempt property can be sold by the trustee to pay your creditors. The reality, however, is that most Chapter 7 debtors have very few (if any) non-exempt assets and they keep all of their assets.
While a Chapter 7 filing does not completely stop the foreclosure process, it can buy you some additional time in your house. During this time, we can help you try to negotiate with your mortgage lender too. In order to proceed with the foreclosure, your creditor must seek relief from the automatic stay from the bankruptcy court.
If the court grants the motion and your home is foreclosed, your Chapter 7 filing will discharge or eliminate any amount you still owe under the mortgage after the foreclosure sale. This can save you from owing thousands of dollars.
Foreclosure and Bankruptcy Attorney serving Brevard County
Chapter 13 | Reorganization Bankruptcy
A Chapter 13 debtor must submit a plan of reorganization which sets forth how the creditors will be paid, fully or partially. Your repayment plan will last a term of three to five years, depending on your individual circumstances.
During this time, you can make small payments under the plan that are applied to the mortgage loan delinquency. When your Chapter 13 case is over, you will be current on your mortgage loan. While your Chapter 13 case is pending and you are making your plan payments, the foreclosure process is halted.
Speak with an experienced Foreclosure Defense Attorney at Faro & Crowder, PA 321-784-8158
Don’t lose your home in a foreclosure. We offer a free initial consult for foreclosure defense or bankruptcy. Contact us to discuss your different options for saving your home and whether filing bankruptcy is the solution.
Faro & Crowder, PA Phone: 321-784-8158 Address: 1801 N. Sarno Road, Suite 01 Melbourne, FL 32935 Email: email@example.com
We are a debt relief agency. We help people file for bankruptcy under the bankruptcy code.
The automatic stay is a powerful benefit of filing a bankruptcy case. As soon as the stay is effective, your creditors are prohibited from taking further collection actions against you.
As a result, a bankruptcy filing can be helpful when you are facing financial emergencies, including:
Foreclosure. The foreclosure process is a collection activity halted by your bankruptcy filing. At a minimum, your filing can buy you some time to negotiate with your mortgage lender or at least remain in your home for a few additional months.
Collection lawsuits. If a creditor, such as your credit card company, has filed a lawsuit against you, your bankruptcy filing will halt the litigation. In many cases, the debt underlying the collection lawsuit can be discharged in your filing.
Garnishment. Garnishments against your wages or your bank account will immediately halt when your Chapter 7 or Chapter 13 case is filed. You may also be able to discharge or eliminate the debt linked to the garnishment action, which means you are no longer liable to pay it.
Eviction. Depending on whether your landlord has obtained a judgment for possession against you, the eviction process may be halted by your bankruptcy filing.
Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA
When you fall behind on your mortgage payments and your lender is threatening foreclosure, you should contact us as soon as possible to discuss your debt relief options. A personal bankruptcy filing is typically an option you should strongly consider. In fact, many Chapter 7 and Chapter 13 cases are filed because homeowners are attempting to avoid a foreclosure action.
If you believe foreclosure is in your near future, it is important to confer with us to discuss whether a Chapter 7 or Chapter 13 would be beneficial for you. Each type of case has pros and cons, which we will fully explain to you.
A Chapter 7 case is called a liquidation because your non-exempt property can be sold to pay your creditors. However, the reality is that most Chapter 7 debtors do not own very many (if any) non-exempt assets. Although a Chapter 7 filing may not completely halt a foreclosure action, it can buy you more time in your home. Your mortgage lender can file a motion for relief from the automatic stay. If the judge grants the motion, the lender will be allowed to proceed with foreclosing on your home. However, this process takes time and you can negotiate with your lender. If your lender is allowed to foreclose on your house, it is important to understand that you can discharge the deficiency balance (the amount that you owe after the house has been sold).
In a Chapter 13 filing, the debtor is required to submit a Chapter 13 plan of reorganization. The plan outlines how you intend to pay your creditors (including your mortgage lender) and it must be approved by the court. Depending on the amount of debt and your individual finances, the Chapter 13 plan lasts for a period of three to five years. During this time, you can make payments that will get you caught-up on your mortgage payments. Thus, the foreclosure action is halted as long as the debtor is making the Chapter 13 plan payments.
The thought of losing your house is frightening and overwhelming, but we can help. Let us help you try to save your home.
Don’t delay any longer. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.
If you are past due on your mortgage payments and you want to avoid a foreclosure action, you may want to consider filing a Chapter 7 or Chapter 13 bankruptcy. Another option to consider is a short sale. Either choice has its advantages, but deciding which is more beneficial for you depends on your unique situation.
Bankruptcy Attorney serving Palm Bay, Florida
Are you limited on time?
If you are not in a time-crunch, the short sale may be a viable option for you. The short sale process can be lengthy because it involves several parties in a variety of negotiations. At the end of the short sale process, there is no guarantee that the sale will successfully close.
A personal bankruptcy provides you instant financial relief. The automatic stay stops all collection activity against you while your case is pending. A Chapter 7 filing typically lasts three to five months, while a Chapter 13 lasts three to five years. In a Chapter 13, a homeowner can cure delinquent mortgage payments. In both types of filings, when you complete your case you will receive a discharge of debt that eliminates a large majority (if not all) of your debt.
Will your lender pursue a deficiency balance?
If your short sale is successful, you will still be left with a deficiency balance. The home was sold for less than what you owe on your mortgage, which leaves your lender “short.” Depending on where you live, this can leave you in a financial bind. Most states do not require a lender to waive the deficiency in a short sale, but there are a few states that require the lender to accept the short sale as payment in full. It is important to confer with a seasoned attorney to discuss this issue in your state.
When you file a bankruptcy case, a debtor can usually discharge all of the deficiency balance left on the mortgage loan. This can save you thousands of dollars!
Is mortgage debt your only debt?
A short sale only deals with your mortgage-related debt. Thus, if you are overwhelmed with credit card or medical debt, a short sale will not provide you relief from these creditors. In a bankruptcy, you deal with all of your debt. Bankruptcy is one of the most comprehensive means for dealing with all of your creditors at once.
If you are behind on your mortgage payments or your lender is threatening foreclosure, contact us to discuss all of your debt relief options.