Riverside County Bankruptcy Lawyer BlogHELOC’s or Home Equity Lines of Credit were pretty popular during the boom years and I’d put a good bet are a thing of the past for near distant future. Riverside County has lost 8 years of value in homes. I’ve seen many homes that are worth 50% of what is owed on a 1st mortgage. Homes that are underwater to the point that you owe more to the first then the home is worth are eligible for lien strips in Chapter 13 bankruptcy. This has been enticing enough for some clients that I have that even though their unsecured credit is minimal and typically would not fit a profile that had bankruptcy in their future, have led them to seek bankruptcy relief as a form of restructuring their mortgage. The amount of loan modifications that are being denied and peoples desire to get out of bad housing deals make bring them to the steps of the bankruptcy court. If you are in this position call a riverside bankruptcy attorney to discuss your options.
Articles Posted in Chapter 13 Bankruptcy
Chapter 13 filings Doubled in Riverside County for December
Chapter 13 bankruptcies are twice the usual amount on a monthly basis in Riverside County. I filed 3 Chapter 13’s last month and was amazed at how slow the trustee’s were to responding to issues in my cases. When I inquired I was told that filings are around 1000 for the month of December as opposed to the typical 500 that their office reviews. I don’t know if higher income people are needing to file or more people are being enticed with the potential for discharging 2nd mortgages and HELOC loans. I know 2 of the cases that I filed the clients qualified for Chapter 7 but chose to do a 13 because of a 50k dollar HELOC loan that we could discharge through the bankruptcy with the making of minimal payments over 3 years. The chapter 13 trustees while busy are still extremely persistent in examining the cases that I have sent over. They even went to the point of calculating my clients commute mileage when I put in an expense of 650 dollars for transportation costs. They thought that 550 was more reasonable based on their commutes. I hadn’t even calculated commutes and took my clients at face value and don’t know costs for oil changes etc which all get wrapped up in that expense. Even with the magnifying looking eye of the Chapter 13 office for many people it is the best way to go if your house is really upside down and you want to keep it. Either paying back arrearages or getting rid of 2nd homes makes Chapter 13 a better advantage to a 7 for some clients
Don’t be Cheap when it comes to Bankruptcy. Talk to an attorney not a petition preparer
Bankruptcy Petition preparers are cheap but don’t add value to your case.
Be wary of all the advertisments for $200 dollar bankruptcies. While a petition preparer can offer typing services and help put your assets and debts in the right places, and maybe help determine your six months of income necessary to do the means test. They cannot offer legal advise or help you with exemptions. Read this article before turning to a low cost petition preparer. As an attorney I see bankruptcy cases every day and see how the trustee’s look at issues and understand how to protect all your assets and make sure that everything is included so that you get your discharge and not your case dismissed.
Failure to mention a potential asset such as an unresolved personal injury case or employment law case can make it where its subject to the trustee and property of the estate instead of exempt and yours to enjoy and protect.
File for bankruptcy while the economy is down don’t wait
Filing for bankruptcy is never an easy decision but if things are starting to get better for you economically but you are still mired in debt then there is no time like the present to get bankruptcy advice from a riverside county bankruptcy attorney. The type of bankruptcy you qualify for depends on your last six months of income and once things start getting better if getting out of previous debt is still a priority, its likely you’ll be in a five year plan and subject to a restricted budget. Chapter 13 offers many benefits but its nice to be able to make the decision to choose between a chapter 7 or chapter 13 and by waiting until your income goes back up, it might be a choice you won’t have.
Cram down your car in a chapter 13
Cramming down a car in a chapter 13 is a great way to save money and also reduce your disposable monthly income so that you have a cheaper plan payment. If your car is more than 910 days from when you financed it, then you can pay what the car is currently worth on kelly’s blue book or your opinion based on damage etc. Chapter 13 will allow you to pay it off over 5 years instead of the time that you have left which can really lower your payments. It will also help you with reducing disposable monthly income because if you have a financed car then you get a deduction of 496 dollars minus what your car payment is divided over 60 months or 36 months if you are below the median income for your family size. If you own your car outright the ownership expense is much less so it actually helps to keep a financed car through a chapter 13. Chapter 7 allows you to keep your car and continue to make finance payments but you can’t bring it down to current market value.
Banks stop foreclosures in 23 states
Foreclosures will slow down throughout Country with recent developments but not so fast for California homeowners.
While news of foreclosures slowing down based on banks and lawyers questionable methods is great news it won’t be helping Califonia homeowners as much as other states. California has non-judicial foreclosure which means that within a deed of trust there is typically a power of sale cause. After a notice of default, the owner of the property(bank) will typically sell the property at a trustee notice of sale which gives the borrower 21 days. At a trustee sale, the lender will typically bid the amount that is due plus costs if there is not a bidder. The borrower has no right of redemption and deficiency judgments maybe purused in non-judicial foreclosure. That essentially means that the lender can sue you for their loss on the property and you could get a 1099C for their loss which can sometimes have the effect of making you accountable for their loss as income for tax purposes in the following year.
The issue the banks are facing on judicial foreclosures are that people are signing afffadavits about documents that they are not familiar with and have not reviewed. The affadavits say certain facts about the case including what is owed which signer says he has personal knowledge of. They are doing this to the tune of 10,000 affadavits a month which they could clearly not have personally reviewed in order to get a summary judgment and avoid going to trial which is more expensive. They tried to streamline the machine of foreclosures and in the midst they perverted the justice system. The banks in their carelessness have shown. Foreclosure attorneys have been questioning the standing of MERS(mortgage Electronic recording system) for years and have had some success so this ruling by judges who have timely questioned banks foreclosure processes which will help homeowners. As a bankruptcy attorney it will likely not allow me to delay filing petitions so I can keep home owners in their homes longer because the trustee sales will go an as usual since lenders almost always foreclose outside of the judicial system. Many people who live in their homes for free while the bank drudges through the foreclosure process are able to put their financial houses back in order. For states with judicial foreclosure this will be a relief for homeowners who try to rebuild their savings and move on with their lives after falling off a cliff with the loss in equity that their homes went through.
Bankruptcy filings are increasing and will most likely top 2009 number of 1.4 million
Personal bankruptcy rose 9% in July according to the Wall Street Journal. That is a anumber of close to 138,000 in one month leading me to believe that 2010 will be the highest number of filings in five years. 2009 saw 1.4 million people file and we are already at 900,000 for 2010. For people who have had the credit rating reduced and are having a hard time finding a credit source, bankruptcy becomes one of the only ways to get out of a financial mess. The 2005 bankruptcy changes have had little impact in terms of reducing the number of filings. The main purpose was to force people into chapter 13 but creating the means test and the % of chapter 13’s have not drasstically changed and many people still qualify for chapter 7 relief.
California has almost jumped 30% in the nmber of filings as opposed to a year ago. With Riverside County having 15% unemployment I don’t see the trend stopping any time soon. One out of every 125 households has filed for bankruptcy protection in the last year. It is beoming apparantly obvious that bankruptcy has lost some of the stigma that was traditionally associated with it. My opinion is that it inevitably becomes a stimulous to the economy since consumers get to spend again instead of putting all there money into interest fees that have skyrocketed even while banks are borrowing money at less than 1%. 70% of our economy is based on consumer spending and sometimes being able to walk away from deficiency judgments and potential wage garnishments is better than contributing to bank profits when the banks are failing to put that money back into our communities. If you are paying to much in interest rates or are facing foreclosure or other financial problems, talk to a California Bankruptcy attorney who practices in all the federal districts.
Should I continue to pay on an underwater house or walk away and file bankruptcy
Everyday I have clients that wonder whether they should continue to make payments on a home that has lost so much value. I think you need to consider whether you are in an interest only loan and the payments will reset to something that is not affordable. The other consideration I take into account are what the prices for a rental would be and if its similar then potentially staying in your home is a better bet depending on how far behind on your mortgage or upside down you are and therefore the length of time it will take to build equity. As a bankruptcy attorney I believe it is imperative to go over all options with a client and let them make a informed decision.
Cramming down a car in Chapter 13 bankruptcy
Chapter 13 has some powerful aspects that can really help people with financed vehicles. In a chapter 13 if you owe more on your vehicle than the current market value(blue book) then we can restructure your financing so that you pay on what the car is actually worth. This only works if the financing is more than 2.5 years old so you can’t buy a new car and walk off the lot and get it crammed down, but it works for a lot of people and can save you quite a bit of money.
I have had clients that have been able to fund a chapter 13 plan just in the savings that they made by cramming down their car. If you owe 20k on a car and its only worth 10k then just the money you save in financing would give you 200 a month to fund a chapter 13 plan.
Although Chapter 7 can be a faster way to get debt free, a chapter 13 with its cram downs and lien strips on real property can be a valuable way to put yourself in a great position to come out ahead when your chapter 13 debts are discharged.
Failed loan modifications can be fixed in a chapter 13 bankruptcy
As a riverside bankruptcy attorney I have been getting more frequent calls from people who have been trying to work with their lender in getting a loan modification. In order to qualify for a loan modification lenders often tell home owners that they cannot be caught up with their payments. Many homeowners have fallen behind on payments in hopes of getting a loan modification which often don’t ever come to realization. Banks are notorious for stalling on these loan modifications, losing paperwork, having you constantly send in new pay stubs and other qualifiers when it seams like there only motive is to drag this housing crisis out. Inevitably the day comes where the lender lets the client know that there is a notice of foreclosure pending and potentially a trustee sale. Fortunately there is a solution.
Chapter 13 Bankruptcy allows people to put their late payments(arrearages) into a chapter 13 plan and pay off their late payments over a 3 to 5 year period. The filing of a chapter 13 bankruptcy will stop the foreclosure process immediately and give you time to take the full amount that you are behind on your mortgage and pay it back over either 36 or 60 payments depending if you are above or below the median income for your household size. You can also pay pennies on the dollar to your unsecured creditors and discharging all those debts once your plan is complete. In order to qualify for a chapter 13 bankruptcy you will have to have enough disposable income to pay off your arrearages over the payment plan period. This usually means having a current income that pays your average expenses and leaves you with enough money to fund the plan. Don’t let a failed loan modification lead you to believe that you can’t keep your house. Often times bankruptcy is a much better option and you can realize a greater benefit. You can even get rid of a second or third mortgage in bankruptcy if your house is worth less than you owe on the first. Talk to an experience riverside county bankruptcy attorney and know your options before you allow the bank to take your home.