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.
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.
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.
I am now a local Bankruptcy Attorney for Riverside County.
I have been filing cases here for over three years but have recently decided to move my family to be able to service more bankruptcy clients. The riverside bankruptcy court is the busiest bankruptcy court in the country. In 2009 there were close to 120,000 cases filed here. The second largest was in Florida with 60,000 cases. Most of my business has come from this area for quite some time, but I also handled cases in Oakland, San Jose, San Francisco, San Diego, Los Angeles, Modesto, Sacramento. I will still take cases in the Northern and Eastern District and either fly there for the 341 hearing or pay a special appearance to do so.
My new focus will be serving the people of Riverside County and will occasionally drive to San Diego or L.A. for cases that I take on there. I have an a great relationship with many of the trustees in Riverside and have already built trust in the cases that I have been filing in Riverside court for 3 years.
Bankruptcy can be very predictable if I have all the facts and I have never had a client who did not get a discharge or have their case go in the direction that I predicted.
It’s best to talk to a bankruptcy attorney before allowing your situation to get worse. There are a lot of things we can do to protect your assets and prepare for a case and I can advise you on pitfalls not to take and make sure you keep things that are exempt currently in that position. It troubles me to see people who have cashed out retirement funds and other exempt items and ended up filing for bankruptcy anyways.