Articles Posted in Settlements

Over the past three years, a series of impactful events have significantly influenced the housing market. In response to the economic challenges posed by the COVID-19 pandemic, the Federal Reserve injected unprecedented amounts of money into circulation. This infusion of funds gave more individuals cash in hand to make down payments on homes. 

Why Did California Home Prices Rise So Fast? 

Simultaneously, the widespread adoption of WFH (work from home or remote work) reshaped living preferences, prompting a shift from urban to suburban and rural areas. People realized that if they didn’t need to consider commuting, they saw their relationship with work differently and could make lifestyle choices accordingly. Those who made a home purchase in 2020 or 2021 likely secured favorable fixed-interest rates, while those with adjustable rates may find themselves facing financial challenges. With interest rates at historic lows during the 2020-2021 period, the National Association of Realtors (NAR) highlighted in a report that the qualifying income for a median-priced home in America was approximately $50,000. Fast forward to 2023, and this figure has surged to around $107,000. This means that prospective homebuyers, who would have met the criteria for a home loan just a few years ago, now need significantly higher incomes to afford a similar property. This makes the number of possible home buyers shrink immensely over just a few years, not because they don’t want to buy a home but because they are no longer able to qualify for the mortgages. There are even stories floating around online that people who no longer qualify for the mortgage they already have, are being forced to refinance under the new interest rates simply because they no longer qualify based on the current conditions. That means theoretically people who had a 3.5% fixed mortgage could be forced into a 7.5% mortgage simply because they don’t make enough money after inflation. America has a habit of charging people more money when they can’t afford their current situation. 

How it started 

When Covid-19 hit America it was a black swan event that nobody could have predicted the series of financial turmoil it would cause for many Americans. Several major factors contributed to the reasons why Americans decided to buy new cars. Huge stimuluses were provided giving millions of Americans cash in hand as they pivoted from working in offices to working at home. With overflowing bank accounts and the fact that nobody could travel, eat out or do anything, many people decided to go out and finance new cars. Supply chains were also virtually shut down making car production and delivery difficult resulting in people fighting over what inventory was available. Many people are now asking how to give a car back and we are going to explore the options available to you. 

What dealerships did 

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How to File for Bankruptcy and Keep Your Car

If you’re contemplating bankruptcy and worried about keeping your car or truck, the solution isn’t straightforward, but there are strategies available to help you keep it. If you bought a brand-new or even a used vehicle over the last few years and you paid a premium for it, the vehicle may be underwater. There were many buyers during covid and people were offering over value on many hard-to-find vehicles when both manufacturers and dealers were unable to keep up with demand. This in turn pushed many Americans to agree to buy the car or truck that they wanted sometimes for thousands of dollars over the median price. Now that demand has slowed a bit there are many car owners who have vehicles in which they owe far more than the vehicle is worth. 

Can I file for bankruptcy? 

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What happens if I default on my SBA loans?

Covid-19 hit small businesses hard, leading the U.S. government to initiate several programs aimed at supporting struggling American businesses. As part of the U.S. Small Business Administration’s (SBA) Disaster Assistance program, these efforts included the Paycheck Protection Program (PPP), which played a central role within the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. The PPP was designed to provide vital resources to small businesses, enabling them to sustain their payrolls, rehire laid-off employees, and cover essential overhead costs during these challenging times. The CARES Act, along with the subsequent Coronavirus Response and Consolidated Appropriations Act of 2021, swiftly delivered direct economic assistance to American workers, families, small businesses, and various industries in need.

What was the plan? 

Introduction

The COVID-19 pandemic brought unprecedented challenges to the United States, with small businesses being hit particularly hard. Recognizing the urgent need to provide relief to these struggling enterprises, Congress introduced a new bankruptcy option known as the Small Business Reorganization Act of 2019, commonly referred to as Subchapter 5. This groundbreaking legislation aimed to offer a lifeline to small businesses grappling with mounting debts during one of the most significant financial crises since the 2008 housing bubble burst. Prior to Subchapter 5, Chapter 11 bankruptcy was the primary mechanism for debt reorganization, but it proved to be complex, costly, and inaccessible for many small businesses lacking the financial resources to navigate its intricacies. Subchapter 5 offers small businesses debt relief by being an efficient, affordable, and accessible alternative, providing a ray of hope for struggling entrepreneurs.

The Genesis of Subchapter 5

Raymond Lee sues a lot of people in southern california and in Riverside county where I typically practice. Most cases in my jurisdiction are heard in Indio and are often brought by American Express who sends a lot of there accounts to Zwicker and Associates. You have many options in how to deal with the law suit that you have recently been served but first thing you need to do is speak with a competent lawyer to examine those options. When you have been sued you have 30 days to answer or you could face a default judgment which essentially says you agree to everything and allow them to collect against you through a judgement. Remember a judgment is good for 10-20 years with a renewal and collects 10% interest plus when they win they tack on attorney fees, costs for bringing the suit etc so now is not the time to put your head in the sand. Many times I negotiate these cases down to 50% of what you owe. Sometimes we have to answer the law suit, other times I call them directly and work on a settlement prior to answering to save money. If they won’t come to the right number then we answer to make them realize they are going to have to work and expend money to get potential money. This often brings them back to the negotiating table quicker. Another option that I have and they realize is that I file chapter 7 or chapter 13 bankruptcy cases which either means they get paid nothing or what you can afford over either three or five years. All of a sudden a settlement sounds good to them. Raymond Lee is located in Pasadena so sending someone out to fight this case with someone that fights them every step on the way in Indio is not cheap. This is done for clients that might not be perfectly situated to file a current bankruptcy. Sometimes filing a bankruptcy case is all about timing depending on where you income is or certain financial things that you have done too recently to filing a bankruptcy case which necessitate waiting. Filing an answer to buy time in these types of cases is critical. Also, sometimes bankruptcy isn’t necessary depending on how old other debt that you have is, if you are about to meet the statute of limitations on your other debt and make above the median income, filing a 13 might not make sense so answering and negotiating becomes advantageous. If you have debt and have been served and wonder your options, call a knowledgeable riverside county bankruptcy attorney who looks at things from all angles before sending you down a one road solution.

Are you receiving collection letters or threats for law suits by American Coradius International (ACI) for your second mortgage? In all likelihood, you have already lost a property to foreclosure or short sale and the 2nd mortgage is now trying to collect what is essentially an unsecured debt since the security has been lost or transferred. This is bad paper that is very hard to collect since you are in a precarious financial situation. You want to deal with this now while you have a good chance of getting a low settlement and or qualifying for bankruptcy. Once your income goes up or you are able to buy a new property, they could sue you and collect a judgement through putting a lien on your new property, getting a wage garnishment for up to 25% of your wages or levying your bank account. If you can come up with 10% then I might be able to settle these accounts. There potentially are tax consequences since you get 1099’d for forgiveness of debt. Talking with an experienced bankruptcy attorney is in your best interest as I can potentially tell you how to avoid those tax consequences through insolvency or advise you to file bankruptcy if the tax consequences are too much.

American Coradius International LLC is a collection agency based in Amherst, NY that specializes in collecting 2nd mortgages that have been foreclosed on. They are often very persistent when calling, mailing letters, and have been known to be a burden to my clients prior to filing for bankruptcy. If you have been notified by them or have been served with a summons from a law firm, your options include filing for a Chapter 7 or Chapter 13 or settling the debt with a lump sum. A second mortgage is considered an unsecured debt after a foreclosure, making it possible to settle with creditors like American Coradius International for a low percentage. I have been successful in negotiating as low as 8% of the original amount here are several examples on accounts I have worked on for clients, including one from ACI. Low percentage results are typical and very possible if you have some money set aside, and prefer to pursue this option instead of filing for bankruptcy. If you would like help or further advice on either filing or negotiating a debt with ACI call my office today to discuss your options.

More and more of my Bankruptcy clients are being sued by The Law offices of Patenaude and Felix. They are based in San Diego and have many California lawyers who sue on credit card debt. If you have been served a summons or are being sued or looking at a default judgment from this law firm then we should look at bankruptcy as a potential option or possibly trying to settle the debt if you can come up with a lump sum payment. Default judgments will allow them to collect 25% of your net income through a wage garnishment and for most people even who make a lot of money a chapter 13 plan will be much less on a monthly basis then the loss of 25% of your wages. If you are below the median income you can do a chapter 7 bankruptcy and most likely keep all your assets. Call my office to find a solution to your legal problems with Patenaude and Felix.

Have you been served or sued by Legal recovery offices on behalf of a Portfolio Recovery account. I have been noticing more and more clients with old debts that are getting law suits by this firm in San Diego. There is still time to settle the suit and hopefully for pennies on the dollar since that is what they bought it for. California has a 4 year statute of limitations on written contracts and it seems like this firm likes to sue people right before that runs which usually means they bought the account for very cheap. I have been successful in negotiating good settlements with them and if they don’t want to settle we can always file chapter 7 bankruptcy and either extinguish it or pay it back over time for less than what is owed at 0% interest. Now is the not the time to wait if you have been sued by this firm. Call my office to discuss options.

Mann Bracken LLC , Professional Recovery Services Inc, Receivable Management Inc, Capital Management, Frederick J Hanna and Associates PC, Zwicker and Associates, Hemar and Rousso, are some of the debt collectors that I have had to deal with the most in terms of law suits or law debt collection activities. Zwicker and Fredrick J. Hanna, Mann Bracken are so big that they would rather pursue collection activities and work on settlements, then go to trial quickly. If coming up with a reasonable percentage is something that you can do then settling some of these accounts can be worth your while. If your debts are overwhelming then you really need to look into the bankruptcy laws and realize that most if not all of your assets can be protected.

Frequently Asked Questions: Debt Consolidation in California
How does debt consolidation affect credit scores?

Initially, it might cause a slight dip due to credit inquiries. However, consistent payments can improve your credit score over time.

What is the difference between debt consolidation and debt settlement?

Debt consolidation involves taking a new loan to pay off debts, while debt settlement is negotiating to pay less than you owe. Settlement can negatively impact your credit score.

What are secured vs. unsecured debt consolidation loans?

Secured loans require collateral (like a house or car), usually with lower interest rates. Unsecured loans don't require collateral but typically have higher rates.

Is debt consolidation right for me?

It depends on your total debt, interest rates, credit score, and payment capability. It's suitable if you can pay off your debt within five years and secure a lower interest rate than your current debts.

Should I consider long-term financial planning?

Yes, debt consolidation should be part of a broader financial strategy including budgeting, cutting expenses, and building an emergency fund.

How do Chapter 7 and Chapter 13 bankruptcies in California differ?

Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 allows debt restructuring over a set period, usually three to five years.

Can my spouse's bank account be garnished for my debt?

Bankruptcy laws offer protections against such actions, but specifics depend on individual cases and state laws.

How can I learn more about my options?

Consulting a California bankruptcy attorney can provide clarity. Firms like The Law Offices of Christopher Hewitt offer free consultations to explore debt relief paths.

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