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Bankruptcy

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IF MY HOME IS CURRENTLY IN FORECLOSURE AND I WANT TO KEEP MY HOME, WHICH IS A BETTER OPTION: CHAPTER 7 OR CHAPTER 13

  • November 8, 2019
  • Bankruptcy,Chapter 13,Chapter 7
  • Comments : Comments Off on IF MY HOME IS CURRENTLY IN FORECLOSURE AND I WANT TO KEEP MY HOME, WHICH IS A BETTER OPTION: CHAPTER 7 OR CHAPTER 13

Make sure you have all the bankruptcy information

As a debtor filing for bankruptcy, you are entitled by law to a court-ordered rule of protection known as the automatic stay. This applies in a Chapter 7 and in a Chapter 13 filing. There are several creditor activities that the automatic stay protects and/or prohibits. One of the prohibited acts involves any creditor continuing a foreclosure sale that has begun prior to the bankruptcy filing, or starting a foreclosure proceeding during the length of the bankruptcy case. If you want to file for bankruptcy and keep your home, there are certain requirements that must be met. A qualified attorney will look at your situation in detail to determine whether you meet the requirements.

See Chapter 7 vs Chapter 13

In a Chapter 7 filing, a debtor can buy some time for him/herself with the automatic stay by preventing immediate foreclosure on a debt secured by real estate. If there is a scheduled foreclosure sale, this sale gets cancelled. It is very important to note: the debt that is allowed to be wiped out in a Chapter 7 does not include missed mortgage payments. Once the debtor in a Chapter 7 receives a discharge at the resolution of his/her case, then the automatic stay is lifted. At this time, the creditor can resume or begin foreclosure proceedings against a debtor who has missed mortgage payments prior to filing the Chapter 7. The creditor can also seek relief from the automatic stay prior to your Chapter 7 discharge. Chapter 7 bankruptcy does not allow a debtor to “catch up” overdue mortgage payments within his/her case. Additionally, there is no requirement for the bankruptcy court to work out any repayment plan with the lender. Lenders are not required to modify a mortgage if you file a Chapter 7.

One important thing to consider regarding Chapter 7 is that money may be freed up for you once all allowable debts are consolidated into a Chapter 7 plan. This can, in some circumstances, allow a debtor to pay the lender all of the missed payments owed. Then the debtor must continue to keep the mortgage current and pay the monthly mortgage, both during the Chapter 7 proceeding and after the discharge.

Usually, the better option if you want to keep your home is to file a Chapter 13 bankruptcy. This is a reorganization of your debts, which is a 3-5 year repayment plan on debt owed. Missed mortgage payments do qualify to be part of this repayment plan. This means that you can “catch up” on all overdue mortgage payments, and also not have to pay them all at once. Through a Chapter 13 plan, monthly payments are made to a Chapter 13 Trustee who oversees the case. The debtor must continue to make all ongoing mortgage payments during the entirety of the Chapter 13 case. At the end of the Chapter 13 case (the 3-5 year period), the debtor receives a discharge on all debts that were part of this plan. The debtor keeps his/her home and continues to pay the monthly mortgage payment.

New Chapter 11 Bankruptcy Law

WHAT IF I AM OVER THE DEBT LIMIT IN ORDER TO FILE FOR A CHAPTER 13 BANKRUPTCY?

A Chapter 13 Bankruptcy allows individuals to pay all or a portion of their secured and unsecured debts through a U.S. Trustee-approved plan, totaling 3-5 years. After the payment plan is finished, the debtor receives a discharge of all remaining debt that was part of the plan.

As of 2019, the debt limit for an individual to file for a Chapter 13 is $419,275.00 for secured debts and $1,257,850 for secured debts.

What Happens if My Debt Exceeds the Current Limit?

If your debts exceed the current limits, then you may have the option of filing a Chapter 11 bankruptcy under a newly created law in October of 2019. This new law allows a debtor to be treated as a small business. The total debt to be repaid must not exceed $2.75 million. This is a 3-5 year repayment plan, similar to a Chapter 13 repayment plan. Speak with bankruptcy attorney Matthew Cherney to see if this new subchapter of Chapter 11 bankruptcy would apply in your situation.

Is Debt Consolidation Right for You?

There are many reasons why people are struggling with debt and seek options that will help them get out of it. Your Marietta Debt Consolidation attorney Matthew Cherney can help lower and pay off any current unsecured debts that you have. If you are looking for a way to get out of debt, debt consolidation may be the best option.

Reasons Behind Debt

You will need to figure out when you started accumulating debts so that a solution can be found. There are several reasons why people experience debt such as:

  • Unemployment
  • Emergencies
  • Medical bills
  • Student loans
  • Auto loans/Repossession
  • Overdue mortgages/Foreclosure
  •  Bankruptcy
  • Among many other reasons

The best thing to do while going through the process of debt consolidation loan is to make a budget plan so that your bills and creditors will be paid on time. It is also important to remember that you should not spend more than what is within your means.

What is Debt Consolidation?

One of the first things to understand is knowing what debt consolidation is and learning how it will help to clear your debts. Debt consolidation is a legal opportunity that allows debts to be lowered, grouped together, and paid with a consolidation loan. You will be able to pay off debts by paying a fixed amount every month until your credit is cleared. Debt consolidation is an option that is open to everyone, and this even includes those with secured debt with collateral or unsecured debt.

Applying for Debt Consolidation

Having the option to pay off accumulated debt by applying for a loan can seem easy at first, but not everyone is eligible. Lenders require a certain credit score before they will approve an application. A low credit score is considered a risk to lenders, so there is a chance you may not be approved. The higher your credit score is, the more likely a consolidation lender will approve your application.

Another factor that is considered by lenders is the total amount of debt you have. If your debt is too low and does not reach the minimum threshold for a consolidation loan, a lender is less likely to approve the loan. A debt consolidation lender will also consider the amount of the loan to be paid back, monthly fees, and how long it will take for you to pay back the loan.

How does Debt Consolidation work? 

It is important to keep in mind that a debt consolidation loan can help relieve debt, but it is not an overall solution. You will still have to pay back the loan through a debt consolidation lender in addition to paying any recurring monthly bills such as a mortgage, rent, electricity, water, or cable bills. It is necessary to know if you can afford to pay off the loan and still live fairly comfortably; you should not have to struggle unbearably while paying off your debts.

Debt consolidation can be a perfect option if you are well organized and can follow a budget plan that will help avoid overspending. This alternative solution to clear your debt should be considered as a temporary aid. It is designed to provide a better start for managing your financial difficulties.

Making A Budget Plan

Having a budget plan will help keep financial transactions well organized so that creditors will be paid on time. It is also a good idea to consult a professional financial lawyer or advisor for help. An attorney can help you devise an effective plan to remove debts as quickly as possible.

By assessing all of your spending habits, it will be much easier to determine the crucial spending necessities. Once a spending pattern has been observed, a financial plan can be made so that you can pay off the consolidation loan as soon as possible.

Learn More About Debt Consolidation

By understanding what debt consolidation is and how it works, the better the chances to get out of debt. It is not a good idea to wait until you are almost bankrupt to apply for a consolidation loan, but instead, identify the problem at an earlier stage where debts are more manageable. Take the time to decide if this type of loan is right for you and consult a professional Marietta debt consolidation attorney to find out what steps you need to take to start your path towards financial recovery.

Top Reasons Why You Should Consider Bankruptcy

Whether you’re upside down in debt because of being unemployed, too much spending, medical bills, college tuition or anything else, you should know that you’re not alone!

Last year, almost 773,000 individuals found themselves in the same situation.

You at one point or another might have considered filing for bankruptcy.  Bankruptcy can help those in financial distress get a fresh start and start over again.

Does Bankruptcy Really Work and is it the Right Fit for You?  Here is what you need to know

When is a Good Time to Consider Bankruptcy?

Anytime your income is insufficient to pay your debt while also maintaining your household expenses, bankruptcy is an option worth looking into. Matthew C. Cherney, a bankruptcy attorney, says that a good rule of thumb is to take a good look at the total amount of debt that you owe.  If the monthly expenses associated with servicing the debt comes close to, or exceeds your monthly income, then you may be an ideal candidate for filing for bankruptcy.

Some debts such as child support, income taxes and student loans cannot be discharged in bankruptcy, so one should really consider monthly figure as an expense, rather than a debt.

In Georgia and other states, the bankruptcy laws require many different forms and schedules to be filed with a bankruptcy .  These forms also depend on the chapter of bankruptcy.  Some of these forms are Chapter 7 and Chapter 13.  Let’s explore these in detail.

Chapter 7 Bankruptcy

Chapter 7 is commonly referred to as a “liquidation” bankruptcy.  Chapter 7 is oftentimes associated with what people think of when they think of bankruptcy.  A business bankruptcy would be a Chapter 11.

After your bankruptcy attorney files your paperwork, the judge will appoint a “trustee.”  The trustee’s job  is to investigate your financial affairs search for any assets, and, if appropriate, sell, or liquidate these assets, and pay any monies to your creditors.

You are allowed certain exemptions to protect your property, and this situation only becomes relevant when the value of your assets exceed your exemptions.  If that is the case, you may want to consider a chapter 13 bankruptcy in order to protect your assets.

Did you know?

Abraham Lincoln filed for bankruptcy in 1838.  Prior to the Civil War, Abraham Lincoln had considerable debt associated with the purchase of several general stores.

Chapter 13 Bankruptcy

If you do not qualify for chapter 7, or are attempting to protect your assets and have regular income, chapter 13 may be a better solution for you.  In chapter 13 one can propose a plan to pay back their debt (or a portion thereof) over three to five years.

Another benefit is that Chapter 13 can treat certain debts that are not dischargeable in chapter 7.

What is the Immediate Benefit of Bankruptcy?

The one thing that ALL forms of bankruptcy have in common is the wonderful feature known as the “Automatic Stay.”

Immediately upon filing bankruptcy,  the automatic stay prevents most creditors from collecting any outstanding debts.

This means:

  • No more lawsuits;
  • No more harassing phone calls;
  • No more “Final Demand” letters sent to your home;

Instantly all of these things that keep you up at night, as well as any outstanding debt- are all washed away, or “discharged,” in legal terms.

Read more about Automatic Stay

What is the Negative Impact of Filing for Bankruptcy?

After filing, your credit score will be impacted.  However, if your credit score is already rather low, the impact will be nominal.  Bankruptcy will remain on your credit report for a period of years (depending on the chapter); however, this time frame may pale in comparison to the length of time necessary to pay back your debt.  You will also be surprised at the amount of credit card offers you’ll receive after your bankruptcy is discharged.  When used responsibly, a credit card is an excellent way of building your credit back up.

So is Filing For Bankruptcy a Good Thing?

The thought of bankruptcy may be unpleasant, but you will not believe the relief you feel after filing.  Filing with a trusting attorney should make it a pleasant experience.  Nobody ever wants to end up filing bankruptcy, but it can be a better alternative to harassing phone calls, intrusive letters, lawsuits and garnishments.

If you or someone you know is going through hardships due to outstanding debt, give our office a call today and speak with attorney Matthew Cherney of Cherney Law Firm, LLC.

Vehicle Repossession and Chapter 13 Bankruptcy

One reason for the overwhelming increase in vehicle repossessions is the rise of sub-prime vehicle loans. Sub-prime borrowers account for nearly 1/3 of the new car loans. Sub-prime borrowers are sure to be saddled with the highest interest rates (15% – 20%), and the longest loan terms (60 months – 72 months). Inability to maintain payments may result in repossession. A chapter 13 bankruptcy will stop a repossession, and allow the borrower an opportunity to pay the loan back over a period of 3-5 years, oftentimes at a significantly reduced interest rate.

Is Fear Holding You Back from Filing for Bankruptcy?

  • May 29, 2013
  • Bankruptcy
  • Comments : Comments Off on Is Fear Holding You Back from Filing for Bankruptcy?

People often hold out for a hopeful solution, even while their debt is mounting fast. They cling to other solutions besides bankruptcy- getting a raise, selling their house, and so forth. Why is bankruptcy the “worst case scenario” and something that causes individuals to drag their feet in trepidation? Continue Reading

Keeping Your Home in Bankruptcy

Depending on your income and debts, bankruptcy can actually help you stay in your home. While saving your house is possible with Chapter 7 bankruptcy, Chapter 13 (also known as reorganization bankruptcy) is normally a more advisable option when faced with foreclosure. How can you know which is right for you? Continue Reading

Do I Qualify for Bankruptcy? Which Chapter?

The first question for many people considering bankruptcy is “do I qualify?” In order to determine whether you qualify for bankruptcy, you should consult with a Marietta bankruptcy attorney. As a general rule, almost everyone qualifies for bankruptcy. Find out more about qualifying for bankruptcy here. The real question is, “What Bankruptcy is Right for Me?” Continue Reading

Is Filing for Bankruptcy Going to Hurt My Credit?

Usually, those who are filing for bankruptcy already have a bad credit score because they have been unable to pay their debts. Filing for bankruptcy can help those who need to get their debts discharged and get a fresh start on life. Most find that their credit scores begin to improve after they have filed because they are able to pay off their newly decreased debt, rather than watching it continue to accrue. Continue Reading

Roswell Bankruptcy: Discharging Debt in Chapter 7

The federal bankruptcy laws allow certain debts to be discharged. If you receive a discharge, you will no longer be legally obligated to pay back that debt. Certain debts cannot be discharged. These include child support, spousal support and most income taxes. Generally speaking, debts that can be discharged are unsecured debts, such as medical bills, credit card bills and personal loans. Continue Reading

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