SHORT SALES
A short sale is just like a regular sale of real estate, except thatyou sell the property for less than the balance owed to yourmortgage lender(s). In exchange for your participation, we insistthat the mortgage lender cancel the debt remaining after the sale.
The primary reason is to discharge the mortgage indebtedness. If youhave already accomplished the discharge through bankruptcy, a shortsale is still useful because it can be the best way to get your nameremoved from the title and eliminate the expense of the property.Also, you may receive a monetary incentive at closing, as much as$10,000.
Foreclosures generally take much longer than short sales (830 dayson average). During the foreclosure process, you are stillresponsible for maintaining the property, and you have liability asthe property owner. Foreclosures can be more damaging to credit. Ashort sale, on the other hand, takes 4-6 months on average. Afterthe closing, you will have no further responsibility for theproperty as the property will belong to someone else.
Generally, because your mortgage lender pays the expenses of a shortsale, a short sale is completely free for the client.
A short sale will affect how your mortgage account is reported tothe credit bureaus. Foreclosures are typically reported as chargeoffs, the worst possible credit declaration. In contrast, shortsales are reported “paid” or “settled” for “less than full balance.”
If you have received, or will be receiving a bankruptcy discharge,you will not be taxed on the mortgage cancellation after a shortsale. If you do not have a bankruptcy discharge, you should consultwith your tax advisor as there may be a loophole to prevent any taxon debt cancellation.
Absolutely, yes. The waiting period is generally 3 years for an FHAloan. There may be a shorter waiting period if you can showextenuating circumstances. The waiting period is usuallysignificantly longer if you allow your home to be foreclosed.
CHAPTER 7 BANKRUPTCY FAQ’S
Please note: This handout is for informational purposes only and is not meant to be legal advice. Always seek the advice of a professional before filing a bankruptcy case.
Chapter 7 is the legal process of obtaining a fresh start andeliminating debt.
Most types of debts. Some common exceptions are student loans andparking tickets.
The average amount of time the case will be open is three andone-half months from the filing date.
After you give us your documents and complete your online creditcounseling, we can usually file your case within 3 business days orless.
Yes, almost always. If there is a possibility of losing an item inthe bankruptcy, we will warn you in advance.
Chapter 13 is a debt consolidation, whereas Chapter 7 is for debtelimination.
No. But if you have too little debt, Chapter 7 may not be the bestoption for you. Ask us at your consultation.
This depends on your total income for the last 6 months, on yourhousehold size, and on your expenses. We can almost always determineyour eligibility at the initial, free consultation.
The case will be reported on your credit for 10 years. You also mustreport all of your items of value (assets) to the bankruptcy court.In unusual cases, assets can be sold in Chapter 7 bankruptcy.
Proof of income and the last 2 income tax returns that you filed.You will also need to complete a pre-filing credit counselingcourse.
If you filed Chapter 7 more than 8 years ago, you can file Chapter 7again now. If you filed Chapter 13 before, and you did not finishit, you can file Chapter 7 now. If you filed Chapter 13 more than 6years ago, and finished the plan, you can file Chapter 7 now.
You will need to take 2 courses, one pre-filing and one post-filing.The deadline to take the second course is 45 days AFTER your meetingwith the trustee. We recommend taking the courses online atwww.debtorcc.org. The fee is $14.95for the first course and $9.95 for the second course.
The Court fee is $335. Our attorney fees vary depending on casecomplexity. We only charge reasonable fees. We will quote your feeafter the free consultation, if not earlier.
No. While the bankruptcy may lower your score in the short term, youwill have the opportunity to raise your credit score when thebankruptcy is completed. Many of our clients have obtained carloans, mortgages, and business lines of credit within three (3)years of filing for bankruptcy.
Yes. The minimum waiting period is 3 years after case is discharged,for FHA mortgages.
If your car is paid off, you can keep the car if the blue book valueis not too high. We will let you know. If you owe money on the car,you have the option to surrender the car to the finance company andeliminate the debt on the car, or to keep the car and to continuemaking payments.
We pull your credit report and import all creditors from the reportinto the bankruptcy petition. After we give you your credit report,please tell us about any creditors that are not listed. Parkingtickets, collection agencies, payday loans, medical bills, andutilities are often not listed in the report.
Yes, the law requires all creditors to be listed. If you have a carloan or a mortgage, you will almost always have the option to keepthe account and continue making payments.
All auto drafts will be suspended upon the filing of the Chapter 7.In most cases, documents can be signed to restart the auto drafts,but in the meantime please make your payment manually.
Usually, no. It is almost always the case that all credit cardaccounts will be closed. You may be able to obtain new credit cardaccounts when the bankruptcy is over.
Sometimes, yes, but the rules are complicated. Ask us during yourconsultation.
Generally, no, unless you have a substantial hardship, such as asevere disability.
Unfortunately, no. Only in Chapter 13.
Yes, if the reason for the suspension was parking tickets, municipalfines, or auto accident with lack of insurance.
No, discharge of debt in bankruptcy is not taxable.
Once we file your bankruptcy petition, all collection activity muststop. Please allow at least one week for this to happen from thefiling date, because some creditors receive notice via US mail.
Almost always, no. You will have to attend a meeting with thebankruptcy trustee. We will give you the date, time, and locationwhen you file. You will have at least 30 days’ notice. Thesemeetings last an average of 10 minutes. We will be with you theentire time.
You will be asked some questions, mostly about the things you own.We will prepare you so that you will know most of the questions inadvance.
Social Security Card and Driver’s License (or State ID). Also bringsomething to do, as the wait times can sometimes be long.
Yes, but if you are honest with the Court about your income andassets, it would be very unusual. We can almost always inform you inadvance of any risks of denial.
You can file on your own without your spouse. However, unless youare separated, the law requires your spouse’s income and expenses tobe listed in your Petition.
Generally, no. But, if you have any joint debts, those accounts maybe closed, and the closing of the accounts may affect the non-filingspouse’s credit.
Yes. You will receive in the mail, at the successful conclusion ofyour case, a discharge order. Keep this order in your files.
Chapter 13 is a plan to repay your creditors. It consolidates your debt into one monthly payment, which is made to a trustee, who distributes it to your creditors.
Anywhere from 3 to 5 years, based on your household size and income.
Chapter 13 is a debt consolidation, whereas Chapter 7 is for debt elimination. In Chapter 13, you have to make payments for 3-5 years. After you do that, the debt you didn’t repay is eliminated.
Chapter 13 has certain advantages over Chapter 7. You can use Chapter 13 to get rid of parking tickets and tollway violations. You can stop a foreclosure and catch up on a mortgage. You may be able to eliminate a secondary mortgage. You can undo a repossession. You can get your driver’s license reinstated. Also, Chapter 13 may be necessary if you don’t qualify for Chapter 7 because you have too much income or assets.
The Court fee is $310. You will usually have to make an additional down payment to our office to file, but most of the fees will be included in your consolidation. When you hire us, we will be your attorneys for the entire duration of time you are in Chapter 13.
You can always file Chapter 13 whether or not you filed bankruptcy in the past. If you filed a Chapter 7 in the last 4 years, you are ineligible to receive a Chapter 13 discharge, but you can still file Chapter 13. Ineligibility for discharge just means that you would still have debt when you complete your Chapter 13, but get all other benefits of filing.
You will need 4 years of tax returns (or less if you did not need to file), and at least 60 days of paystubs. Sometimes we will need 6 months of paystubs. You also need to complete a credit counseling course at www.debtorcc.org (cost: $14.95).
We can answer this question after we analyze your income and expenses, after you tell us what you own, and when we have a list of your creditors. We do this at your consultation.
Payments to the trustee start 30 days after the filing of the case. You must start paying any debt left outside your plan (such as a mortgage) in the next month following the month in which the case is filed.
Payments can be withheld from your payroll (for example, if paid twice a month, one half payment can be deducted each pay period). You can also pay by cashier’s check or money order, or online by ACH transfer. The trustee will give you more details.
The trustee represents your creditors. The trustee collects your payments and distributes the payment to your creditors. The trustee also holds a meeting to verify the information in your petition. The trustee may attempt to argue for an increase in your plan payments. Ultimately the judge, not the trustee, decides whether your plan will be confirmed.
While Chapter 13 is a public record, only creditors, the trustee, and recipients of domestic support (such as child support) are actually notified of the filing.
Yes, you do have to include all creditors who you owe in your petition. Sometimes, student loans, mortgages, and car loans are listed, but not included in the payment plan.
No. While the bankruptcy may lower your score in the short term, you will have the opportunity to raise your credit score when the bankruptcy is completed. Many of our clients have obtained car loans, mortgages, and business lines of credit within three (3) years of filing for bankruptcy.
We will pull your credit report. Please make sure to tell us about any creditors that are not listed in your report, such as payday loans, medical bills, parking tickets, and collections.
Usually, no. It is almost always the case that all credit card accounts will be closed. You may be able to obtain new credit card accounts when the bankruptcy is over.
We can use Chapter 13 to reduce the interest rate on your car loan to as low as 5 percent. For older car loans, we can sometimes reduce the principal. Your car loan will almost always be included in your plan.
Yes, if the reason is parking tickets, speeding tickets, or other municipal violations. We can get your car released within a week of filing.
If you are behind on your mortgage, all of the back payments will be included in your Chapter 13 Plan. Foreclosure will stop. You must continue making your regular mortgage payments after we file your case. A junior mortgage can possibly be eliminated.
Yes, but only for investment property. For your primary residence, you may be able to eliminate a junior mortgage.
We will usually include your student loans in your Chapter 13 Plan, in which case the lender(s) will receive a small payment from the trustee during your plan. However, because we cannot eliminate the student loan debt in Chapter 13, we recommend that you continue to pay down your student loan debt on your own during your plan.
Chapter 13 will remain on your credit report for 7 years from the date of filing. During the Chapter 13, you will not have much access to credit, but you can probably borrow to purchase a car if needed.
You can file on your own without your spouse. However, unless you are separated, the law requires your spouse’s income and expenses to be listed in your Petition and factored into your plan payments.
You will almost never have to attend court. A meeting with the trustee is required – you will need a social security card and driver’s license (or state id).
All collection activity is stopped. Roughly 45 days later, we will attend a short meeting with the trustee who will ask you questions about your income, expenses, and assets. After the meeting, the Court will decide whether to approve your plan at a confirmation hearing.
There is no minimum. Currently, the maximum debt is $394,725 for unsecured (such as credit cards), and $1,184,200 for secured (such as mortgages and car loans).
All auto drafts will be suspended upon the filing of the Chapter 13. For any accounts that you are paying separately from your Chapter 13 Plan (usually just the mortgage), you will probably need to make these payments manually without auto draft.
Sometimes, yes. This will depend, based upon the trustee and Judge that your case is assigned to. If you are required to turn over your refund, you can minimize it but having less money withheld from payroll for taxes.
If something happens that changes your financial picture, call us. We may be able to lower your Chapter 13 payments, or even convert your case to Chapter 7 so debt can be eliminated.
You are free to dismiss your case at any time, but if you do so, your creditors can start collecting again, and you will lose all of the benefits of the Chapter 13.