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August 13, 2014

Should You Reaffirm Your Mortgage Loan in Chapter 7?

mortgage reaffirmation in Chapter 7When it works as planned, Chapter 7 serves to discharge (wipes out) your unsecured debt, while allowing you to keep most or all of your property.   If you have secured debt in your Chapter 7, you generally have the options of:

  • surrendering your property and walking away from any associated debt
  • redeeming your property by paying the secured creditor the fair market value in one lump sum
  • reaffirming your property by re-entering into a contract to pay the installment note
  • continuing to pay the note but not signing a reaffirmation

There are pros and cons for each of these options.   In this blog post I want to discuss the good and bad of reaffirming your mortgage debt.

Many lawyers feel very strongly that you should never reaffirm your mortgage.   When you reaffirm, you are obligating yourself personally to pay your mortgage note.   This means that if you should default on this obligation and the value of your home is less than the outstanding balance (a very real possibility in current economic times) you could find yourself facing a deficiency claim in the tens of thousands of dollars. [Read more...]

The top 10 reasons to file bankruptcy

Here are some top reasons why people file for bankruptcy, and also a discussion of how filing for Chapter 7 or Chapter 13 Bankruptcy can help.

1. I filed to eliminate the legal obligation of paying off my debts.debt

This process of wiping the slate clean is called a discharge of debts. The goal of a discharge is to reduce debt to give you a fresh start. Whether it is through total elimination of debt via a Chapter 7 Bankruptcy, or through reorganization of your current debt via a Chapter 13 Bankruptcy, most or all of your current debts will be addressed.

2. I filed to stop foreclosure on my house and effectively make payments to catch up on missed payments of my mortgage.foreclosure

If your home is in foreclosure, Chapter 13 Bankruptcy will stop the foreclosure any time prior to the sale. Bankruptcy does not eliminate mortgages on your property without payment. Rather, bankruptcy will structure a payment plan (usually lasting 5 years) in order for you to repay your mortgage the amount that you are behind.

3. I filed to prevent my car or other property from being repossessed.repo

Like foreclosure, repossession is another big reason people file bankruptcy. The past payments you have missed on your car or other personal property will be consolidated into your Chapter 13 Bankruptcy plan. After this you will no longer pay the finance company, rather you will make monthly payments to the trustee of your Chapter 13 Bankruptcy who will then pay the finance company.

4. I filed to reduce (or even eliminate) high medical bills.bills1

Sometimes people get blind-sighted by an accident or an illness which can prove to be an expensive affair. Filing Chapter 7 Bankruptcy can greatly reduce the amount of those expensive medical bills.

5. I filed because I recently lost my job and am now unemployed.unemployment

According to studies, loss of work is one of the most common reasons people file for bankruptcy. Losing a job is closely tied to high medical bills and can mean that a family may be left without the protection of insurance that was once provided by their employer. Often times these two factors combined create an almost impossible situation to get out of without the help of bankruptcy.

6. I filed to stop the harassing behavior from creditors.creditors

Often, creditors will persistently call the home of a particular debtor with demeaning and abusive behavior. Not only are these actions unethical, they can be unlawful. Bankruptcy will put on hold the demands of many creditors and stop their distressing behavior.

7. I filed to prevent my utilities from being shut off (or to restore already cut-off utilities)utilities

If you have been failing to pay the utility companies, then there’s a good chance your utilities may be in risk of being terminated. Filing bankruptcy can prevent the utility company from shutting off your utilities.

8. I filed to get help for large amounts of student loan debt.student-debt

While it is true that your student loans will not be eliminated like several other types of unsecured debt, bankruptcy can at least consolidate your student loan debt. This consolidation will allow a debtor to make monthly payments through Chapter 13 Bankruptcy that are within the financial ability of the debtor.

9. I filed to end wage garnishments.wage-garnishment

Chapter 7 Bankruptcy can stop those wage garnishments which take away some of your weekly earnings – often times leaving you without necessities. Chapter 7 Bankruptcy allows you to purchase necessities for you and your family and Chapter 13 Bankruptcy will also help if you face wage garnishment.

10. I filed to challenge certain claims of fraudulent creditors.creditor-fraud

Bankruptcy will allow you to challenge the fraudulent claims of creditors who are trying to collect more money from you than you really owe, or those creditors who are using illegal practices to collect your money. An experienced bankruptcy attorney can provide the expertise you will need to stop these creditors. A good bankruptcy attorney can often even the playing field between a big creditor and a single debtor. Filing bankruptcy with an attorney can stop fraudulent reporting by a creditor.