Homestead

Published on: October 20, 2011

Should You File Bankruptcy Before or After Foreclosure?

Recently, a small debate has been brewing in the legal world about whether a person facing foreclosure should file bankruptcy before or after their foreclosure comes to a close. First of all, bankruptcy is not always the best option for someone facing foreclosure.

If filing bankruptcy is right for you, some attorneys recommend filing after your home has been foreclosed on. This should allow you to discharge the debt and will help you move on with your life. But this may also limit your options.

It has been suggested that filing bankruptcy before foreclosure may give you the option to fight the foreclosure post bankruptcy. You would “Surrender” your interest in the property to the Trustee, which gives him the option to liquidate the property subject to the mortgage. However, because the mortgage is often higher than the house is worth, the Trustee disclaims any interest. It is then up to the bank to continue the foreclosure process either during or after the bankruptcy. While the bankruptcy goes on you may still be able to remain in your home (this may effect your bankruptcy exemptions). Theoretically, you will remain there essentially rent-free, as you will not be making your mortgage payments during this time. This could mean saving thousands of dollars in unpaid mortgage payments, depending on how long the bankruptcy takes. At the end of the bankruptcy you should have no unsecured debt and would have savings to use in negotiations with the bank. What’s even more interesting is that you would no longer be personally liability for the mortgage, so if negotiations failed, you could just walk away.

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Published on: September 27, 2011

Reasons Not To Do A Short Sale If You Are Going To File Bankruptcy

By David M. Goldman

A short sale is when you sell your property for less than you owe on the mortgage, creating a deficiency amount that you still owe on the loan. If you are planning to file for bankruptcy, a short sale is usually not in your best interest. Here are some reasons why:

1. A short sale will damage your credit. You will be defaulting on a contract, and so the mortgage company will report on your credit that you settled for less than the actual amount owed. This can oftentimes have the same negative effect as a foreclosure. If you are going to file for bankruptcy, then you do not need an additional negative report on your credit.

2. The short sale will not alleviate any liability issues. If you are filing for bankruptcy and surrendering the property, then you probably will not be liable for the deficiency amount anyways. In a bankruptcy, you almost always surrender the property in full satisfaction of the debt, so a short sale does not get you away from any problems that the bankruptcy itself does not handle.

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Published on: September 27, 2011

Must I Reaffirm My House And Car When I File For Chapter 7 Bankruptcy?

By David M. Goldman

A reaffirmation agreement is an agreement between you and the creditor that holds a secured lien on collateral that you have previously purchased. This reaffirms the debt that you owe the creditor. So if you own a car and you file Chapter 7 bankruptcy, you can either surrender the collateral (give it back to the creditor), redeem the collateral (refinance through another company), or you can reaffirm the collateral by signing a reaffirmation agreement with the creditor and filing it with the court. This reaffirmation agreement basically says that you will be responsible for the debt just as you were before you filed the bankruptcy. If you do not do one of the above options, the creditor can repossess your vehicle.

As for your home, In re: Linderman dictates that you must also do one of the above options for your real property. So if you file a Chapter 7 bankruptcy and want to keep your home, you must sign a reaffirmation agreement with your mortgage company.

If you need help with your bankruptcy or want to know how to file a reaffirmation agreement, contact a Jacksonville Bankruptcy Attorney today.

Published on: September 12, 2011

My Home Has Been Foreclosed And There Is A Sale Date. What Can I Do?

By David M. Goldman

Filing for bankruptcy will stop the future sale date of your home, even if there has been a final order foreclosing the property. This is due to an automatic stay that is immediately put into place upon filing for bankruptcy. Under the automatic stay, a creditor cannot take any action against you to try and collect a debt. So your foreclosure suit will halt immediately and your sale date will be cancelled; no more action will be taken in the case until the automatic stay is no longer in place.

The automatic stay will be effective until the conclusion of your bankruptcy. In a Chapter 7, this will probably be a short amount of time, around 4-6 months. But this extra time may give you the opportunity to catch up on your mortgage, achieve a modification, or sell your property. However, in a Chapter 13 bankruptcy, your case will not be concluded until after your Plan payments are finished. This will be anywhere from 3-5 years. Within those years, your Plan will allow you the opportunity to catch up on arrearages and so cure your deficiency with your mortgage company.

There are many ways in which a bankruptcy might be in your financial best interest. Help with mortgages that are in default is just one way a Jacksonville Bankruptcy Attorney can help you. Call us today at 904-685-1200 to schedule a free consultation.

Published on: September 9, 2011

Mortgage Help In Bankruptcy

By David M. Goldman

Many people find that bankruptcy is the right option for them if they are having problems paying their mortgage. First, a Chapter 13 bankruptcy can give you time to catch up on the arrearages that you owe through a Chapter 13 Plan. Also, your Jacksonville Bankruptcy Attorney can file a motion within your bankruptcy requesting that your Judge order the mortgage company attend mediation, where your Jacksonville Bankruptcy Attorney can negotiate on your behalf to reach an amicable resolution. Finally, if you feel that you cannot or do want to catch up on your mortgage and are ready to walk away from your house, surrendering the property in your bankruptcy will shield you from any liability from a deficiency judgment.

If you are behind on your mortgage, contact a Jacksonville Bankruptcy Attorney today to discuss your options.

Published on: August 29, 2011

What Does it Mean to “Strip A Lien”?

By David M. Goldman

In a Chapter 13 bankruptcy, a Jacksonville Bankruptcy Attorney might be able to strip a lien for you. This means that the lien would be considered unsecured, so that a creditor cannot take your collateral if you do not pay it. Most often, this is done with a second mortgage. If you owe more on your first mortgage than the house is worth, you can strip the second mortgage in a Chapter 13 bankruptcy. Then, the debt becomes unsecured. The amount of money you must pay to unsecured creditors is determined by your means test and the amount of unexempt property that you have. So any amount that you owe to unsecured creditors beyond this amount simply gets discharged in the bankruptcy and you do not owe it anymore. In saying, the amount you must pay to unsecured creditors through your Chapter 13 bankruptcy is not dependent on the amount of money you owe to unsecured creditors or the amount of any unsecured claims in your case. So it is of great value to you if you can strip the second mortgage in your bankruptcy and no longer owe this debt. If you would like to learn if you are eligible for your second mortgage to be stripped, contact a Jacksonville Bankruptcy Attorney today to discuss your particular situation.

Published on: August 26, 2011

What Are Some Main Reasons One Might File For Bankruptcy?

By David M. Goldman

There are many reasons that it would be advantageous to file for bankruptcy, but here are some of the most common reasons:

1. The first reason to file for bankruptcy is to stop a foreclosure sale. Filing for bankruptcy immediately stops a halts a foreclosure suit against you. This can give you time to reorganize your finances, try to sell your home, negotiate a modification, or find another place to live. Your chapter 13 Plan can let you catch up on your arrearages over a 5-year time span and so cure your default. If your home has been foreclosed upon, bankruptcy might be a good option for you.

2. Filing for bankruptcy not only stops a foreclosure suit, it halts almost all legal actions taken against you, such as a garnishment or auto repossession. If your auto is in danger of being repossessed, filing for bankruptcy will keep the creditor from doing so. You can value your auto in the bankruptcy and pay only fair market value to the creditor. This means that if you owe $20,000 on your auto and it is only worth $10,000. you can pay the $10,000 to the creditor through your bankruptcy and own the vehicle outright after your Plan is completed.

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Published on: August 25, 2011

Florida Supreme Court Case: Osborne v. Dumoulin, allows some to keep more property than before

By David M. Goldman

When people consider bankruptcy they often wonder if they’ll be able to keep their car, home or even personal belongings. Fortunately, the bankruptcy laws are designed to help you get a fresh start and in the spirit of a fresh start they allow you to keep more than the shirt on your back with “Exemptions” i.e. property that you’ll be able to keep through the bankruptcy.

Exemptions come in two forms: State or Federal. Once you’ve lived in Florida for two years you must use our state exemptions. If you haven’t lived here quite that long you will need to use either your previous state’s exemptions or the federal exemptions.

Every state that has opted to create their own exemptions has it’s own nuances. For example, a bankruptcy debtor in Texas is allowed to keep a gun as well as a certain amount of homestead property. Maine allows a debtor to keep a wedding ring of unlimited value and one of each type of farm equipment needed to raise and harvest crops. Florida allows you to keep $1,000 in vehicle equity, $1,000 in personal property (beds, jewelry, televisions, etc.) and either $4,000 of additional personal property or the benefit of a homestead of any value. Back when homes were worth more than was owed on them, the unlimited homestead exemption was a huge benefit to people in bankruptcy. The unlimited homestead allows you to file a Chapter 7 bankruptcy, keep a three million dollar homestead and discharge three million dollars in credit card debt. Unfortunately, not a lot of people have three million dollars in household equity these days. In fact, as stated in our Jacksonville Report Rate of Florida Mortgages Underwater Down, 46 percent of home-owners currently owe more on their mortgages than those homes are worth. As a result, more people than ever are entering bankruptcy with homes that have no equity at all. When choosing between a house with no equity and keeping an extra $4,000 in personal property, the right decision is not always clear. Economically, it makes sense to take the $4,000 and give up the house, but for many people a home means more than bare dollars and cents. Fortunately, a new case from the Florida Supreme Court Osborne v. Dumoulin allows some people who have filed bankruptcy to keep both the $4,000 exemption for personal property and keep their homestead. This gives them the best head start in their life after bankruptcy without having to move out and it helps keep their children in the same school district.

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Published on: August 14, 2011

Deed in Lieu or Foreclosure — Which is more Beneficial?

By David M. Goldman

First of all, as far as your credit score goes, banks usually report a deed in lieu as a foreclosure. In other words, a deed in lieu will probably have the same effect on your credit score as a regular foreclosure. Further, even if a bank has a deed in lieu, they will likely require you to sign a note saying you will pay them any amount left over if the sale of your home is less than what you owe.

You’re probably wondering: What is the advantage of a deed in lieu over a foreclosure? For most people, there isn’t one. If you accept the foreclosure, you should ensure your agreement states you will not owe any amount on a potential deficiency sale. Both deeds in lieu and foreclosures will look the same on your credit score, so bankruptcy is also another consideration here.

If you are thinking of filing bankruptcy, contact a Jacksonville Bankruptcy Attorney today. If your home is facing foreclosure, contact a Florida Foreclosure Defense Attorney to further discuss your options.

Published on: July 27, 2011

Can a Bankruptcy Judge Order a Mortgage Company to Modify a Mortgage After I filed a Chapter 13 Bankruptcy?

By David M. Goldman

An attempt to pass a law that would allow Bankruptcy judges to modify mortgages never made it passed the Senate. So a judge cannot automatically modify the terms of your existing mortgage. However, filing bankruptcy in Florida can help in other ways.

First, if you are behind on payments, filing a Chapter 13 bankruptcy allows you to catch up the arrearages over time so you are no longer in default. Second, filing bankruptcy oftentimes serves as a strong negotiation point with lenders. Lenders might be willing to work with you more if they know that there is a strong possibility that you might just walk away from the house if they do not work with you. Third, your Orange Park bankruptcy attorney can file a motion within your bankruptcy proceeding to require your mortgage company into mediation with you. So the judge cannot automatically change the terms of your mortgage, but s/he can order your mortgage company into mortgage modification mediation with you. Finally, if your home is in foreclosure, filing bankruptcy will halt the foreclosure proceedings. The automatic stay will go into effect immediately and all activity in the foreclosure case will cease.

To see if filing for bankruptcy is in your best interest, contact an Orange Park bankruptcy attorney today to discuss the particulars of your situation.