Stopping Foreclosure

Foreclosures are regulated by state law in every county and parish within the U.S. The process is always similar. Each mortgage holder must receive notice of the intent to foreclose and has a right to bring payments current. The typical notice period is 30 days, and notices are published as a public record. In the past, mortgage companies typically filed notices automatically once a homeowner slipped three months past due. You may have less time today.

Dealing with a foreclosure notice strikes fear in the hearts of homeowners. Your future is uncertain, you must find a place to live, or alternatively find a way to make past due payments. In most cases, payments would not slip past due if homeowners have funds available. For many people, this unfortunate situation is best resolved through filing bankruptcy. Filing will save your home.

The U.S. Bankruptcy Code, in 11 U.S.C. Section 362, contains a powerful provision creating an automatic stay of proceedings. A stay is similar to a federal injunction that prohibits all creditors, in all bankruptcy chapters, to collect debts. The stay also specifically applies to foreclosure sales. Once a case is filed, your mortgage company cannot proceed with foreclosure once receiving notice that you file. Written notice of filing provided by certified mail is sufficient and indisputable, even though a call providing oral notice is also acceptable.

The automatic stay is not a permanent injunction. In Chapter 7 cases, a mortgage holder must bring payments current or the court will entertain motions to lift the stay. The motion will be granted and foreclosure resume if you do not make all payments that are due. In Chapter 13 cases, past due payments are included in a proposed plan. Once included in a plan, payments are assumed current and the stay will remain in place. When filing a Chapter 13 case, you must make a proposed plan payment to the assigned trustee within 30 days. If this payment is not made, the stay may lift and the case is subject to dismissal.

The best time to plan a bankruptcy case is before receiving a notice of repossession, foreclosure or eviction. By allowing more time to plan, the benefits of filing multiply exponentially. You may optimize the means test result with only a few extra months. This test determines if you qualify to file Chapter 7 and the amount of your trustee payment if selecting Chapter 13.

Planning bankruptcy does not require that you retain an attorney. Most attorneys provide only one free initial consultation. Your means test however changes each month. You may compute the means test yourself, each month, and save $400 per test. To do this, you must use a customized form to maximize your results. The official form is cryptic at best and provides little meaningful guidance for individuals who want to file Chapter 7.

Bankruptcy Strategies

The election of Chapter 13 increases options available when filing bankruptcy. In exchange for at least partial payment on all debts, the added benefits in Chapter 13 frequently make it the best choice. You may include back taxes, past due mortgage payments and a wide variety of priority debts in the plan. The partial payment required may be minimal. In many cases, the percentage payment on unsecured debts is less than 5%. For a minimal payment, you may avoid tax seizures and home foreclosure.

Each person who is experiencing financial difficulty presents a unique set of challenges. Income, goals and necessities vary in each situation. Nevertheless, a solution exists for all financial problems. You may avoid filing bankruptcy if acting early. You may settle unsecured debts easily for less than 50 cents on the dollar without filing. You may need to file at some point in the future to gain the protection of the automatic stay. Keep your options open.

All people must pay income tax in all situations. The IRS receives a super-priority. These important debts may lead to the seizure of assets, including exempt property, if taxes remain unpaid. Chapter 13 is unique in that past due taxes are considered current when included in the plan. All tax seizures and levies must stop and the IRS must accept the plan payment. You may spread payment over five years.

Additionally, each person has a right to convert a Chapter 13 case to Chapter 7 if qualifying under the means test. This option becomes quite valuable if taxes are repaid and only unsecured debts remain in Chapter 13. In addition, during the time a Chapter 13 cases is pending, each debtor has power within their grasp to make small changes in their lifestyle. These changes may influence the means test result and later qualify any debtor to convert to Chapter 7.

You have an amazing variety of options and alternatives provided by law. The secret for using them wisely is to become familiar with each option. When you compare the real cost and actual benefits of each option, in a side by side comparison, you may be shocked by your potential results. Misinformation regarding debt relief options is common. The only way to know, with certainty, the value of your options is to compare them over an equal time period. You must use actual costs and realistic assessment of available benefits. Not all people qualify for all options.

This comparison is far easier than most people realize. You do not need an account or financial analyst to help you. You do not need an attorney to calculate the means test if you use a well prepared custom form. You could perform these calculations within the comfort of you home with the next few days.

How to Succeed

Geographical Interpretations

Australia

Continued

There are normally two principal sources from which funds can be realised, viz. the assets and wages of the bankrupt. However, the bankrupt is granted the facility whereby certain assets are set aside and their value cannot be realised. These are referred to as "protected assets", and include such items as furniture and appliances used in the home, as well as tools associated with the bankrupt's trade together with vehicles up to a certain value. Apart from these items, all other assets with a material valuation will be sold. On the other hand, should a house or car be deemed to have a value above a certain level, then the bankrupt has the right to purchase the interest receivable from the estate and so be able to retain the asset. However, should the bankrupt not take advantage of this right, then the interest income will reside with the estate. In this case, the trustee will now be in a position to assume possession of the asset and duly sell it in order to realise its value.

Should the bankrupt's income exceed a certain level, then it will be necessary to make appropriate contributions to the Trustee. This income threshold is indexed and as such, the level is revised biannually in March and September. Whether or not the bankrupt has any dependents will have a bearing on the final valuation. The method for determining the extent of the income contribution is based on 50% of the difference between the bankrupt's income and the value of the threshold above which contributions are payable. Should the bankrupt fail to maintain his contribution liability, then the Trustee is empowered to issue a notice by which such contributions may be deducted directly from the bankrupt's wages. However, should this course of action fail to materialise, the Trustee may register an Objection to Discharge by which the term of the bankruptcy is extended by a further five years.

The normal term of a bankruptcy is three years. However, a bankruptcy can be set aside prior to this period should all the debts be paid off in full. Should a bankrupt be able, during the normal term, to raise additional funds from some external source, then it would be possible for the bankrupt to make an Offer of Composition to all of the creditors. The advantage of such a proposal is that all of the creditors would receive a defined percentage of the outstanding debt owing to each. On this basis, should all the creditors accept the terms of this offer, then the bankruptcy can be annulled once the agreed funds have been received by all the creditors.

Once the bankruptcy has been annulled by one of the methods previously stated, or the bankrupt has been automatically discharged, then the status of the bankrupt's credit report will display the classification "discharged bankrupt". As in the case of credit violations, this classification will remain on the bankrupt's credit report for a specified number of years. The actual term will be solely dependent on the company issuing the report. However, once this term has elapsed, this particular classification will revert back to the standard form of reporting.

By viewing the ITSA website, a certain amount of information may be found relating to Bankruptcy Law in Australia.

Bankruptcy - How To Succeed

Peter Radford writes Articles with Websites on a wide range of subjects. Bankruptcy Articles cover History, Role in Europe/US, Types, Prevention.

Credit Card Harassment?

Once you retain the services of any attorney you have the right to tell your creditors that all further communications are to go through your attorney. If you also write a letter to your creditors advising them all further communications are to go through your attorney and send it certified, return receipt through the United States Post Office or other mailing service in which you have proof an agent of the creditor received the letter, then, if the creditors continue to call, you have a cause of action against the creditor and its agent. This is one of the benefits of hiring an attorney to prepare and represent you in a bankruptcy.

You are not alone in the financial stress you are experiencing. Research by the Federal Reserve indicates that household debt is at a record high relative to disposable income. Many households have experienced a reduction in work hours, thus a reduction in income. In fact, the American Bankruptcy Institution statistics show that in second quarter of 2008, 32,387 bankruptcies were filed in the State of California. In the second quarter of 2009, 53,505 bankruptcies were filed in the State of California. That is more than 60% increase in filings.

Your credit card debts are discharged through a bankruptcy, as long as there is no fraud involved. You may be forgiven of all the debt through a Chapter 7 or for a percentage of the debt through a Chapter 13. See previous blogs to understand which Chapter you qualify for.

Can Bankruptcy

Student loans are non dischargeable, generally. To discharge a student loan obligation through bankruptcy you must file a complaint requesting that your government-owned student loans be discharged pursuant to section Bankruptcy Code Section 523(a)(8). The standard for the Court to determine your student loan obligation discharged was set in the case Brunner v. New York State Higher Education Services Corp. in 1987. This means you need to satisfy the so-called "Brunner Test" and the court is to consider: (1) you current level of income and expenses, and determine whether you can maintain a minimal standard of living for you and your dependents if you are required to repay the loans; (2) whether there are additional circumstances suggesting that your current financial condition is likely to continue for a significant portion of the repayment period; and (3) whether you have made a good faith attempt to repay the loans.

The "Bruner Test" is a very high standard and basically, unless you care for or are suffering from a disability that will continue for your lifetime, that prevents you for earning sufficient income to support you and your family and you have made a good faith effort to repay your loans, you will be unable to discharge your loan debts through a bankruptcy.

Testimony in the Con¬gress hearings in 1998 intended undue hardship claims to be considered in light of "the availability of various options to increase the affordability of student loan debt, including deferment, for¬bearance, cancellation and extended, graduated, income-contingent and income-sensitive repayment options." H.Rep. No. 750, 105th Cong. 2d Sess. 408 (1998).

There are other options to consider on your student loans. One such option is through the United States Department of Education, William D. Ford Federal Direct Loan Program ("Direct Loan"), offers various repayment options for student loan debtors. One of these is the Income Contingent Repayment Plan (the "ICR" plan). Essentially, once a loan debtor is on an ICR plan, monthly payments are calculated on the basis of adjusted gross income, family size, and total amount of Direct Loan debt. This can give student loan debtors the flexibility and breathing room they need during difficult times. The maximum repayment period under an ICR plan is twenty-five years. Direct Loan provides a handy calculator for ap¬proximating ICR plan pay-ments.