Will Bankruptcy Hurt My Chances To Refinance My Mortgage?

When you are in over your head financially, there are a lot of options to help get you back on your feet. You can call your creditors and ask them to give you a lower interest rate, or to defer some of your payments. You can also take out a consolidation loan and wrap all of your payments into one lump sum payment each month. You can try to take equity out of your house by doing a refinance, which might also lower your interest rate. And you can also file for bankruptcy, so certain debts are eliminated and you are then able to pay what debts do remain.

But what if you want to refinance your house, because the benefit of having a lower rate and lower payment for the duration of a typical 30-year mortgage is long lasting, but also need to file for the protection offered by bankruptcy? Will bankruptcy hurt your chances to do a refinance of your mortgage, or should you refinance first and then file a case? Here are some pointers on the subject:

•         If you refinance before you file a bankruptcy case, you can reaffirm the refinanced mortgage debt and still get the benefit of the bargain you made during the refinance.

•         If you wait until after your bankruptcy case is over, you might not get to refinance right away because lenders will want to see a pattern of regular payment for a few months prior to making you a new loan.

•         If you file a Chapter 13 case you might be able to put the past due mortgage payments in your plan in such a way that you pay them out over a period of time, instead of having to get current right away. In this way, you get the benefit of being considered current on your mortgage payments while actually making the payments that get you to a current status.

Whatever your needs, call us to find out what option will work best for you. Your home is your most valuable asset, and we will work with you to find a way to keep you and your family in your house, at a payment you can afford.

For more information about bankruptcy cases, call us today or reach us online at www.law-ri.com.

Why Is Student Loan Debt So Hard To Get Rid Of In A Bankruptcy?

One of the most fasting growing debts held by most Americans is student loan debt. The amount of money owed for college courses has reached astronomical figures, and many recent graduates are not even employed in the field in which they sought a degree. There is also a large number of college graduates that don’t have a job at all, and so are unable to repay their student loans. The inability to repay student loans can be handled, for a while, because you can ask your lender to defer the payments or grant you an economic hardship forbearance. But sooner or later the government will come calling for its money, and you will have to find a way to come up with the funds to pay back your student loans.

With so many people turning to bankruptcy to find financial relief, you might be thinking that you can erase your student loan debt in this way as well. But, discharging a student loan debt in bankruptcy is harder than you might imagine. In most instances the debt is not discharged, and here is why:

•         To seek a finding that you do not have to pay back your student loans, you have to file an adversary proceeding, which is like a case within your bankruptcy case. The matter will proceed to trial before the Judge, if you are not able to come to an agreement with the other side, and this requires you to give testimony and provide evidence showing your financial condition.

•         Even though your financial condition is likely dire, given you have filed bankruptcy, it must be so dire that there is virtually zero chance you can ever pay back any part of your student loan in order for the Judge to find that the debt can be discharged.

•         Your household’s entire financial condition will be analyzed during this process, so if your spouse has a healthy income, chances are you will not be able to prove that paying back even a portion of your student loan will result in a significant hardship on you or your dependents. This is the Court’s reasoning many times, because if you are married it is presumed your spouse is just as responsible for the well-being of your dependents as are you, and if their income is sufficient to provide basic necessities then you may not be able to meet the required legal standard of “undue hardship.”

If this sounds like a hard thing to prove, it is, but that does not mean it is impossible. It can take a lot to show that your financial condition will never improve, such that you will never be able to pay back your student loans, but there are cases where the evidence is in your favor. And if you are not able to discharge your student loans, you can at least breathe a little easier knowing your payments may be easier to make when other debts you have are discharged. That is the beauty of bankruptcy, it frees up money you were spending on some debts, so you can pay the debts that remain.

For more information about bankruptcy and student loans, call us today or reach us online at www.law-ri.com.

Can I Use Social Security Income To Pay Chapter 13 Plan Payments?

When you file a Chapter 13 bankruptcy case, you are required to make payments each month to the Chapter 13 trustee. The trustee will then take that money and pay it to your creditors, which saves you from having to make multiple payments each month. One of the key requirements to a Chapter 13 is having a steady flow of income to fund the Chapter 13 Plan, and make the Plan payments to the Trustee.

If you are not working, but have income from other sources, that money can be used to make your Chapter 13 Plan payments. If your income source is from social security, you are allowed to pay your Chapter 13 bankruptcy payments with those funds. Here are the most common sources of income used to pay Chapter 13 Plan payments:

•         Wages from your employment, as shown on your income taxes and/or on a W2 form.

•         Retirement income, such as a pension.

•         Income you receive from being self-employed, and that you can verify from prior year tax returns or 1099 forms.

•         Income paid to you for a rental property that you own, which must also be verifiable.

•         Your spouse’s income, if you filed a joint case or there is some other reason your spouse is contributing to your monthly income.

•         Child support payments, although you are not typically required to rely on child support to make payments on your Chapter 13 bankruptcy.

•         Spousal support (alimony) payments from a divorce.

If, during your Chapter 13 case you become unemployed, you can ask the Court to give you time to find new employment to make your payments. This needs to happen quickly, because if you fall behind on your plan payments the Trustee will ask the Court to dismiss your case. So, when considering Chapter 13 bankruptcy, it is important to have reliable employment you can count on for the duration of your case. That said, we do understand that things happen, and are here to help you keep your case going from start to finish. If you have more debt than you can pay, call us to find out if Chapter 13 is right for you.

For help with bankruptcy, call us today or reach us online at www.law-ri.com. We have multiple locations to serve you and can schedule a time to meet at the office most convenient for you.

Do I Have To Be Current On My Debts To File A Chapter 7?

If you are not able to pay all of your bills, and need help finding a way out of debt, it might be difficult to get current on everything before you are able to put a plan in place. Luckily, there is no requirement that you be current on your debts before you are allowed to file a Chapter 7 bankruptcy. This is good news for those of you that are drowning in debt, and in need of immediate relief from your financial distress. But, just because there is no requirement that your loans be paid current before you file a Chapter 7 bankruptcy case, that does not mean there are not certain other things you need to know about before you start your case.

A Chapter 7 bankruptcy will benefit you in many ways, perhaps the most important of which is that you can eliminate all of your unsecured debt. In order to qualify for a Chapter 7 case, you don’t have to be current on all of your payments, but you do have to meet certain other requirements. Some of these requirements include:

•         You must perform the means test calculation, which will examine the amount of income you have in comparison to your secured debt obligations. If the result of this test shows you have even a small amount of disposable income left over each month to put towards your unsecured obligations, you may be required to file a Chapter 13 case instead.

•         You have to provide proof of your income, for the “lookback” period, which is essentially a set amount of time prior to the date you file your case. So, if you have just received a large bonus, you might want to ride it out for a while so this income is not included in the means test calculation. This is perfectly acceptable, especially if the bonus is not something you count on receiving regularly. It would be unfair to include money you don’t normally get paid in the means test, and would yield an unreliable result.

•         You will have to provide copies of tax returns, as well as titles to your cars and deeds to any real property you own.

Once you have gathered the information and documents needed to file, call our office. We will go over your finances with you and let you know what type of case you can file. We will perform the means test on your behalf, because it is critical to get an accurate result before your case is prepared, and this test can be tricky. If you need to file bankruptcy, call us today.

For more information about how to handle overly burdensome debt, call us today or reach us online at www.law-ri.com. We have multiple locations to serve you and can schedule a time to meet at the office most convenient for you.

Five Benefits To Bankruptcy If You Are Being Sued For Past Due Debts

Being sued for anything is unpleasant. When those lawsuits concern past due debts, chances are your stress level will increase drastically. Most people who are unable to pay their debts are already under a significant amount of stress, and adding a lawsuit to that mix only makes matters worse. One thing you can do to keep creditors at bay, and give yourself a chance to repair your finances, is to file for bankruptcy.

Five benefits to filing for bankruptcy if you are being sued for an overdue account include:

●          All pending lawsuits must stop right away.

●          If you are being garnished, the garnishment must be withdrawn and your employer has to stop holding money out of your paycheck.

●          Any phone calls or letters you are getting from collectors must cease, if a lender persists in contacting you, they can be held accountable for their wrongful action.

●          The account in question will be part of your bankruptcy, which means once you receive a discharge, the debt is no longer due. When a debt is legally eliminated through bankruptcy, the lender cannot try and collect it after you case has completed.

●          Without collection activity, without an active garnishment of your wages, and with the knowledge that when your bankruptcy case is over the debt is no longer due, you get an immediate break from the negative emotions and stress that accompany dire financial straits.

It is easy to get behind on payments, especially when extraordinary circumstances are prevented. Too many Americans have lost their jobs, or been forced to take a cut in pay in recent years. Or, it might be that you have had a medical emergency, and the hospital expenses are mounting. Whatever has caused you to fall behind on your financial obligations, take comfort knowing there is a way out. The light at the end of the tunnel is close, and grows closer every day when you take positive steps towards fixing your finances. Bankruptcy is the answer for thousands of people every year, and it can be the answer for you too! Call us today to find out how bankruptcy will help you.

For more information about bankruptcy, call us today or reach us online at www.law-ri.com. We have multiple locations to serve you and can schedule a time to meet at the office most convenient for you.

Can I File A Personal Bankruptcy If I Also Own A Business?

Most bankruptcy cases are filed by individuals, but businesses are also allowed to seek relief under the Bankruptcy Code. The requirements are basically the same, meaning the business is unable to pay its debts as they become due. But there are some important differences to note if you are thinking about taking your company through bankruptcy.

Most business bankruptcies are filed under Chapter 11 of the bankruptcy laws. A Chapter 11 bankruptcy allows a business to do the following:

●          Develop a plan of reorganization, which allows the company to continue in operations while restructuring its debt load.

●          Pay creditors that the business deals with on a daily basis, and needs to continue dealing with in order to maintain operations.

A Chapter 11 case can be quite complex, so unless your business is quite large and the chances of continuing to operate are great, you might consider some of the other options available to you under the Bankruptcy Code. While Chapter 7 and Chapter 13 cases are typically reserved for individuals, if most of your business debt is in your own name, you might qualify for a Chapter 7 or 13 case. With a Chapter 7 the most likely scenario would include one where your small business is no longer viable, and you will not be making an attempt to keep your business doors open. A Chapter 13 would be an option if your company is a sole proprietorship, owned and operated by you as an individual. Filing bankruptcy for a company under a Chapter 7 or 13 can be tricky, and you will want to be sure all of your “I’s” are dotted and “T’s” crossed.

The key is to make a determination as to the possibility that your business can survive, and even thrive, in the future. If the chances are good, then it is well worth the time and effort a Chapter 11 requires. We understand how hard it can be to make a decision about a business you have grown from the ground up, and are here to help you sift through the facts and make a decision that is professional rather than personal. For help getting your business back on its feet, or in liquidating a company, contact our office today.

For more information about what to do if you are a small business owner and need to file bankruptcy, call us today or reach us online at www.law-ri.com. We offer appointments at multiple locations for your convenience and can schedule a time to visit with you soon.

Can I Refinance My Mortgage If I File Chapter 13 Bankruptcy?

Mortgage refinancing can be beneficial when you are struggling to make your house payments. A refinance can lower your interest rate, which results in lower monthly payments. A lot of times you are also allowed to take out some of the equity you have built up in your home, and you can use that money to pay off higher interest rate debts, which also saves you on your monthly obligations. Or, you might be permitted to skip a payment or two, and those funds can also be used to put towards other debts. But what do you do if you need to file bankruptcy? Can you still refinance your house?

In a Chapter 13 bankruptcy, you are allowed to alter the payment scheme on many of your debts. For example:

●          Autos do not have to be repaid in full when you file a Chapter 13 bankruptcy case. Instead, you are permitted to pay only the value of the car rather than the balance. You area also allowed to modify your auto loan by paying a lower interest rate. When you combine a lower rate with a lesser balance, the payments decrease.

●          Credit cards are not required to be paid in full in a Chapter 13, but rather you will pay percentage of what is owed. The percentage is different for everyone, and depends on the amount of disposable income you have each month. But generally speaking, you will only pay back pennies on the dollar on your credit card debt through a Chapter 13 bankruptcy plan.

●          If you are behind on your mortgage, you are allowed to pay the past due amount over a period of time during your Chapter 13 case. Doing this allows you to get caught up at a rate that fits your budget, rather than having to come up with the entire back due amount all at once.

If refinancing is your goal, you may have to wait until after you Chapter 13 is over. But the benefits you get while in a Chapter 13 case will likely eliminate your need to refinance. When you finish a Chapter 13 case, your mortgage should be considered current, and without other debts to be paid you will be able to keep the payments current. For help understanding what a Chapter 13 can do for you, call us today.

For more information about Chapter 13 bankruptcy and your mortgage payments, call us today or reach us online at www.law-ri.com. We offer appointments at multiple locations for your convenience and can schedule a time to visit with you today.