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March 2012 Archives

Debt Forgiveness: Part 2

In an earlier blog I discussed debt forgiveness on unsecured debts such as credit cards. I talked about the difference between discharging these debts in a bankruptcy versus settling these debts with your creditor for less than is owed. Discharging the debts through a bankruptcy does not leave you open to tax liabilities in the next tax year, but settling the debt with the creditor may.
Overwhelming credit card debt is one of the top reasons people file bankruptcy. One late payment can raise your interest rate, making it impossible to pay down the balance. If you only make the minimum payments, it can take decades before the debt is paid off (assuming you stop using the card).
In addition to unsecured debt, many people find themselves in need of debt forgiveness when it comes to mortgages. Some people want to keep their home, and they enter into a chapter 13 bankruptcy in order to put the arrears in a bankruptcy plan so that they can catch up over a period of time. But others are looking to walk away from the home and be free of a mortgage payment they can no longer afford.
When this is the case, and if you qualify, it is possible file a chapter 7 bankruptcy. This not only discharges the credit card and medical debt, but allows you to surrender your home to the bank that holds the mortgage. The bank will then sell the home at foreclosure sale, and any deficiency between what they sell it for and what you owed them is discharged in the bankruptcy as well. There is no tax liability to the debtor who files a chapter 7 bankruptcy and surrenders a home, whether there is a deficiency with the bank or not.
Some banks will consider a short sale, which means they will accept less than what is owed if you find a buyer willing to pay. In this case, you are technically being forgiven of some of the debt you owe the bank. If you owe $200,000 and find a buyer who pays the bank $175,000, you have been forgiven the $25,000 difference. This would normally be taxable, but thanks to the Mortgage Debt Relief Act of 2007, many people will not have a tax liability.
The Mortgage Debt Relief Act of 2007 allows a taxpayer to exclude this forgiven amount and not pay taxes on it. There are a few requirements and limitations, however. For example, the home must have been your principal residence (not a rental property or second home). There is also a $2 million cap on the forgiven debt if you qualify under this act.
As always, when you are dealing with tax questions, you should always consult a knowledgeable accountant. These are just a few things to think about when you are considering taking steps to settle or discharge your debt. If you think that you need to look into your bankruptcy options, Greenwald & Hammond offers a free initial consultation where you can discuss your concerns with an attorney.
Submitted by:Kerry Hammond, Esq.

Tags: Credit card debt, IRS, Taxes, chapter 13, chapter 7, deed in lieu, foreclosure, forgiven debt, forgiveness, medical debt, medical expenses, mortgage debt, settlement, short sale, tax liability

Bankruptcy Basics - Chapter 7

Most people have heard of bankruptcy but many are curious as to how bankruptcy works. For most individuals there are two types of bankruptcy, chapter 7 and chapter 13. Chapter 7 is also known as a liquidation bankruptcy and chapter 13 may be referred to as a reorganization. In both types, individuals can be relieved of significant amounts of debt. Chapter 7, called chapter 7 because it is set forth under chapter 7 of the bankruptcy code, typically provides a debtor with a fresh start, free of most prior debt. In theory a chapter 7 is liquidation of assets but in most cases debtors can keep most, if not all, of their assets because they are entitled to claim certain exemptions on basic assets like clothing, household goods, vehicles and the debtors' homestead (of course there are limitations to exemption amounts. A chapter 7 starts with the filing of a bankruptcy petition. The filing of the petition puts into effect the automatic stay which stops ALL collection efforts of creditors. No creditor, including the IRS or judgment creditors, can take any action to collect on a debt. Any garnishment that has started must stop immediately, even a scheduled foreclosure sale will be stayed. Roughly 30 days after a petition is filed, the debtor will attend a meeting of creditors. At the meeting of creditors the debtor will be examined, under oath, about their bankruptcy petition, by an appointed trustee. The trustee is an attorney who represents the interests of the creditors. Their job, in part, is to determine whether the debtor has non-exempt assets that can be liquidated to pay creditors. After the meeting of creditors, the creditors have roughly 60 days to object to discharge of debts owed by the debtor. Most debts are dischargeable and regular creditors often have no grounds to object. For a creditor to object, a creditor must be believe (and ultimately prove) that the debt falls into certain special categories of debt that are non-dischargeable. Non-dischargeable debts that would require an objection are typically based in fraud or some other malfeasance. Certain creditors do not have to object to discharge because the type of debt is not dischargeable unless proven otherwise by the debtor. Student loan debt, maintenance and child support obligations and most tax debt are not dischargeable and the creditor need not file an objection to dischargeability. Once the objection period has run, and no objections are filed, the court will review the case and issue a discharge order. The order of discharge, informs creditors that the debtor is relieved of the liability to the creditor and the creditor may no longer take any action to collect on the debt. If a debtor has made an agreement for turnover of information or assets to the appointed trustee, the discharge order does not relieve the debtor of the obligation to comply with the agreement. Failing to comply with an agreement with the trustee can be grounds for revocation of discharge. If you are wondering if chapter 7 bankruptcy can help you attain a fresh start by eliminating credit card, medical debt, foreclosure deficiencies, repossessed vehicle deficiencies or any other unsecured debt then contact Greenwald & Hammond for a free bankruptcy consultation. We are here to help people understand bankruptcy and make informed decisions about their financial future. Submitted by:
Mindy Greenwald, Esq.
Bankruptcy Attorney

Tags: Bankruptcy, Credit card debt, auto loan deficiencies, bankruptcy attorneys, chapter 13, chapter 7, foreclosure, fresh start, medical debt, mortgage deficiencies, unsecured debt

Debt Forgiveness: Part 1

It’s tax time again, and this year your accountant may be asking you about debt forgiveness. In addition to the usual questions about your income and deductions, you may be asked if any of your debt was forgiven in 2011.
There are a couple of ways in which your debt can be forgiven. One is through the filing of a bankruptcy. If you found yourself in financial trouble in 2011 and were forced to file bankruptcy to get out from under medical debt or credit card debt, these debts were discharged, or forgiven. You no longer owe money to these creditors, and they can’t come after you in the future or sue you for the debt.
In the case of a bankruptcy, there are no tax consequences involved. You do not have to pay income tax on any of the debt that is discharged, no matter what type. If any of your creditors 1099 you, there is a form you can file with your taxes to let the IRS know that the debt was discharged through a bankruptcy and you won’t be paying taxes on it.
Even if you don’t file bankruptcy, another way a debt can be forgiven is through a settlement with a creditor. A lot of creditors are working with their customers and accepting less than what is owed. For example, you may owe a credit card debt in the amount of $18,000, and the creditor may accept a lump sum payment of $10,000 as payment in full on the account.
In this case, however, the IRS looks at the transaction and says that you were forgiven $8,000 of your debt to that creditor and therefore have to claim that amount on your taxes. What you will end up paying for this forgiven debt is a question for your accountant, but just be aware that there will more than likely be a tax obligation.
When negotiating with your creditors, it’s important to look at the big picture. If you owe more than one creditor, but only one will settle, you may need to determine if it’s worth it. You may settle on one account, but if the others won’t budge, you may find yourself needing to file bankruptcy anyway. The settlement won’t cause you tax problems in this case, but the money you spent could have gone toward living expenses or necessary attorney fees.
Submitted by:Kerry Hammond, Esq.

Tags: Credit card debt, IRS, Taxes, forgiven debt, forgiveness, medical expenses, settlement, tax liability

Common Debt Mistakes

When confronted with unmanageable debt, consumers often make mistakes that result in more debt or loss of assets that could have been protected in a bankruptcy. Some of the most common errors include waiting too long to speak with an attorney, early withdrawal of retirement accounts, hiring debt consolidation counselors, and avoiding bankruptcy out of fear of eternal bad credit. Most people want to avoid bankruptcy at all costs. In some cases it is possible to delay or avoid bankruptcy. Often times when individuals wait too long to consult an attorney, they wind up with court judgments against them. A court judgment allows creditors to place a lien on property owned by the debtor. When a creditor has a court judgment in its favor, it can garnish wages and seize bank accounts. In extreme circumstances, outstanding judgments can lead to the issuance of a bench warrant, which can land a debtor in jail for failure to respond to a court order (not specifically for failing to pay a debt). If an individual is about to default on any debt or is juggling debt by using balance transfers and cash advances or payday loans, should be consulting with an attorney to determine what options are available to protect assets and overcome debt. Even though it is typically never too late to file for bankruptcy, filing when the debt becomes unmanageable, beats filing after wages and bank accounts have already been garnished. When faced with large amounts of debt, some people turn to their retirement plans. Early withdrawals from IRA and 401(k) plans typically result in an early withdrawal penalty and are taxable as well. In rare cases, it may be beneficial to use retirement funds to eliminate debt but in most cases, the money should be left alone. Retirement funds are meant to provide security in retirement. In a bankruptcy, and in general, creditors cannot touch your retirement funds. If withdrawing a small portion from your retirement accounts will not completely resolve your financial problems then it is probably wise to leave the money where it is and consider other options. There are a lot of companies advertising debt consolidation or counseling services. While some may be legitimate, many are in the business to make money. Many people who try this route wind up in bankruptcy after spending more money and incurring additional debts due to these companies that said they were there to help with debt. Discussing your needs with an experienced and licensed lawyer will help you determine what your options are. A reputable bankruptcy attorney will assess your situation and advise you about your options and make a determination as to whether bankruptcy is the best option for you. Credit counseling agencies and your creditors would like you to think that filing for bankruptcy will forever ruin your credit. The fact is, even if your credit has been good, if you are about to miss a payment or default on a loan, your credit will suffer greatly. Most, if not all, people in need of bankruptcy will suffer from bad credit scores if nothing is done to resolve the debt. Filing bankruptcy for many, actually helps clean up credit reports and for some clients has resulted in higher credit scores as soon as a year after filing bankruptcy. Most debtors are able to finance a vehicle within days of filing for bankruptcy and many report receiving credit card offers almost immediately after their bankruptcy is filed. Even those whose credit scores are slower to go up, report that the relief experienced allows them to move forward with their lives when they thought they would never overcome their debt. If credit card debt, medical debt, mortgage debt or business debt are becoming unmanageable, don't wait another day. Call Greenwald & Hammond to speak with a caring, knowledgeable attorney who can advise you of your options for managing your debt. Submitted by: Mindy Greenwald, Esq.
Bankruptcy Attorney

Tags: 401k, Credit card debt, bank garnishments, bankruptcy attorneys, business debt, chapter 13, chapter 7, credit counseling, medical debt, mortgage debt, retirement, wage garnishments

The New and Improved Short Sale Process

With the housing market on the decline for so many years, and unemployment continually on the rise, short sales have become a much needed way for homeowners to get out from under a house they can’t afford. Letting a bank foreclose on your property opens you up to a possible deficiency judgment, if the bank sells the house at auction for less than you owed on the note. It also shows up as a foreclosure on your credit report, which is used to determine when you can qualify for a loan to buy another home.
Many homeowners have taken the short sale route, where they find a buyer for the home (who is willing to pay less than is owed to the bank). The homeowner then submits the offer to the bank to get their approval. If approved, the house is sold for that amount, the bank does not have to foreclose, and there is no deficiency judgment against the first homeowner. Your credit report isn’t spared the hit, but having a short sale on your credit tends to be viewed more favorably than a foreclosure.
This all sounds like great deal, but I’m sure you won’t be surprised to hear that many mortgage servicers have been less than helpful when borrowers approach them regarding a short sale. I have personally heard horror stories about borrowers getting the run around, not getting call backs from their bank, and continually sending in updated documents that the lender says are outdated. (You can imagine how long the lenders have been sitting on these documents if they have become outdated.) In many cases, while this is all going on, the lender is still continuing with the foreclosure process.
In many states, attorneys general have been suing mortgage servicers to try to get relief for borrowers. A settlement was recently reached in which the top 5 mortgage services are now required to comply with timelines and guidelines set out in the settlement. These timelines are the same that were set out by the Treasury Department in 2010 in the Home Affordable Foreclosure Alternatives Program.
The main benefit of the new rules hinges on response time. The servicer is now required to respond to the borrower with a decision within 30 days of receipt of a completed short sale package. If the package isn’t complete, they have 30 days to let the borrower know of any missing documents. Anyone who has ever attempted a short sale knows how huge these requirements are. Just getting a response from the servicer will be a great improvement from how things have been running.
Hopefully these changes will help give many borrowers the relief they need. Even if a short sale is not approved, knowing of the denial allows the borrower to move on to Plan B. They can then decide if it’s a smart move to allow a foreclosure to go through and if they eventually may need to file for bankruptcy.
Submitted by:Kerry Hammond, Esq.

Tags: attorney general, foreclosure, home loan, lawsuit, mortgage, servicer, short sale, unemployment

How to get past Attorney Marketing and Find a Good Attorney

Recently I heard a Colorado bankruptcy attorney offering entry into a monthly drawing for a "giant flat-screen TV" to clients who file bankruptcy. Another has a website offer for a drawing in which one lucky client will receive a "free chapter seven bankruptcy" each month. A third attorney advertises that he is a "family law firm" and before negotiating with debt collectors or filing for bankruptcy, you should see him (though he does not mention that he is a bankruptcy attorney). Obviously I cannot say with any certainty that the law firms that advertise on television or radio, or offer incredible give-aways are good or bad attorneys. I can say that their offices are probably busy. Of course there are thousands of attorneys who do not use give-aways or advertise on radio or television, so how do you find the attorney that suits you? After you get past the ad or the give-away, what type of service do you want from your attorney? While we all need a giant flat-screen TV, are we going to choose a bankruptcy attorney simply because we could potentially win a TV by using that attorney? If you answered yes then you can stop reading now. When choosing a bankruptcy attorney it is important to find an attorney who is going to ask you important questions and answer your questions at your initial consultation or early in the process. In some busy bankruptcy offices, debtors are paired up with paralegals or office staff for their initial consultation. Important information regarding the debtor's individual circumstances may not be brought to the attorney's attention in a timely manner and this can lead to surprises later on. While many people want to keep bankruptcy a private matter, it can be helpful to ask another professional. Many attorneys in other practice areas know of attorneys with good (and bad) reputations. Often times tax accountants and CPAs may be able to refer you to a reputable attorney. Friends are also a good source, and those who have had a good experience are usually happy to refer a friend in a similar situation. Choosing a bankruptcy attorney because their fee is the lowest can also be a pitfall. Once an attorney is licensed, the attorney can practice in pretty much any area of law. The job market is slim these days even for some attorneys so be wary of inexperienced attorneys who know that bankruptcy is a busy field in this economy. They may charge lower fees because of their inexperience or to get their market share because they do not have a client base for referrals. Always ask about an attorney's prior experience to get a feel for how knowledgeable the attorney is about the practice area. When trying to choose an attorney, it is okay to shop around and get a feel for the attorneys' offices. If the office makes you feel comfortable, or if you are wary of something about the office, these are good indicators of what to expect. Look online for client testimonials to get a feel for how the attorney handled other people's cases. Then go with your instincts. If you are in the market for a bankruptcy attorney, our office is not giving away a giant television, but we do offer a free consultation with a bankruptcy attorney. Our attorneys are knowledgeable and experienced. Bankruptcy is the only area of law that we practice. We offer every client individualized attention and focus on coming up with solutions even when bankruptcy is not the best option. Call Greenwald & Hammond today and set an appointment to discuss chapter 7 or chapter 13 with a compassionate attorney. Submitted by:
Mindy Greenwald, Esq.
Bankruptcy Attorney

Tags: Bankrupcy Mill, Greenwald and Hammond, affordable bankruptcy, chapter 13, chapter 7, choosing an attorney

Avoiding Tax Scams

It’s still tax season and many of us are rushing around, gathering our documents, and frantically preparing our taxes. As if it’s not hard enough to navigate through the ins and outs of the tax code and allowable deductions, according to the IRS and U.S. News & World Report, we need to be careful of tax scams as well.
If you haven’t heard of identity theft, you’ve been out of touch with society for some time now. Many of us are careful about what information we submit online or send via the U.S. Postal Service. We guard our Social Security numbers and birthdates to avoid impersonation on credit card applications that could land us in a mountain of debt that we had no part in charging. But did you know that there are identity thieves out there filing fraudulent tax returns in order to claim a refund? If you receive a letter from the IRS stating that multiple returns were filed for you, contact the IRS Identity Protection Specialized Unit immediately.
Another thing to watch for are emails claiming to be from the IRS requesting personal financial information. Even if the email claims to be from the IRS, the best idea is to question it. You can forward these phishing attempts to . Letting the IRS know about the scammers allows them to investigate them and hopefully put a stop to their future attempts.
Lastly, if it sounds too good to be true, it usually is. If you hear that you can file a tax return with little documentation and receive a hefty refund, don’t believe it. These scammers are preying on low income individuals and spreading the word throughout the community using flyers posted in local churches. They will charge a fee for the “filing” and you will then find out that your claim is rejected and you are out the money you paid them.
I think the bottom line is, be very careful when preparing your tax returns and screen those you trust with your documentation and financial information. I know it can get costly to hire an accountant, but there are low cost preparers out there if you look. It’s better to get it done right, even if it costs you a little bit, rather than owing penalties and possibly fines for violating a law you didn’t even know existed.
Submitted by:Kerry Hammond, Esq.Bankruptcy Attorney

Tags: IRS, accountant, deductions, phishing, postal service, scam, tax refund, tax return, tax season

Confronting Chapter 13 Fears

Almost everyone who comes to my office with the hopes of using bankruptcy to eliminate debt, tells me, before hearing the facts about chapter 13, that they do not want to file for chapter 13. It is understandable that when a person has no income and is struggling to afford their meals or their home, they fear having to make a payment plan for three to five years. The most common fear people have is that they will be required to pay all of their debt through the chapter 13 plan. For most people this fear is not out of an unwillingness to pay all debt, it is an actual inability or perceived inability (in a few cases) to pay their debt in its entirety. Most people are of the mind that if they were able to pay all of their debt, they would not need to file bankruptcy. In the majority of chapter 13 cases, the debtor generally pays only a portion of the debt owed. A chapter 13 is meant to be a reorganization. The debtor is expected to disclose all of their income and all of their expenses. By subtracting income from expenses they can determine with some degree their disposable income. There are a few restrictions on the expenses a debtor may incur while in bankruptcy but reasonableness of expenses can be determined on a case-by-case basis. Ultimately someone who files chapter 13 will be living on a pre-determined budget but for most, that budget is not nearly as restrictive as the budget they had when their credit card and other debt payments were consuming their entire income. When in debt, many people forgo much needed medical and dental treatment because they barely have enough money to cover their regular monthly expenses and debt payments. In a chapter 13 a debtor can budget for expected out-of-pocket medical and dental expenses. They can budget for vehicle repairs and other expenses that are necessary for their health and well being. In most cases a debtor in chapter 13 bankruptcy whose circumstances change, can propose a modification to their plan if payments become too hard to make. There are a few instances when a debtor may need to pay all of their debt through a chapter 13 plan. The primary reasons for such a plan are to protect non-exempt assets or as a result of very high income compared to expenses. A debtor may choose to avoid chapter 7 if they have assets that are non-exempt but their debt is out of control and they need to do something. If a debtor has non-exempt equity in their home and other assets that actually exceeds the amount of their debt then, if they want to use bankruptcy to eliminate debt and keep their assets, they should use a chapter 13. Clients have asked me what is the benefit to chapter 13 if they must pay back all of their debt. The primary benefit is very low interest (and sometimes no interest). That means that every payment, in essence, goes to principal only. Another benefit is no late fees or other penalties when plan payments are made relatively close to the date they are due. Another benefit is that the debt paid back is only paid to creditors who file valid claims in a timely manner. Often times creditors fail to file claims at all. A creditor who receives proper notice of a chapter 13 filing, and fails to file a proof of claim, will not receive money and the debt will be discharged when the plan is completed. In some cases all creditors file claims, however I have witnessed cases in which the debtor's largest creditor failed to file a claim, virtually reducing the amount of debt paid back to less than fifty percent. Once a chapter 13 is explained to potential clients who are ineligible for chapter 7 and qualify for chapter 13, most fears are allayed. If you fear you are not eligible for chapter 7 bankruptcy, and have feared the concept of chapter 13, contact Greenwald & Hammond for a free consultation to learn how chapter 13 works and why it is not as scary as one may think. Submitted by:
Mindy Greenwald, Esq.
Bankruptcy Attorney

Tags: Credit card debt, Mindy Greenwald, bankruptcy attorneys, chapter 13, chapter 7, non-exempt assets

How to Cut Health Care Costs

When it’s tax time, I tend to go through my year’s worth of spending to gather deductions and get an overview of where my money went. I’ve noticed that for the past few years, health care has been eating up more and more of my income. From rising costs of insurance premiums to more money I have had to shell out of my own pocket, heath care is one of the highest costing items in my budget.
I came across an article that promised to give 7 ways to decrease heath care costs, so I thought it was worth a read. Some of the items listed were more helpful than others, and not all will apply to everyone (I don’t take any prescriptions, so cutting back on that cost won’t help me). But any article that offers suggestions for me to cut back on expenses is worth a read.
One of the items listed is something that I feel quite strongly about, and that’s prevention. Keeping up with your health in order to prevent future illnesses and possible procedures can go a long way. If spending a little money now makes you spend a lot less in the future, it’s a valid expense in my book. Make sure to research what your health insurance is required to cover, so that you aren’t paying more out-of-pocket than you should.
It’s also helpful to know what resources are out there to help you navigate through the confusing world of health care. Heathcare.gov is a great resource to explore insurance options and providers. They even break it down to additional resources available by state.
Again, I don’t take any prescription medications regularly, but when I do need a prescription, I always get the generic over the name brand. I find that they are just as effective. It looks like Lipitor’s patent protection has ended, allowing other companies to sell a generic version. Switching to a generic on a medication taken daily can really add up.
My current insurance plan has a pretty high deductible, which keeps my monthly premiums lower. It’s a gamble because until I hit that deductible, all of my costs are out-of-pocket. But I find that it is cheaper in the long run for me and may be an option for people who are, for the most part, relatively healthy. I also try to stay in network when I can. My insurance covers much more if I use a preferred provider and I only go out of network when I have to.
The last one is one of my husband’s favorite things to do: question your doctor. Running 16 tests may be necessary to diagnose your illness, but then again it may not. Sometimes it pays to question the tests that the doctor has ordered. For example, maybe you can do a few at a time to see if the problem can be found, rather than running the whole battery of tests prior to the doctor reviewing the results. If the first test shows something conclusive, the rest may not be needed. Of course, this only works with non-life-threatening issues.
Even if you follow one or two of the suggestions listed in this article, it could end up giving you a significant savings. And aren’t we all open to saving money? Submitted by:Kerry Hammond, Esq.Bankruptcy Attorney

Tags: Health care costs, deductible, generic, health insurance, network provider, premiums, prescription

Real Estate Woes - Bankruptcy May be a Solution

Over the past six years, the weak real estate market has caused numerous chapter 7 bankruptcies. In Colorado, residential real estate values dropped significantly over the past six years. Although when real estate prices are low, it is a good time to buy especially if you have nothing to sell, the low prices are usually a sign of large supply. Many first-time home buyers found great deals on homes that just a few years ago, were beyond their financial reach. Not as lucky were people who owned homes and borrowed against those homes or purchased homes or property when the market was at its peak. Many ultimately found themselves under water and owing more than their property could sell for. For some there is time to ride out the storm, but others who need to relocate, downsize or have been faced with an income decline, the weak market has been detrimental. What is a person to do if they can no longer afford the home they live in? Many people have been faced with this question. Many people have depleted their savings and retirement accounts to sell their homes. Others spend months in the negotiation stages of short sales. Some consult with bankruptcy attorneys at an early stage to get an idea of what options they have. I am always saddened by the debtors who depleted their savings and retirement only to ultimately file bankruptcy. Mortgage debt and home equity credit lines are dischargable in bankruptcy. Often times following bankruptcy, debtors can stay in their homes, without making payments, for far longer than they ever imagined, allowing them to save money for a subsequent move. People who were relatively successful with the fix-and-flip market also found it hard to "flip" their properties at the rate they had previously seen. Many found themselves "stuck" with properties and debt that were only supposed to be short term. Some turned to renting out the properties but quickly learned all of the difficulties that go with being a landlord. Believe it or not, debtors who invested in numerous properties with debts in the millions, can also file for bankruptcy. The properties can be surrendered back to the bank and the debts discharged. Is your home under water, do you need to relocate but you cannot sell your home because you cannot afford to pay the costs or your bank will not work with you toward a short sale? Contact Greenwald & Hammond for a free consultation to explore your options. Submitted by: Mindy Greenwald, Esq.
Bankruptcy Attorney

Tags: 2nd mortgage, Greenwald and Hammond, HELOC, bankruptcy attorneys, chapter 7, discharge mortgage, fix-and-flip, home equity line of credit, investment properties, mortgage underwater, surrender

Foreclosures in the Millions

When we talk about foreclosures in the millions, we’re usually referring to the number of foreclosures in progress. This time, however, I’m referring to the millions of dollars owed on a loan. Foreclosures aren’t just hitting middle class Americans, they are also happening to people who most would consider wealthy.
I recently read an article about a foreclosure in our great state of Colorado, where a Breckenridge couple is finding they can’t keep up with the mortgage payments on their $2 million home. My office has handled bankruptcies for numerous homeowners who are behind on their mortgages and needing to file bankruptcy to catch up on arrears. We see loans that range in value from $100k to $400k on average. Rarely do we see anything that has enough zeros to hit the million dollar mark.
But according to the CNNMoney article mentioned above, foreclosures on homes valued over $2 million have increased by 273% since 2007. This clearly shows that tough times and a bad economy don’t discriminate. Loss of a job, and in the Breckenridge couple’s situation a failed business, can cause a downward spiral for anyone. Missing one payment on your mortgage can easily snowball into several.
If you have a multi-million dollar home, catching up on arrears in a bankruptcy may not be an option, or even very wise. But for many of us with manageable mortgages, it may be possible. My advice is to not let things go too far. If you’re behind on payments and find that you’re now back on your feet, but your mortgage company refuses to accept anything but a full catch-up, contact an attorney immediately. The longer you let the arrears pile up, the higher the monthly payment needed to catch-up. It can make the difference between being able to afford to keep the home and having to let it go.
Submitted by:Kerry Hammond, Esq.

Tags: arrears, chapter 13, economy, foreclosure, job loss, mortgage, multi-million

Happy Birthday OREO Cookie

While trying to come up with today's blog topic, which should somehow relate to consumer bankruptcy, I came across one of today's top stories which, of course is that Milk's favorite Cookie, the Oreo, turned 100 years old. That got me thinking, "I want an Oreo." How can I concentrate on writing a blog about Chapter 7 and Chapter 13 Bankruptcy, fresh starts, affordable bankruptcy attorneys, and free consultations when all I can think about is that sweet creamy middle and the delicious chocolate wafers on the outside. Mmmm...now I need some milk too. So today my blog entry will honor the Oreo. I will avoid discussing outstanding credit card debt, wage garnishments, medical bills, foreclosures and crushing debt that a bankruptcy filing could help a person overcome. Instead I will discuss how awesome it was as a child to split open a delicious Oreo and methodically eat the cream filling and discard the remaining chocolate cookies, although now as an adult I appreciate the combination of the chocolate and the super sweet filling. These days, I watch my daughter do exactly as I did when I was younger. Happy Birthday Oreo! It is great that you have made it 100 years. We can only hope that you make it 100 more. Now this bankruptcy attorney must finish her work for today and answer questions like Can I keep my car in bankruptcy? Can I keep my home in bankruptcy? Will I lose my job because of bankruptcy? How long does bankruptcy remain on my credit report? How will bankruptcy affect my credit score? How does bankruptcy work? What happens at a bankruptcy creditors meeting? I am glad that I was able to take a moment to appreciate something as fine as the Oreo. I must now go home and dig into the Costco-sized box of Oreos my daughter (of course I am going to blame her - she can hardly read) insisted that I buy! If however the questions about bankruptcy are of concern to you, this Oreo-loving attorney and her partner (who prefers double-stuff) at Greenwald & Hammond can answer these and many more specific bankruptcy questions in a free bankruptcy consultation. Call today for a consultation. Submitted by: Mindy Greenwald, Esq.

Tags: Credit card debt, Greenwald and Hammond, afford bankruptcy, affordable bankruptcy, bank garnishments, chapter 13, chapter 7, keep my car, keep my home, overwhelming debt, wage garnishments

Common Bankruptcy Fears Put to Rest

When considering bankruptcy many people are afraid they will lose their home or their cars. Some fear that they will lose their jobs, others fear that their credit will be so bad that they will not be able to get financing for a new car or home. In most cases these fears may be alleviated after speaking to an experienced bankruptcy attorney.
Can I keep my car if I file for bankruptcy? In most cases the answer is “yes, if you want to.” In Colorado a debtor under the age of 60 is entitled to a $5000 exemption on the equity in their vehicle. A debtor over 60 or with a disability is entitled to a $10,000 exemption. If there is a lien on the vehicle, a debtor must be current on the car payments in a chapter 7 to keep the vehicle.
If a debtor has more equity in the vehicle than the available exemption, there are several options to protect that equity. A debtor may choose to file chapter 7 and negotiate a short payment plan to “buy back” the non-exempt portion of the vehicle. This may work where there is only a small non-exempt amount (for example the debtor’s equity in the vehicle is worth $6000 so the debtor must pay $1000 to the bankruptcy trustee). Another option is to look for other exemptions that may apply. Some debtors may be able to exempt their vehicle under the “tools of trade” exemption. This can be tricky though. The vehicle must be necessary to the debtor’s employment, not just to get the debtor to and from work.
Where the debtor has a significant amount of non-exempt equity in a vehicle or other asset, a chapter 13 can be used to protect and retain assets. In a chapter 13 debtors do not turn over their non-cash assets to the trustee for liquidation. Generally, however, the value of all non-exempt assets must be paid into the chapter 13 plan for distribution to unsecured creditors to the extent that the unsecured creditors would have received any distribution under a chapter 7 bankruptcy (simply put, a debtor with equity in a vehicle of $20,000 may be required to pay $15,000 to unsecured creditors through chapter 13 plan payments, though there are several caveats and possible reductions that will likely be taken into consideration, however the asset will be protected and debtor will be able to keep the vehicle).
Can I keep my home in bankruptcy? Much like the vehicle, in Colorado, a debtor can claim a $60,000 exemption against the equity in the home (the exemption is $60,000 whether the case is a joint case or not). A debtor over 60 years of age or with a disability may claim a $90,000 exemption in the home. In a chapter 7 a debtor must be current on the mortgage payments. A chapter 13 can be used to catch up payments when payments are not current, or to pay excess equity if the situation calls for it. More often the issue is that there is little or no equity and a debtor wants to save their home by catching up arrears through chapter 13.
Will I lose my job if I file for bankruptcy? Employers are forbidden from terminating an employee simply for having filed for bankruptcy. This can be a sticky area because employers may find other reasons to terminate employees but if a debtor believes that the bankruptcy was the actual reason for termination, an employment attorney or bankruptcy litigation attorney should be consulted.
If fears of losing assets or employment are keeping you from filing bankruptcy, now is the time to speak to an experienced bankruptcy attorney to learn how bankruptcy works. At Greenwald & Hammond experienced attorneys will address your specific circumstances in your free initial consultation so that you know exactly how bankruptcy will work for you. Contact us today to meet with a compassionate female attorney who will listen to your concerns and answer your individual specific questions.
Submitted by:
Mindy Greenwald, Esq.

Tags: Bankruptcy, Colorado bankruptcy, Colorado bankruptcy exemptions, bankruptcy attorneys, chapter 13, chapter 7, female attorneys, free consultation, keep my car, keep my home

If You’re Ready For Retirement, Don’t Let These Things Surprise You

I am no where near retirement age, but I love reading articles about how to prepare for it. I feel that it’s never too early to plan for retirement, especially if you have an idea in your head about the lifestyle you want. If you want to travel and play golf all day, you need to determine how much money you’ll need to save in order to support those activities. If you find that you are barely able to make ends meet with your employment income, imagine what it will be like if you’re living off of Social Security and your 401k withdrawals. This can be a big hit to your budget.
I recently read a Kiplinger article that outlined 5 unexpected, yet costly retirement expenses. Thinking about these things in advance can help you plan for retirement, or at least ensure that you will not get caught off guard. I recommend reading the entire article, but I thought I would touch on a few of the items that I found most interesting.
One unexpected event may not seem like a bad thing at first glance. We work hard to stay healthy so that we can live a long life, but if you think about it, living longer is going to cost you more. When you prepare to save enough for retirement, determining how many years that money has to last is very important. Saving more for retirement may not be an option, so many people will either have to work longer or figure out how to spend less in their golden years.
As we get older, we can expect to have more healthcare needs. Without a continued income, it can get very expensive. Prescription drug costs alone can get out of hand for many people. Health insurance premiums increase as we get older and the quantity of necessary medical procedures is much greater. We tend to think of how much money we’ll need in retirement to pay our living expenses, but it’s harder to anticipate medical expenses for ailments we don’t even have yet.
The above two factors may be unexpected, however, the effects may be minimized with advance planning. But what do you do when you’re retired and your adult children turn to you for support? This is something that seems to be occurring more and more often. Whether your kids need a roof over their head, a loan, or help with expenses for the grandkids, most retirees aren’t financially prepared to give continued support to their children. I think that many have even secretly hoped that their kids would be in a position to help support them, rather than the other way around. Many couples are faced with kicking their kids out of the nest for a second time.
Retirement will bring many challenges, but perhaps with a little advanced planning we can ease the transition, and maybe even enjoy ourselves.
Submitted by:Kerry Hammond, Esq.Bankruptcy Attorney

Tags: 401k, expenses, medical insurance, retirement, savings, social security

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