Chapter 13 Bankruptcy

06 Feb Why Surrendering Your Car or House in a Chapter 13 May Create Unexpected Problems

One of the more powerful tools available to you when you file a personal bankruptcy has to do with your option to cancel an installment contract and surrender secured collateral. This applies to all forms of secured collateral, including such things as houses, motor vehicles, furniture, and jewelry. In a Chapter 7, your surrender of secured collateral will usually mean an end to your obligation to the secured creditor. Any remaining debt owed to the creditor for a deficiency balance will be treated as unsecured debt and unsecured debt is generally going to be eliminated with your Chapter 7 discharge. In Chapter 13, however, your act of surrendering collateral does not necessarily mean that you are done with the now unsecured creditor. Unsecured creditors often do get paid in Chapter 13 - sometimes as little as 1 penny on the dollar, but sometimes as much as 100 pennies on the dollar (i.e, they are paid in full).
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06 Sep Yes You Can Refile Your Chapter 13 Case, But Should You?

If you are facing a foreclosure, vehicle repossession, wage garnishment or other financial crisis, Chapter 13 bankruptcy can be a great tool to stop the chaos.  As the type of bankruptcy that includes a repayment plan, Chapter 13 can empower you to reduce your monthly payments, eliminate accruing interest on credit card debt, reduce your total indebtedness - all while protecting your real and personal property from creditor actions.If you are facing a foreclosure, vehicle repossession, wage garnishment or other financial crisis, Chapter 13 bankruptcy can be a great tool to stop the chaos.  As the type of bankruptcy that includes a repayment plan, Chapter 13 can empower you to reduce your monthly payments, eliminate accruing interest on credit card debt, reduce your total indebtedness - all while protecting your real and personal property from creditor actions. When Chapter 13 plans work, they can literally be life changing and every experienced bankruptcy attorney can recount stories of grateful clients who successfully completed their Chapter 13 plans with property intact and debt gone. Unfortunately, however, most Chapter 13 plans fail before completion - in some jurisdictions the failure rate is 65% or higher.  Often repayment plans fail not because of bad faith on the part of debtors or even because of unrealistic budgeting.
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06 Jun How Bankruptcy Can Solve Your “Too Expensive Car” Problem

Next to home mortgages, motor vehicle loans are often your most expensive purchase. According to USA Today, the average transaction cost of a new car or truck sold in the U.S. was around $33,500. Lenders are now extending vehicle purchase loans to 6 years or longer, and when interest rates are factored in, you can easily find yourself responsible for $40,000, $50,000 or more. Unlike real estate purchases, motor vehicles are depreciating assets. If you finance your car or truck over 4 to 6 years, there is a good chance that you will owe more on your vehicle until year 3 or 4 of your contract. This means that in the event of a financial crises such as an illness or job layoff, you won’t be able to eliminate your financial obligations by selling your vehicle. If you “roll over” your loan into a new loan for a less expensive car, you’ll just delay your day of reckoning because you will end up owing far more on the less expensive car than it will ever be worth. Further, your installment payment is not your only vehicle expense. Insurance costs can rise quickly and unexpectedly if you or a family member has an accident. Routine maintenance and service such as new tires and brakes can add to your cost of ownership.
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19 May Why I Prefer Chapter 7 Bankruptcy to Chapter 13 Debt Consolidation

Most folks considering bankruptcy will consider two options - Chapter 7 and Chapter 13. Sometimes, you have the option of choosing either type of bankruptcy, whereas in other situations you would only be eligible to file either a Chapter 7 or a Chapter 13. When I meet with a client, I always start with the question of how can I fit this person into Chapter 7. It is not always possible, but, in my experience my Chapter 7 just works better - my clients get their discharge that wipes out debt completely, their cases are over in about 5 months, credit rebuilding can start within a year and the cost of bankruptcy is about 25% of the cost of Chapter 13.
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09 Jan Bankruptcy Rule 3002.1: An Unlikely New Weapon Against Debtors

It has been five years since Congress and the U.S. Supreme Court enacted Bankruptcy Rule 3002.1.  Hailed as a victory for homeowners against greedy mortgage banks, the rule was designed to force banks to certify to the court that the homeowner was current in payments...

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06 Jan Is Your Car Loan Underwater – What Are Your Options?

underwater car loanWould you be surprised to discover that your car is underwater? Not underwater in the sense of being wet, but in a financial sense. You are financially underwater with your loan if the fair market value of your vehicle is substantially less than the debt you owe. According to Edmunds.com, quite a lot of folks are significantly underwater with their loans. In 2016 nearly one-third of all vehicles offered for trade ins at dealerships are worth less than the debt encumbering those vehicles. By comparison, the underwater percentage was less than 14% in 2009.

Why Do Car Loans Get Upside Down and What Does it Mean?

There are several reasons why you may get upside down with your loan. First, the average term of car loans is getting longer - Experian reports that the average loan now lasts between 68 and 72 months. Further, the average loan now amounts to around $30,000. Second, vehicles are what as known as depreciating assets - they lose value every year and with every mile driven. When you do the math, you won’t break even on a $30,000 loan financed over 72 months at a 4% until year 3 or 4 of the loan. As the interest rate goes up, it may be year 5 or even year 6 before your loan balance falls below the vehicle value. If you trade in your underwater vehicle for a replacement (or if you have to replace a damaged or destroyed car) when the loan balance exceeds the fair market value, the replacement lender will reduce the unpaid balance by the wholesale value of the original car and “roll in” the remaining balance into a new loan. You may end up with Mercedes sized payments but a modest Chevrolet in your driveway.
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