Depending on the state that you reside in, you could be in for a rude awaking if your home was foreclosed upon. For what you asked? Well if your home sold for less than what was owed on your mortgage than you could be liable for the difference. This is known as a deficiency judgment claim.
There are more than 30 states that allow owners of these notes to go after you if they were not able to sell your home for what was owed on the mortgage. These states include, New York, Florida, and Texas.
Some states, such as California, are “non-recourse” and don’t allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims.
So make sure you ask for a release from the bank.
Otherwise, you could be face with a lawsuit and harassing letters from collectors because in the next few years, banks will be selling many of these types of accounts to collection agencies and other third parties, at discount.
So there are two things you should take from this: (1) ask for a release and (2) read all your paper work carefully when you agree to allow the bank to take back your home. Make sure you don’t agree or acknowledge any debts because your home is going to be sold for less than what you owe on your mortgage.
With individual bankruptcy filing at record place, it is not too surprising that companies and now state government are following suit.
There is a thought floating around that 46 out of 50 states in American could file for bankruptcy. If that turns out to be true then we might be in for a long ride before the economy begins to pick up and unemployment numbers get better as people find more jobs.
So if you are contemplating filing bankruptcy don’t feel bad. It might be the best thing for you to do for yourself so that you can have a better future.
Bankruptcy filing in 2009 jump 32%. There were more than 1.4 million filings in 2009. The largest number since 2005. Experts believe that 2010 may see even more. There were 116,000 filing in December alone.
The filings reflect the severity of the one of the worst recessions since World War II. In fact, states that suffered most from the real estate bust some of the biggest gains.
Filings in 2005 hit 2 million as many people wanted to get into court before the bankruptcy law was overhauled, pushed by lenders who wanted to make it harder to walk away from debts.
Filings fell to 600,000 in 2006 but have been rising ever since.
Chapter 7 is the bankruptcy relief most often sought. On filing, all assets pass to an estate administered by a trustee, who liquidates all nonexempt assets of value. Creditors can file claims against the assets and the claims are paid in accordance with the Code.
If you are an individual, you can get a discharge of all debts, other than debts declared nondischargeable under 11 USC Section 523, unless a creditor can establish a basis under 11 USC Section 727 to deny your discharge.
Your eligibility for Chapter 7 relief is governed primarily by the “means test” and the credit counseling and other requirements of 11 USC Section 109. The credit education provision require that an individual receive a briefing on available credit counseling opportunities and assistance in performing a budget analysis from an approved, non-profit budget and credit counseling agency during the 180 days before filing for bankruptcy.
You must also complete a instructional personal financial management course before discharge is granted.
The means test is applicable to people with primarily consumer debt. The test is set forth in Bankruptcy Code Section 707(b). Under it, a person may not proceed under Chapter 7 if an objective formula-based analsis of the person’s income and expenses indicates that they will be able to repay some or all of what they owe to unsecured creditors.
If you have desires to retain nonexempt assets then you have to consider Chapter 13.
Timing is frequently an important consideration with respect to the filing of a bankruptcy case. When you have made a transfer to or for the benefit of an insider, you may wish to wait until the one year preference period or the two year statute of limitation has expired.
When you owe state or federal income taxes, you may wish to wait until the three year nondischargeability period has passed.
If you are under considerable pressure from creditors, however, you may not be able to wait. Nevertheless, you should know about the following:
- An inheritance likely to be received witin the 180 day period following the filing of the petition will become property of the estate. In such circumstances, you may be able to take steps to disclaim the inheritance or suggest to the benefactor that the bequest be left to another party, such as your kids.
Once you file your application for bankruptcy, an automatic stay is place on your case. What this means is that none of your creditors are able to proceed with any collection attempts against you. This also ensures that all your creditors are place in the same equal position so that no one can do anything to the determent of the others.
If any creditors proceeds with any action despite the stay, their actions are automatically void by the law. You do not need to take any action. They can also face possible legal consequences if the creditor takes action knowing you have filed you application.
For example, say you are rental space in the local mall for your business. You file for bankruptcy and your landlord proves forward to lock you out. The landlord can be found liable for your lost of business during the period that you were locked out of your business – preventing you from operating your business.
When a chapter 7 petition is filed, the U.S. trustee (or the bankruptcy court in Alabama and North Carolina) appoints an impartial case trustee to administer the case and liquidate the debtor’s nonexempt assets. 11 U.S.C. §§ 701, 704. If all the debtor’s assets are exempt or subject to valid liens, the trustee will normally file a “no asset” report with the court, and there will be no distribution to unsecured creditors. Most chapter 7 cases involving individual debtors are no asset cases. But if the case appears to be an “asset” case at the outset, unsecured creditors (7) must file their claims with the court within 90 days after the first date set for the meeting of creditors. Fed. R. Bankr. P. 3002(c). A governmental unit, however, has 180 days from the date the case is filed to file a claim. 11 U.S.C. § 502(b)(9). In the typical no asset chapter 7 case, there is no need for creditors to file proofs of claim because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the Bankruptcy Court will provide notice to creditors and will allow additional time to file proofs of claim. Although a secured creditor does not need to file a proof of claim in a chapter 7 case to preserve its security interest or lien, there may be other reasons to file a claim. A creditor in a chapter 7 case who has a lien on the debtor’s property should consult an attorney for advice.
Commencement of a bankruptcy case creates an “estate.” The estate technically becomes the temporary legal owner of all the debtor’s property. It consists of all legal or equitable interests of the debtor in property as of the commencement of the case, including property owned or held by another person if the debtor has an interest in the property. Generally speaking, the debtor’s creditors are paid from nonexempt property of the estate.
The primary role of a chapter 7 trustee in an asset case is to liquidate the debtor’s nonexempt assets in a manner that maximizes the return to the debtor’s unsecured creditors. The trustee accomplishes this by selling the debtor’s property if it is free and clear of liens (as long as the property is not exempt) or if it is worth more than any security interest or lien attached to the property and any exemption that the debtor holds in the property. The trustee may also attempt to recover money or property under the trustee’s “avoiding powers.” The trustee’s avoiding powers include the power to: set aside preferential transfers made to creditors within 90 days before the petition; undo security interests and other prepetition transfers of property that were not properly perfected under nonbankruptcy law at the time of the petition; and pursue nonbankruptcy claims such as fraudulent conveyance and bulk transfer remedies available under state law. In addition, if the debtor is a business, the bankruptcy court may authorize the trustee to operate the business for a limited period of time, if such operation will benefit creditors and enhance the liquidation of the estate. 11 U.S.C. § 721.
Section 726 of the Bankruptcy Code governs the distribution of the property of the estate. Under § 726, there are six classes of claims; and each class must be paid in full before the next lower class is paid anything. The debtor is only paid if all other classes of claims have been paid in full. Accordingly, the debtor is not particularly interested in the trustee’s disposition of the estate assets, except with respect to the payment of those debts which for some reason are not dischargeable in the bankruptcy case. The individual debtor’s primary concerns in a chapter 7 case are to retain exempt property and to receive a discharge that covers as many debts as possible.
The IRS has filed a $79,064 federal tax lien against California governor Arnold Schwarzenegger. The lien was filed in May 11, 2009. The lien was filed in the Los Angeles County recorder’s office so it basically places a lien on all his property within the Los Angeles County, including his Brentwood home.
The lien was the byproduct of two debts owed to the IRS. $39,047.20 for 2004 and $40,016.80 from 2005. It is believe the panties are for the failure to report certain business transactions. The Governor’s spokesman said that the governor has paid his taxes in full and on time.
The lien was reported by TMZ. Hopefully in the next few days after the Thanksgiving break, we will get more information on the circumstances surround this matter.
A Judge wiped out a $525,000 mortgage that a Long Island couple owed to a California bank. The Bank had received $814.2 million in federal bailout but had a record of being coldblooded in foreclosing in people who owed it money.
The Judge called the banks actions “harsh, repugnant, shocking and repulsive. So the Judge decided to punish the bank by wiping out $291,000 in principal and $235,000 in interest and penalties.
The couple who been paying only interest on their mortgage and had no equity in their home. They had begged the bank to let them restructure their loan. The bank refused to work out a deal and eventually foreclosed on the property. After the foreclosure, the couple manage to get Court to allow a settlement conference.
The Judge canceled the debt because the bank “must be appropriately sanctioned so as to deter it from imposing further mortifying abuse against [the couple].”
The bank is involved in a similar case in California, where it’s trying to foreclose on an 89-year-old woman, despite two court orders telling it to stop. So who is this bank. Its the OneWest bank which is owned by a private equity group.
Filing for bankruptcy is a big step. One that will follow up around for seven to ten years, depending on the route that you take.
If you file for Chapter 7 , most of your unsecured debts are written off within 90 days of filing. The bankruptcy will stay on your credit report for 10 years. While debts will be forgiven, you’ll have to sell some of your property, with the proceeds distributed to your creditors. In most cases, this means you’ll lose your home (if you own it), as well as any expensive items such as art and jewelry, and pricey consumer electronics.
Chapter 13, on the other hand, is a repayment plan: You set up a three- or five-year schedule with your creditors. Chapter 13 bankruptcy remains on your credit report for seven years. With this type of bankruptcy, you get to keep all of your property, including your home.
You might be a candidate for Chapter 7 if you have no assets to lose, like a house or a car, and if after you pay for your basic monthly expenses you have no money left to pay off debts. Chapter 7 essentially wipes the slate clean, but you’d most likely lose any valuable possessions.