It seems Bankruptcy Attorney Lorene Lynn Mies has Retired Medically

The Bankruptcy Minute

A fine attorney and a nice person, Lorene Lynn Mies of the Bankruptcy Minute, has apparently medically retired.

She was one of Murrieta’s finest bankruptcy attorneys and I hope she’ll be well and back to her old self again soon.

I don’t know Lorene’s condition, but I have great respect for her as a person and attorney. I teased her once in a blog post that a minute was a short consultation and got an earful for it.  Once I got to know her I realized that she’s a good person as well as a good attorney. Keep her in your prayers.

There are a couple of things that come to mind, first, if you don’t have life insurance, you need it.  Second if  you don’t have disability and long term care insurance, you need that too.

Three quarters of us will require care before we die.  Yet, less than about 25% of us even have life insurance and fewer still have disability and long term care. Requiring such care when uninsured for it will devastate your family’s finances. Don’t let that happen to you.

Update as of 10/30/13 

I’ve heard just this morning on 10/30/2013 that the Travis Law Firm is no longer taking Lorene Mies’ clients unless those client’s cases have already been filed with the court. I also understand that Ms. Mies has in fact herself filed for bankruptcy. Her bankruptcy attorney is Carey Pickford.

Carey C Pickford 
Pickford Law Office
38975 Sky Canyon Dr Ste 112
Murrieta, CA 92563
951-677-5156

If you have already paid her a retainer but your bankruptcy case has not been filed, and therefore she owes you your money back, then I suggest you check with Attorney Pickford.

However, if you have paid for your bankruptcy to Ms. Mies and if your case has not yet been filed and you still want to file it, I recommend you telephone me directly at 951-200-3613 to file your case. While I cannot credit you any of the fees you have paid to her, my prices are competitive.

Attorney’s Fees in Chapter 7 Bankruptcy and Chapter 13 Bankruptcy

Chapter 7

Chapter 7 is a short procedure.  Also called a straight bankruptcy, it lasts about 4 months.  You pay for it in advance to your attorney via cash, check or money order.  I no longer take checks. I’ve learned something: Every time a client  makes the effort to tell me that his check is good, it isn’t.  And that’s the case so far, every single time that a client has told me that.  So most of us won’t ever take a check.

Reasonable Fees

Sometimes your bankruptcy will cost a pretty penny even with me.  Whether you file in Riverside, San Diego, Santa Ana or Los Angeles, whether you live in Murrieta, Temecula, Menifee, Wildomar, Lake Elsinore, or Canyon Lake, I’m nearby and my fees are reasonable.  I aim to keep things affordable by basing my fees on your income.  If you’re on social security disability my current fees are $800 + the Filing Fee for a chapter 7.

Higher fees are what you will usually find with the other guys.  If your attorney has a big expensive office or several names on the door, you’re going to pay more.  Sometimes that’s what you want, if you’ve committed fraud or basically if you’ve cheated a few people or banks out of money, then you may want a law firm with that kind of litigation support.  However, remember that defending against creditors that you cheated out of money is going to cost you a lot extra, so having a higher priced firm might be a bad idea. If you cannot afford to defend yourself for your misdeeds then if you get sued, you’re going to lose no matter who your attorney is, because we don’t defend those for free.

And if you’re just a regular person who got caught in bad circumstances such as a divorce, medical emergency, death in the family, your company closed etc, then a boutique firm is probably going to be a better option.  However, attorney’s fees in any bankruptcy case must be reasonable.

Within the bankruptcy petition, the fees must be disclosed on two different forms.  If the fees disclosed are not reasonable the bankruptcy trustee assigned to your case is supposed to ask your attorney about it.  Make sure as you review your petition that the fees disclosed match the fees you paid.  If they don’t, you might bring it up to your bankruptcy trustee at the hearing.  If for instance your attorney charged you $4000 for a chapter 7 bankruptcy then listed that he’s charged you only $2500, then he’s trying to hide the actual fees from the bankruptcy trustee.  If he says he’s charged you $700 when he charged you $900 it’s an insignificant typo.  Don’t sweat it.

Fees in California must be not “Unconscionable” which basically means something to the effect of does the fee charged shock the conscience of the court.  But in Bankruptcy, the fees must be reasonable even in California.  This is a safeguard for you to protect you from unscrupulous attorneys.

UNPAID Attorney’s Fees

Listen, this is my favorite issue:  If at time of filing of your Chapter 7 bankruptcy, there are any unpaid attorney‘s fees, they are added to your credit card balances and are discharged. From the moment of filing your attorney can never ask you to pay your balance of attorney’s fees ever again. Your attorney knows that of course, better than anyone, and therefore your attorney can never ask for you to ever pay your fees ever. Never, never, never.  Is that enough Nevers yet?

If he does you can most likely get the bankruptcy judge to order your attorney to pay you punitive damages.  See In Re Waldo, 417 B.R. 854 (Bankr. E.D. Tenn., 2009) and this Article. So, if an attorney suggested filing your Chapter 7 case without paying any attorney‘s fees prior to filing the case, take it.  If he then asks you to pay your attorney‘s fees after filing your case, let me know, and I’ll sue him for you, where he will lose and he will pay my attorney‘s fees to sue him and he may also be required to pay you punitive damages.  

Chapter 13

In Chapter 13 instead of a straight bankruptcy you are in a Chapter 13 reorganization plan where you pay a portion of your debts back usually over a 3 to 5 year period.  For attorney‘s fees you pay a down payment to your attorney via cash, check or money order, it could be as little as the filing fee, but could more.  I’ve seen a case where an attorney takes only $75 against the filing fee then he asks the court to allow you to pay your filing fee in installment payments.  Personally, I find that odd because if you can’t afford to pay even the filing fee how are you going to pay your chapter 13 plan payments?I usually charge as up front fees the same amount as a chapter 7 and of course you must also pay the filing fee for the chapter 13 prior to filing the case.  The balance of the $4000 in attorney‘s fees (standard for a chapter 13) are paid through the monthly payment plan.  So, if you put down $1000 plus the fling fee then the other $3000 would be divided by 60 months and added to your monthly payment.

These are Rare But I have Seen Them Happen

Often attorneys who have no morals will put you into a payment plan type bankruptcy, or chapter 13 when you cannot afford to pay your attorney‘s fees prior to filing the case.  That way they get more attorney‘s fees out of you.  It’s an Up-Sell to a chapter 13.  You cannot afford the $1000 or $1200 for a chapter 7 but your house is about to be foreclosed or your wages are about to be garnished or your bank account is about to be taken by a creditor called a bank levy.  Rather than suggesting you sell something or borrow from your mom, he just charges you the filing fee for a chapter 13, and presto your case is filed.  Your bankruptcy protection is started.

Is it just to get you to pay the $4000 in attorney‘s rather than the closer to  $1000 for a chapter 7?  Sometimes yes.  But if you easily qualify for a chapter 7 then filing a 13 is a disservice to you because you will not be able to sustain the plan payment in the long run, not even a little one, and then you’ll be wishing for a chapter 7 anyway.  Then he can charge you to convert your bankruptcy case to a chapter 7 and get coming and going.

I’ve met clients of an attorney who actually told people that their county, San Bernardino, only allowed a minimal amount of rent on the chapter 7 qualification test (means test) as an expense regardless of family size and that therefore those 4 clients could not file a chapter 7.  I went to the US Trustee’s Main Office in Riverside and told them so because this is patently false.  The housing expense in the means test increases as your family size increases in every state and county in the country.There was another attorney who told an old lady from Menifee that she could pay her attorney‘s fees after the case had been filed.  She paid her filing fee but after her case was over she could still not afford to pay.  So, that attorney’s paralegal called her and told her that her bankruptcy Trustee was going to reopen the case and start investigating assets again, however, the paralegal continued, the little old lady’s attorney could make it go away if the little old lady would just pay him $1000 in cash by the following Tuesday.So I telephoned her bankruptcy Trustee and found out that it was all a lie and that her bankruptcy trustee had not even contacted the attorney.  I suggested that the little old lady turn him in to bar, her bankruptcy Trustee, the US Trustee’s Office and to write a letter to the judge assigned to her case.  She did.

I’ve also seen attorneys who would file an emergency filing or “bare bones” case for you real cheap. When you do that you must within 14 days file the balance of the schedules and statements i.e. the pages of the petition which explain who your creditors are and what your income and expenses are and if you pass the means test or not.  So, what the attorneys did was to charge you a mere pittance to file the emergency case but an arm and a leg to file the balance of schedules.  The emergency case was $200 plus the filing fee but the balance of schedules was another $3500, and you’re over a barrel, you must file the balance or your case will be dismissed by the court.  

I recently saw a case where a client’s bankruptcy attorney was suspended by the California bar during their chapter 13 and they didn’t even get notified by their attorney.  They went to that attorney‘s former office and found out about it.  The new attorney working in the office offered to take over the case for $500 which they were supposed to pay to that attorney.  However, in a chapter 13, only the initial payment of attorney‘s fees is ever paid directly to the attorney by the client.  After that, no fees get paid without court approval.  I told them that.  They went back to that attorney in Temecula and that attorney “just stared at me blank faced”.  Once a chapter 13 plan is confirmed by a bankruptcy court judge, you can never accept any fees directly from the client without a court order.  Then the bankruptcy trustee on your chapter 13 case pays those attorney‘s fees to your attorney through the chapter 13 plan as a plan distribution.  

If you have any other concerns, questions or comments please write back back in the comments section below.

Bankruptcy and Income Taxes and Tax Liens

The California Board of Equalization and California Franchise Tax Board are a bunch of rats clamoring over a cadaver with very little meat left on it’s bones. If you ever make an offer to compromise a debt, never have the money in an account with your name on it. Your attorney’s trust account might be a good place.

DISCLAIMER: Nothing in this article OR WEBSITE may be mistaken as legal advice. Attorney David Nelson, is licensed only in California, and this article is intended only for readers in California. This article is for entertainment, educational, extra-curricular, and medical purposes only. If you decide to rely on this, heaven help you. Remember also that I’m not a tax attorney, I’m a bankruptcy attorney in Murrieta near Temecula CA.

Chapter 7

Yes, you can discharge taxes in bankruptcy. No, not all of them but some of them. I hate to mention this part, when it comes to credit cards, medical bills and collection agencies, I only want one statement so that I have the addresses, account numbers and balances. But with the IRS, Franchise Tax Board and Board of Equalization, I want you to bring every letter with you that they ever sent you. In those letters are the answers to many of the questions and rules we will go over below. California sales taxes are calculated against gross receipts and therefore discharge in bankruptcy under ALMOST the same rules. For the specifics of the noticing requirements which you must give the California Board of Equalization in an article written Mark Sharf regarding the Ilko case, Ilko v. California Board of Equalization, click HERE.

To discharge income taxes, whether Federal or State, or California Sales Taxes, many rules have to be followed. Because this article only discusses income taxes, then it is important to remember that these are taxes that are assessed against gross income or gross receipts. See 11 USC 507 a 8 and 11 USC 523 a 1

There are several rules involved. What’s worse is that the rules all involve the timing of the bankruptcy. Often you’re in my office because of a lawsuit or a wage garnishment, or your bank account has recently been levied and you want to file immediately in order to stop the bank or your employer from sending your money to the Sheriff’s Office.

Problem is this, if you owe a bunch of money to the IRS and have to wait to file your bankruptcy in order to get rid of the tax, you’re going to have to decide whether the amount of tax to be discharged is more or less important than the amount of money the Sheriff is about to take away from you. Notice that I said more important not bigger.

The Rules

  1. The tax year must be over. Kind of a “No Duh” moment.
  2. The tax return (if required) must have been filed. This is also sort of a “No Duh” moment. Prior to 2005 you used to be able to discharge the tax even you hadn’t filed your return if you chose to file a chapter 13 bankruptcy instead of a 7. Many great things about the bankruptcy code were eviscerated in 2005 when republicans and democrats who had taken hundreds of millions of dollars in lobby money over the course a decade finally gave us bankruptcy reform. Conveniently this happened right at the start of the economic downturn. Literally, the housing market went flat one month before the bankruptcy reforms went into effect. Hmm, I wonder how the banks knew it was finally time to get the bankruptcy reforms passed? Bottom line is, if you owe federal or state income taxes in California and you haven’t filed your returns, your bankruptcy is not going to help you get out of paying your taxes. So file your tax returns, make sure you get proof that they received them, and call back in two years. But what if you were audited, and at the end of the audit, you signed the audit, that is not a substitute for your filing of your return? What if you didn’t file a return and the IRS files one for you? When it comes to filing returns, YOU must be the one who files it, not the IRS, or other taxing authority. If you cannot remember if you filed the returns, contact the IRS and get an IRS Transcript for the tax year or years in question. You can download the Transcript request from the IRS website.
  3. If it turns out that you didn’t file your return, then you will have to decide if you want to file your tax return now and then wait for just over two years to file your case, can you handle the other wage garnishments, bank account levies and lawsuits that will take place during that time. You will have to weigh the amount of tax you can get rid of compared to the amount of wages that will be garnished and what will happen to your bank accounts and having to go to court for judgment debtor exams, and if you don’t go to the judgment debtor exam, the court will issue a bench warrant for your arrest and on and on.
  4. DISCLAIMER: Make sure that you speak with an attorney now and get this advice from an attorney as bona fide legal advice before you make your decision. This article is not your legal advice.
  5. The tax return’s due date must have been more than 3 years prior to the filing date of your bankruptcy petition. Notice it says “Return’s Due Date”. Commonly called the 3 year rule, this is where most people stumble and file their bankruptcy petition too early. Tax Returns are due in April! On top of that, if you got an extension to August, then they were due to be filed in August. What if you extended to October? If you cannot remember if you extended, contact the IRS and get an IRS Transcript for the tax year or years in question. You can download the Transcript request from the IRS website. Alternatively if there is nothing else pressuring you to file you could just wait until October 20th to file. I assume you can get a tax transcript from the Franchise Tax Board or Board of Equalization if you need one. A little while ago, the IRS decided that all extensions were automatically extended to October 15th, I don’t remember which year that started, but from now on, if you think you filed your extension to August, then you must file your bankruptcy in November 3 years later.
  6. If you filed your tax returns late, your returns had to have been filed with the IRS or other taxing agency at least 2 years prior to filing your case. This is true whether you owe income taxes to the IRS or the State of California or whatever state you owe taxes too.
  7. Assuming you have beaten the 3 year rule, and the late filing rule, you still have to have beat this one. The tax must be assessed at least 240 days prior to filing your bankruptcy petition. That’s about 9 months. Assessed means that they have decided you owe, how much and told you so. In California, you get a letter that says: Notice of tax due. It won’t say “assessment” and probably won’t say “assessed” either. California’s notice of tax due is a weird animal, it does not become effective until 60 days after they send it. So, in California, it’s a 300 day rule from the first letter. Our Franchise Tax Board will send a 2nd letter stating that the notice is “final” and from there your 240 days starts. At this point people often ask the IRS, Franchise Tax Board or Board of Equalization if they will take less, give them a break. Called an offer to compromise, if you’re going to file a bankruptcy, DON’T DO IT. An offer to compromise delays the 240 day rule. Sort of like the extensions on filing your tax returns under the 3 year rule. You have to add 60 days to the time that your offer is pending plus the time that your offer is pending to the 240 days. That can extend your 240 days automatically by 60 days even if you withdraw the offer to compromise the tax debt on the same day as you make the offer. If you filed a bankruptcy previously during the 240 day period and it was dismissed and now you have to refile, you must add the amount of time your bankruptcy was pending to the 240 days plus another 90 days. So, even if your previous bankruptcy was dismissed after a month you must add 4 months to the 9 months. That’s an overdue baby.

A client, and no kidding his real name was Groucho Marx, (the names were changed to protect the innocent) owed $50,000 to the Board of Equalization, and $250,000 to the IRS. And no kidding, his rich uncle, (it wasn’t his uncle) died and left him some money, 15% of the total taxes owing. After calling the IRS and talking them into taking a 15% pay off, the IRS put a condition on the deal, he had to get the State of California’s Board of Equalization to take the same deal. Stupid condition but that’s what they told him. So, he calls the BOE and says hey they’ll take 15% if you do, what do you say? Unfortunately, they said, “we’ll get back to you.” A week later they answered by taking all of his money out of his bank account.

Even if since Bush the IRS is kinder and gentler, the Board of Equalization and Franchise Tax Board in California are a bunch of rats clamoring over a cadaver with very little meat left on it’s bones.

“Maybe you can’t squeeze blood from a turnip, but you can eat the turnip.”
~David L. Nelson and yes, I just quoted myself.
 

If you ever make an offer to compromise a debt, never have the money in an account with your name on it. Never have it in your wife’s account. Never have it in your S Corp’s or your LLC’s name. In fact, you might want to have it in a hole in your back yard before you make the call.

I had another client who back in 2006 owed every year from 1995 to 2000. Turned out he had filed every year except 1996 which the IRS had filed for him. He was dead certain that he had filed it and was totally surprised when it wasn’t he that had done the filing. Fortunately for him there is a 10 year statute of limitations on the collection of federal income taxes. In his case, because he had been sued, the creditor had a big judgment against him and his wife and was about to garnish both their wages he could not file his return himself and wait out that two years. The amount that would have been garnished would have been greater than the amount of tax he would have discharged by waiting. If you cannot remember if you filed or extended, contact the IRS and get an IRS Transcript for the tax year or years in question. You can download the Transcript request from the IRS website.

Chapter 13

The rules are nearly the same but you get to put the taxes you owe into a payment plan. Plan details can be tricky but you no longer get the good benefits such as discharging taxes without filing the returns and so on like you did before the law change.

Tax Liens and Statute of Limitations

Many of you have asked about Tax Liens. Yes, there is a 10 year statute of limitations on the collection of the tax. Tax Liens are only one method of collection. The question of how long is the tax lien enforceable once recorded is a different question which we will get to in a moment. Have a look at Internal Revenue Code IRC 26 USC 2605.

26 USC 2605(a) Length of period

Where the assessment of any tax imposed by this title has been made within the period of limitation properly applicable thereto, such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun—
(1) within 10 years after the assessment of the tax, or
(2) if—
(A) there is an installment agreement between the taxpayer and the Secretary, prior to the date which is 90 days after the expiration of any period for collection agreed upon in writing by the Secretary and the taxpayer at the time the installment agreement was entered into; or
(B) there is a release of levy under section 6343 after such 10-year period, prior to the expiration of any period for collection agreed upon in writing by the Secretary and the taxpayer before such release.
If a timely proceeding in court for the collection of a tax is commenced, the period during which such tax may be collected by levy shall be extended and shall not expire until the liability for the tax (or a judgment against the taxpayer arising from such liability) is satisfied or becomes unenforceable.

So, the date the statute of limitation starts the assessment date and it runs for 10 years from the assessment. Is that true in every case? Of course not. There a few notable exceptions, all of which only add to the 10 years, none of them subtract from it.

The one that matters the most on my page is the bankruptcy extension of the 10 year period. Extensions of statutes of limitations are calling “tolling” of the statute of limitations. It just means that you did something that made it impossible for the IRS to collect for a certain amount of time therefore you have that amount of time added to the total amount of time that they get to collect. The Statute of limitations is extended.

Filing bankruptcy extends that statute of limitations for the amount of time you are in bankruptcy plus six (6) months. If your chapter 7 bankruptcy lasts 4 months and plus 6 more then they get to collect against you for 11 years for any pre-bankruptcy non-discharged taxes.

In the Severo case, Severo v. IRS (9th Cir. 2009) the Severos owed money for 1990 income taxes. They filed an extension on the filing of the tax returns to October 15th 1991. However, they filed their bankruptcy in Sept of 1994. You can see by reading above that they filed about a month too early to discharge the tax. Oops. They also filed a chapter 11, then about a year later converted it to a chapter 7. Just as an aside, the chapter 11 bankruptcy not only extended the 10 years statute of limitations on the collection of the tax, it also extended the “three year rule” listed above. So, if they wanted to discharge the tax in the chapter 7 they would have had to dismiss the chapter 11 and wait a little while then refile as a 7. Sadly they didn’t do that

Also their chapter 7 case lasted until early 1998 when they got the chapter 7 discharge. So, from Sept of 94 to March 1998 they were in a bankruptcy. That gave the IRS an additional 3 1/2 years to collect. In other words the 10 year statute of limitations grew or expanded to a 13 1/2 year statute of limitations. That’s what tolling does.

Notice that during that 10 years, if the IRS sues you and obtains a judgment then they can enforce the judgment for the amount of time that your state allows them to. In California judgments are good for 10 years and may be renewed for an additional 10 years. So, they could conceivably follow after you for 30 years

Length of Time of the Lien

Internal Revenue Code Section 6321 states that the lien is created when the tax is assessed, the IRS has sent you a notice and you don’t pay it. If the lien is created when you don’t pay or it’s inception is at assessment is at present an unresolved issue. In most cases, it’s probably a non-issue because they’re coming to get you either way. Circle the Wagons!

How long does the lien last? Internal Revenue Code Section 6322 states that the lien will continue until the assessed tax is satisfied or becomes unenforceable by reason of lapse of time. So now you can see why I spent so much time on the Statute of Limitations. When the statute runs, the lien expires.

Here’s an excellent discussion of Tax Liens by Attorney Tony Mankus.

Disclaimer: Nothing in this article may be mistaken as legal advice. Attorney David Nelson, is licensed only in California, and this article is intended only for readers in California. This article is for entertainment, educational, extra-curricular, and medical purposes only. If you decide to rely on this, heaven help you.

The Bankruptcy Minute

TheBankruptcyMinute.com

I met a new client today for the first time who was single and made nearly $12,000 over the median income. After putting in all of the client’s weekly pay checks into the computer and doing the 8 page analysis, I was able to determine that this client did indeed pass the means test.

By the time I was done with all the data entry and analysis of the various means test rules, the free consultation turned out to be a bit 2 hours long. Thankfully most don’t take as long to complete and come to a conclusion one way or the other. That was a bankruptcy-120-minutes plus.

Murrieta Bankruptcy Attorney

I don’t know if The Bankruptcy Minute might give a free consultation that long, or spend that much time for free on the means test for you. Call her and ask. MurrietaBankruptcy.com She’s another bankruptcy attorney in Murrieta, CA who has a great radio ad running.

It’s just that minute thing that got me to thinking. I don’t know about Attorney Mies, but so many bankruptcy attorneys will bring you in for a free consultation for a half hour. If your income is above the median income then that means test takes a long time to complete and it suddenly isn’t such a free consultation anymore. Again, I don’t know if Ms. Mies does that or not, I’ve never heard that she does. Call her and ask how long her consultations are.

I heard from Attorney Lorene Mies who runs the Bankruptcy Minute ads.  She was unequivocal that she spends as much time as she needs to with you in your consultations.  I want to add that here.  A little while ago, an attorney who knows her well, Bankruptcy Attorney Michael Gouveia, just out of the blue expressed to me that he has great respect for her and her professionalism and her practice.  Rather than change this post, I’ve decided to add these two paragraphs. 

I believe that if you are considering Ms Mies as your attorney, then you should go for it.  I am adding my recommendation to that of Bankruptcy Attorney Mike Gouveia who stated that she’s professional and very good at what she does.  What I noticed recently about her is that she shows up to her own hearings.  A great many attorneys will never go the hearing with you and will hire another attorney to go to your hearing for you.  Sometimes we have to, but there are some attorneys who do it for every hearing just as a matter of routine.  I don’t think that’s fair to the client and clearly she doesn’t think so either.  Not only that, she was way early.  That day she didn’t beat me to the court house but she was dressed better.  To sum up, I apologize to Ms. Mies who didn’t like the way this post sounded without these two paragraphs. If you’ve already decided to use Ms. Mies, then be assured, you’ll be well taken care of.

Because I like her radio commercials, and the sound of her voice, I have put her here so you can ask her yourself.

If my client had been required as many firms do, to pay for the 2nd hour of his consultation, then that client would not have been able to afford to find out what protections are available. What if the client were you and you decided you didn’t like the attorney or the attorney’s price. There goes a couple hundred dollars and you can bet almost all of the other bankruptcy attorneys out there are going to charge for that 2nd hour of consultation or even subsequent half hours.

Many bankruptcy attorneys charge you a bunch just to do the means test for you at all.

Now, starting from 2 hours, I’m going to charge you, but if you have a means test issue and if I can get it figured out in 2 hours, which most of the time is the case, then you’re not penalized just because you’ve worked harder and smarter than the average bear. I know that most of the time you have nothing left at the end of the month.

I’m here to help.

Bankruptcy Means Test Basics

Bankruptcy Means Test Basics

_____________

Bankruptcy Means Test is the Chapter 7 Qualification Test. However, if you do not qualify for a 7, it is also used to determine the amount of your chapter 13 plan payment. Additionally, it determines the duration of you chapter 13 plan.

If your income is above the median income your chapter 13 payment plan must last for 5 years.  If below then only 3 years.

You can always file a chapter 13 which is often a much better idea than a debt consolidation. A chapter 13 is a type of debt consolidation however, you as the consumer have the upper hand.  You have the power.

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Reaffirmation Agreements

REAFFIRMATION AGREEMENTS

A Reaffirmation Agreement is a new promissory note to keep paying on an old contract for the purchase of goods where the lender can repossess or foreclose the goods.  Because you have signed a security agreement the lender has the right to repossess or foreclose if you do not pay for it.

Chapter 7 bankruptcy discharges your personal obligation to pay the loan, or in other words, you no longer have to legally pay on the note.  However, the lender still has a lien on the object(s) in question. Jewelry, refrigerators or large appliances, and most notably cars can be repossessed in this way.

What a reaffirmation agreement does: It allows you and the lender to agree that you may keep the goods so long as you continue to pay for them.  When executing a reaffirmation agreement with the lender sometimes the lender will reduce the balance owing, the interest rate or both.  As a result the payment and term can be reduced.

Nowadays most lenders will not reduce the interest rates and balances on cars.  Home mortgages never do.  You can often reduce the balance and interest rates on appliances, jewelry, computers and motorcycles.

If you do sign a reaffirmation agreement, you will have 60 days to change your mind and rescind it.  Rescissions must be in writing, served on the creditor and preferably filed with the court.

MORTGAGES

You would never reaffirm a mortgage.  Never.  Seldom but sometimes a mortgage lender will tell a client that the client’s post bankruptcy mortgage account would show up as good credit on their credit report if the client had just done a reaffirmation agreement.  It’s all the bankruptcy attorney’s fault that the client’s credit is not better than it is right now because he didn’t tell the poor client to reaffirm the mortgage.

Most mortgage companies will not do this to you, just a few.  Ones that do are unscrupulous and are aiming to get you to sign your life away.  They want you tied to that mortgage through the reaffirmation agreement come hell or high water.  If they can just do that, then if you foreclose, maybe they can sue you.  If you are in a worse position later, maybe you have to short sell, and when you do, they will ask you to pay them back sometimes, $10,000 to $50,000 in order for them to approve the short sale.

No, we don’t know what will happen, but I have a client right now who is being sued by a lender, his former first mortgage, who asked him to sign just such a promissory note in order to approve his short sale.  Fortunately for him, he did not do a reaffirmation on his mortgage during his bankruptcy.  Therefore, his mortgage company cannot in fact stick him with the debt, but for some reason they think that they can.  Wrong, they cannot.  We will be suing them soon for violating the Bankruptcy Discharge Order.

Because we do not have a crystal ball, and because the length of the term of a mortgage is so long, we NEVER sign a reaffirmation agreement on a mortgage.  This is the industry standard.

CARS AND VEHICLES

Legally, WITHOUT a reaffirmation agreement the lender can repossess your car, even if the car payments are current.  However, at this writing, the only companies who do are Ford Motor Credit & Jaguar Credit & California Coast Credit Union.   I cannot promise that other companies will not change their policies and begin behaving like Ford.

WITH a reaffirmation agreement, as long as the payments are current, then they cannot take the car just as before the bankruptcy.  However, just as before the bankruptcy, if you get behind in payments they will take the car AND sue you for a deficiency balance.

If you get behind, WITH or WITHOUT a reaffirmation agreement, they will definitely repossess the car.  So, the thing to do is to ask yourself, is the economy getting better or worse?  Answer:  Worse, my business is constantly picking up.  Everyone who comes in tells me that the business they work for is dropping off.  Fewer orders, fewer sales, employees are being let go.

So, if you just keep making the payments and don’t worry about it, you have a great probability of nothing changing, and eventually once the vehicle is paid off, they will still have to give you the pink slip.

If you sign and file a reaffirmation agreement, and then change your mind, you have 60 days to do so in writing and it must be in writing, signed and filed with the court.

Temecula bankruptcy attorney, Murrieta bankruptcy attorney, Lake Elsinore bankruptcy attorney, Canyon Lake bankruptcy attorney, Menifee bankruptcy attorney, Perris bankruptcy attorney, Riverside bankruptcy attorney, Corona bankruptcy attorney, San Diego bankruptcy attorney, Los Angeles bankruptcy attorney, LA, and Orange County bankruptcy attorney

Bankruptcy Attorney David Nelson

Temecula Bankruptcy Attorney David NelsonTEMECULA BANKRUPTCY ATTORNEY DAVID NELSON

I have been a Bankruptcy Attorney since the very beginning. Having graduated in the top 15% of my class I passed bar the first time and in June of 1994 I opened my law office.  Back then there was a recession and it was just natural to open a bankruptcy practice.  I saw a need and was able to fill it.

I’m an expert in the field of bankruptcy.  Since 1994, I have been passionate about getting my clients out of the troubles they find themselves in.  Certainly many of us might think that if we’d just planned better, we would have been able to avoid the challenges facing the country right now.  While it might be true, it’s probably more accurate to say that there was no way to plan our way out of the whole economy crashing down on us.

I’ve seen first hand the blessing that Bankruptcy can bring to individuals and families.  Think about this for a moment:  What is it that you fight about the most?  Is it too much money, “Dang what are we going to do with all these 20s honey?”  No, it’s the lack of money.

But what if we could cut the arguments in half?  What if we could at least take the arguments from: which debts do we pay this month with the little bit of money we have? and transform those to: how do we set up a savings for the little that we have?  That’s what Bankruptcy can do for you.

If you could start the day knowing that your credit cards, medical bills, repossessed cars, 2nd mortgages, and so on were all going to just disappear, how would you feel the rest of the day?

Wouldn’t you treat your spouse better?  Wouldn’t you be kinder to your children and co-workers?  Wouldn’t you have a better marriage, family, career?

I’ve probably saved more marriages than most marriage counselors over the same time period. You don’t need to know how to talk to each other about money, you must do something about it.

What if you could go back to paying your tithing or your favorite charity again?

Do something about it.  Make the Call Right now to set the Appointment that will change your lives.  Call 800 FILE AWAY or 800 345 3292, call right now.

Temecula bankruptcy attorney, Murrieta bankruptcy attorney, Lake Elsinore bankruptcy attorney, Canyon Lake bankruptcy attorney, Menifee bankruptcy attorney, Perris bankruptcy attorney, Riverside bankruptcy attorney, Corona bankruptcy attorney, San Diego bankruptcy attorney, Los Angeles bankruptcy attorney, LA, and Orange County bankruptcy attorney

Chapter 13 2nd Mortgage Lien Stripping

Chapter 13 2nd Mortgage Lien Stripping

You may be able to strip your 2nd mortgage or home equity line of credit, Heloc, off of your home in a Chapter 13.  Not only can you discharge the loan, or promissory note that you signed when you executed the loan docs, but you may also be able to remove the lien from your home as well.  If the Bankruptcy Judge assigned to your case agrees, then once your chapter 13 case is over, the creditor must release the lien.

You may also be able to remove the 2nd mortgage from a rental property and in addition, you may also be able to reduce the 1st mortgage as well.  Rental property properties have different rules than residences do.  An important distinction, you must remember that if you live in the house, you have fewer options than if you have moved out and rented the place.

IT WORKS PRETTY MUCH LIKE THIS:

A 2nd mortgage, or home equity line of credit, has two things over you:

*****
a) the have the note that you signed promising to pay
b) they have a deed of trust or trust deed on the house which is a lien on the house
*****

Chapter 7 Bankruptcy discharges the Note or the Loan, but you still have the Lien or Trust Deed on your house.  Even after your bankruptcy, your 2nd mortgage lender can foreclose the lien, but in order to do so, it must first pay off the 1st mortgage and any unpaid property taxes.

This is a big difference between the two chapters of  Consumer Bankruptcy.  After a chapter 7 is over and completed, the 2nd mortgage could still foreclose on the house later.  Over time, the value of the property will go up. The house will appreciate.  After it’s value increases to a point where the value of the house is greater than the balance on the first mortgage, the 2nd mortgage would be in a position to foreclose the property.

So, what you do is:

1.  Get an appraisal.  We must be able to credibly state that the value of the home is significantly lower than the balance on the 1st mortgage.   If your value is lower but close, you run the risk of expensive litigation in order to strip your 2nd mortgage or home equity line of credit.  Of course, if the balance on the 2nd is large compared to the cost of the litigation, then it’s worth the effort.  As long as you know that the attorney’s fees could be significant as you’re going into the deal, then it’s fine if you want to spend the money.  Nevertheless, those attorney’s fees would be on a three to five year payment plan so it should be manageable.

2.  If the value of the home is lower than the balance on the first and it is significantly lower, then the mortgage lender on the 2nd mortgage or Heloc, Home Equity Line of Credit, won’t fight it, and you’ll win by default.

3.  If the value of the home is greater than the balance on the first, even just a little bit, then you lose and you’re stuck with the whole 2nd mortgage.   Remember however, there is a difference between your primary residence and your rental properties.  Respecting your primary residence, you can only remove your 2nd mortgage, or not.  Rental properties however, can have 2nd mortgages removed, 1st mortgages reduced, or if the value of the home is above the balance on the 1st mortgage, the 2nd mortgage (or heloc) could be reduced so that the total balances on all mortgages are equal to the value of the property.

Caution

Chapter 7s are risky. We don’t know how long it will take the values of our real estate to increase.  If you do a chapter 7, you will discharge the loan, or promissory note.  Nevertheless, you will still have the deed of trust still attached to the house.  So at some point you must settle that 2nd mortgage with that bank.

Chapter 13s are risky too.  They can allow you to strip the 2nd mortgage off the house completely.  Risky because chapter 13 (on your primary residence) requires that you immediately go back to paying your regularly scheduled monthly mortgage payments on your 1st.  If the 1st mortgage has not yet been modified on the date of filing the bankruptcy, then you’d be stuck with the unmodified mortgage payments.

All chapter 13s must be approved by the judge assigned to your case.  Called a confirmation order, many cases end up falling short because people who want to remove the 2nd mortgage often propose payment plans that are unrealistic.  In other words the budgets they propose for themselves are just too tight.  Your attorney will refer to such a budget as unfeasible.  Feasibility just means that you really can afford to make the monthly payment to the bankruptcy trustee on your case.  To be confirmed, a case must be feasible, and you must convince your judge and your bankruptcy trustee that you can afford to to make the chapter 13 plan payments.

Additionally, most chapter 13s never get completed once they are confirmed.  More than 70% don’t get a chapter 13 discharge because something happens that derails the payment plan such as a work stoppage or an illness, or even just a busted transmission.  Either your earning capacity has been reduced or your ability to pay has been eclipsed by a more pressing expense.

Stripping the 2nd mortgage off in a chapter 13 requires that you complete the payment plan.  If your hypothetical plan payment is $350/mo and you pay it for 2 1/2 years that’s a total of $350 x 30 months = $10,500.  What if you cannot pay it anymore because of a work stoppage, you get fired or laid off, you break your leg, your transmission goes bad? You’re not going to complete your chapter 13 payment plan.  Guess what, you just tossed $10,500 out the window.

So, to strip a 2nd mortgage off of your primary residence,

  1. the value of the property must be lower than the balance on your first mortgage
  2. you must be able to pay the 1st mortgage payment,
  3. you must get the judge to agree that you are able to afford the plan payment,
  4. and you must complete the plan which will be 3 to 5 years long.

How Much Will My Chapter 13 Plan Payment Be?

Plan payments depend on a couple things

  1. how much excess income you have at the end of the month
  2. how much the means test says you must pay
  3. how much you owe on unpaid mortgage payments from previously unpaid months called arrears
  4. back taxes and child support
  5. the balance owing on your car
  6. how much of your attorney’s fees were paid in advance
  7. how much you usually get as tax refunds
  8. and several other possible issues

You will have to call for a consultation on the issue in order to get an estimate.

Call 800 FILE AWAY or 800 345 3292, call right now for a consultation.

David L Nelson
Temecula Bankruptcy Attorney
Temecula bankruptcy attorney, Murrieta bankruptcy attorney, Lake Elsinore bankruptcy attorney, Canyon Lake bankruptcy attorney, Menifee bankruptcy attorney, Perris bankruptcy attorney, Riverside bankruptcy attorney, Corona bankruptcy attorney, San Diego bankruptcy attorney, Los Angeles bankruptcy attorney, LA, and Orange County bankruptcy attorney

Debt Freedom and Retirement

Debt Freedom is Required for Retirement

If you’re like most of us, you’re planning to retire on your 401k or other similar Retirement plan. And you’re wondering if Walmart and McDonalds will have too many “senior” team members when you get there.  Because you’re going end up with a lower income than the one that you presently cannot live on, you wonder what will you do then?  Do you really think social security will be available?  Even if it is, how much buying power will it have?  My mom used to get the equivalent of groceries and utilities, and that was it.

I will teach you how a 2nd Mortgage can be treated as though Stripped Off your home even in a Chapter 7, and how you can in fact strip a 2nd Mortgage off your home with a Chapter 13.

Because your retirement income will most likely be lower, than your current income: If you’re still in debt at retirement time, you’re going to file Bankruptcy.  Why not file right now?  Put those credit card payments into your retirement accounts instead.  I realize that for most of you, if you didn’t have to pay consumer debts, you would not likely be able to just switch portions of your budget over to retirement planning.  You’re eating white bread from Albertsons with non-fat milk and telling yourself that it’s because the non-fat is healthier.  Just to pay the gas expense, you’re wearing sweaters at night and walking to the not as good park because you can’t afford to drive to the nice one with the lake.  Telling yourself and your kids that walking is good for you even though the slides are broken isn’t making you feel any better. I get it.  However, what if you could have a more normal budget and maybe put at least some into savings?

RETIREMENT AND KEEPING YOUR HOME:

YOU MUST GET OUT OF DEBT. When it comes to Retirement, or Wealth Building, getting out of debt is not the FINAL step but the FIRST. Mortgages must be part of the formula. How can you Retire when you’re in debt?

Here’s what I see everyday: Your Mortgage payment is $1500/mo and your 2nd is $500/mo.  In Credit Cards you have $25,000 with payments of another $500/mo.  Both Mortgages have 30 year terms.  At year 10 you start up a 401k plan and a personal IRA.  But how much can you put into either?  You’ve got $1000 in debt service going out of your budget every month.  Each month before you eat, you have to pay $1000 to cyberspace or “The Man”.

Assuming you have an income of $6500/mo and take home $5300 after taxes and insurances, and that you’re married and you have 2 children living at home.  First, I’d recommend, one of you must get a better job or another job as soon as possible.

$5300 Net Pay Less
$2000 Mortgages
$500 Debts and Credit Cards
$2,800 Left after that. (the rest of the budget must be calculated.)
$700 Two Car Payments
$500 Gas and Travel for the two cars
$100 Car Insurance
$40 Medical Expenses out of pocket
$800 Groceries (and everything that comes from the store) and Fast Food on the way to and from work, school and at work and school.
$400 Day Care
$400 All Utilities including Internet $30, Cell Phones $150, Home Heating & Cooking $100,  TV $50, Water $70
___________________________________

You can see that this family’s budget is already negative.  Add clothing & shoes $150 (for four), life insurance $80, hair cuts & beauty shop $40, tithing/charitable giving $40, laundry/dry cleaning $35 and home maintenance $20 and you’re toast.

____________________________

Bankrupt already, and you just didn’t know it.

Filing bankruptcy for this family would be a fantastic idea.  Just think about it.  Even if they were stuck with the 2nd mortgage when it was over, how much better off would they be if they could just get out of under the credit cards payments.

In a Chapter 7 Bankruptcy they must Qualify.  Called the Means Test, the qualification test starts with your gross income and asks first are you above it or below it?  If above, then there is an 8 page questionnaire that you must go through to see if you qualify or not, and in my experience, 97% of my clients have qualified by the time we are done with the 8 page questionnaire.  In our current test case, the family makes $6,500/mo which is $78,000/yr.  The Median Income for a family of 4 this year is $78,869.00 and they get to skip the 8 page test.  Part three of the Qualification Test, we go their budget to see if they have any money left over when it is all said and done.  Even adding that $500 from the credit cards back in leaves them negative $5.00/mo so they have qualified for a Chapter 7 Bankruptcy.

In Chapter 13 you must also Qualify, but the test is basically this, can you afford to make a payment?  Why would you want to do a Chapter 13?  If the value of the home is lower than the balance on the 1st mortgage, then this family could do a chapter 13 bankruptcy and strip that 2nd mortgage off of the house.  In this case, they would divert the $500/mo that they are paying to their 2nd mortgage, or perhaps even a bit less depending on circumstances, and at the end of three short years, (in this hypothetical case) the 2nd mortgage is gone, the lien is released, and that $500/mo payment is gone forever starting 17 years earlier than planned.

I cannot stress this enough, what happens in month 37?

Okay, probably after a short vacation so probably in Month 40 or 45, they can now put that $500/mo that had been going into the 2nd mortgage into their retirement planning.  If it goes into an IRA, Life Insurance, 401k, or whatever, at least it is now going into their future rather than huge bonuses to Citibank and Chase Mastercard’s CEOs.

I would pay the 1st Mortgage off at this point. 17 years x 12 months is 204 months x $500/mo is $102,000.  Any mortgage with a $1500 payment could probably be paid off before the 17 years is over when you combine the 2nd mortgage payment with the first and pay down the first with $2000/mo instead of only $1500.

If you put the $102,000 into an IRA or a 401k how much would you have at the end of 17 more years, it’s hard to say, it could easily be only the $102,000 or it could be $250,000.  What will the monthly payments be from a pot of $250,000 when you retire?  I’m not a retirement planner but I’m sure it would be less than $1500/mo.

So with a chapter 7 our hypothetical family might have some breathing room.

With a chapter 13 they might be able to pay off their 1st mortgage and save for retirement. HERE’S A CREDIBLE PLAN TO RETIRE EARLY THAT CAN ACTUALLY WORK WITHOUT SELLING STUFF TO YOUR FAMILY AND FRIENDS.  (Not that there’s anything wrong with that.)

It depends on the value of the house.

DO NOT WAIT, FILE NOW.  YOUR HOME’S VALUE WILL START HEADING BACK UP SOON IF IT HAS NOT ALREADY.  YOU MUST FILE NOW TO TAKE ADVANTAGE OF THIS.

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Chapter 7 and Your 2nd Mortgage

Updated on June 13th, 2018.

Refinancing Your Second Mortgage

Yes, it may be an actual option. And as unlikely as it may seem or feel, if you have home equity now (at this writing in 2018) then a refinance may work but only if you have good enough credit. But how do you manage that after having filed a Chapter 7 Bankruptcy? Believe it or not, credit repair services use the same techniques outlined in the following Guide. The Attorney’s Guide to Credit Repair. It’s Fast, Easy and Guaranteed.

In fact many use the very same Guide. Follow this guide to repair your credit fast, including how to write letters to settle debts such as your 2nd Mortgage. Download it Now and Get Started Right Away with The Attorney’s Guide to Credit Repair. It’s Fast, Easy and Guaranteed.

Your 2nd Mortgage or Home Equity Line of Credit – Heloc

While it is true that you may be able to strip these off of your home in a Chapter 13, in a Chapter 7 you can’t, but, you may still be able to effectively ignore it (for a while) and keep your home.  However, the 2nd Mortgage or Heloc would still have a lien on the property.  You would then have to settle the lien or deal with it in some manner later on. Your 2nd or Heloc has two things over you

a) they have the promissory note that you signed promising to pay

b) they have a deed of trust or trust deed on the house which is a lien on the house also called a mortgage. 

If you have filed a Chapter 7 Bankruptcy, then the Chapter 7 discharges the Loan or Promissory Note, which means that the mortgage company or lending bank cannot collect money from you directly. They cannot sue you, garnish your wages, levy your bank account, or even ask you for money or anything like that.

If you still own the home, then you still have that 2nd Mortgage Lien called a Trust Deed or Mortgage on your property. Chapter 7 Bankruptcy does not remove that kind of lien from your house, not in the 9th Circuit Appeals Court’s jurisdiction. Therefore, if the value of the house is high enough, then your 2nd mortgage lender can foreclose that lien, but in order to do so, it must pay off the 1st mortgage and any unpaid property taxes first.

Some Things You Can Try Include, But Are Not Limited To: 

1.  Refinance Your Second Mortgage: Yes, it may be an actual option. But if you have bad credit, you will have to repair it first.

2.  If the Value of the house is higher than the balance on your 1st mortgage then you must deal with your 2nd mortgage now.  If it is lower than the balance on your first, then you don’t have to deal with them immediately, but you must deal with them eventually, because, remember, they have a lien on the house.

3.  If the value is relatively close to the balance on 1st mortgage then you will have to deal with the 2nd mortgage sooner rather than later because in not too much time, the value of the house will go up high enough for the 2nd mortgage company to be able to foreclose. If you cannot afford to settle it, you should consider trying a loan modification. 

4.  What most clients will do is make an offer to settle the 2nd mortgage lien in one payment, one time with no balance owing afterwards, and you must get that in writing from the bank before you mail your cashier’s check. You might have to take a massive 401k loan in order to be able to make such an offer, but if they take it, it would be worth it. 

5.  If you have previously filed a bankruptcy and then the 2nd mortgage lender cancels the debt and sends a 1099 for the “forgiven” balance next year, then you are able to deduct the amount because it was already previously “forgiven” or when you filed your chapter 7 bankruptcy and received your chapter 7 bankruptcy discharged. 

6.  Most clients will save as much as possible and then when they get a tax refund next year, they add that with the savings, and if possible, sell a car or some jewelry and then use that to make an offer to settle the lien. (Dear Reader, when I originally wrote this several years ago, most homes had much lower values and so it was so much easier to offer to settle such a second mortgage. However because home values have gone up considerably, it’s nearly impossible to do now.) 

7.  In any case, your Discharge Order from your Chapter 7 Bankruptcy prohibits  all kinds of collections.  Therefore, they cannot hound you, dunn you, or bother you, whether by phone, email or letters demanding payment of the loan or promissory note.  They have only one legal option, they can foreclose. It doesn’t mean that they won’t but knowing your rights, that they cannot, at least you can protect yourself.  REMEMBER however, that the 2nd Mortgage must pay off the 1st Mortgage in order to foreclose.

8.  If your home has significant value which it probably does, the loan modifications are an option to protect your home, and if necessary, selling your home as a method of preserving the home equity is also a great option. Not that those are the best options, but they are options. Additionally, Chapter 13 Bankruptcy may be a viable option as well.

THEREFORE, the probability of them foreclosing is lower and lower when the value of the house is lower than the balance on the 1st mortgage.  It’s simple math, they won’t pay off a $200K loan to get a $150K asset that they can then resell and only recoup $150K and they’d have to pay closing costs to sell it so they’d only net $120K. That would be a loss of $80K plus they would also lose all of the 2nd mortgage too which is probably another $50K or more on top of the $80K.

HOWEVER, when the 1st and 2nd are held by the same company and particularly if that company is a credit union, it may be possible that they’d foreclose anyway but if the payment on the 1st is getting paid, then it’s still not very likely.

Overall, when dealing with a 2nd mortgage, it’s risky, no matter what happens. A chapter 13 which would allow stripping off the 2nd mortgage, is risky too.  Even more so because your Chapter 13 Bankruptcy requires that you immediately go back to paying your regularly scheduled monthly mortgage payments on your 1st mortgage, and if the 1st was not yet modified on the date of filing the bankruptcy, then you’d be stuck with the unmodified mortgage payments. Also, most Chapter 13 Bankruptcies never get completed.  More than 70% don’t get a chapter 13 discharge because something happens that derails the payment plan such as a work stoppage or an illness, or even something unexpected such as a busted transmission. Stripping the 2nd mortgage off in a chapter 13 requires that you complete the three to five year payment plan, so it’s majorly risky because if you have a hypothetical plan payment of $350/mo and you pay it for 2 1/2 years and then if you cannot pay anymore and you don’t get your plan completed, guess what, you just tossed $350 x 30 months out the window.  That’s $10,500 that you’ll never get back, and that’s only if you get a payment that low to begin with.  Most are higher.

In Summary:

Offer to Settle Your 2nd Mortgage

So, in summary, making an offer to settle the balance on the 2nd after a Chapter 7 Bankruptcy, should aim to pay (I originally wrote 10% of the balance or less, but nowadays the percentage at this writing in 2018, must be much higher). However if the house is seriously upside down on the 1st mortgage already, you may be able to offer lower. But it does have to be paid in one payment once they accept and you must get them to accept it in advance in writing. You must not pay them unless you have it from them in writing that they will accept your settlement offer and that they will RELEASE the lien once they get the payment.

I’ll say it again just in case you didn’t hear me, they must agree to RELEASE the lien in writing once they get your payment. If they don’t agree to release the lien, don’t send the check.

Refinancing Your Second Mortgage

1.  Refinance Your Second Mortgage: Yes, it may be an actual option. And as unlikely as it may seem or feel, if you have home equity now (at this writing in 2018) then a refinance may work but only if you have good enough credit. But how do you manage that after having filed a Chapter 7 Bankruptcy? Believe it or not, credit repair services use the same techniques outlined in the following Guide. The Attorney’s Guide to Credit Repair. It’s Fast, Easy and Guaranteed.

In fact many use the very same Guide. Follow this guide to repair your credit fast, including how to write letters to settle debts such as your 2nd Mortgage. Download it Now and Get Started Right Away with The Attorney’s Guide to Credit Repair. It’s Fast, Easy and Guaranteed.

YOUR HOA MAY SUE YOU EVEN AFTER YOUR BANKRUPTCY

YOUR HOA MAY SUE YOU EVEN AFTER YOUR BANKRUPTCY:

THE BANKRUPTCY CODE SPECIFICALLY ALLOWS IT!  The Rule is that you can eliminate your personal liability to pay your Home Owner’s Association up to the date that you file your case.  But what happens AFTER?

YOUR HOME OWNER’S ASSOCIATION CAN SUE YOU IF:

FILING BANKRUPTCY STOPS FORECLOSURE, BUT YOU MUST STILL EITHER WORK OUT A LOAN MODIFICATION OR SETUP A CHAPTER 13 PAYMENT PLAN IN ORDER TO STRIP OFF THE 2ND AND CATCH UP YOUR FIRST. IF ALL GOES WELL YOU WON’T THINK ABOUT YOUR HOA, YOU JUST CONTINUE TO PAY IT.

IF THE ABOVE DOESN’T WORK OUT, YOUR AIM MUST BE FOR A SHORT SALE to avoid a Foreclosure after Bankruptcy.  Doing a Short Sale will take the Home Owner’s Association into account as part of the final deal and that will be that.

But if you end up with a Foreclosure after Bankruptcy . . .

FORECLOSURE AFTER BANKRUPTCY:

If you know that you can’t pay a Chapter 13 payment (YOU MUST CONSULT A BANKRUPTCY ATTORNEY TO BE SURE, NEVER ASSUME ONE WAY OR THE OTHER WITHOUT A CONSULTATION FIRST), & if you cannot pay your 1st, you are going to lose your property.  So, File a Chapter 7 Bankruptcy: Your 2nd or HELOC will no longer be able to sue once your Chapter 7 has discharged.  You can stay in the property a bit longer while saving up to move. You could get a couple or even several extra months Rent-Free! But if you don’t do a short sale, you will eventually have a foreclosure.

Your HOA will be able to sue you from the date that you filed your Bankruptcy until the day your property is foreclosed.  I have seen this more than once, a couple assumes that a short sale is on track, and then it doesn’t go through.  Meanwhile they have not been paying the Home Owner’s Association fees.  Probably they haven’t paid for a year prior to filing the bankruptcy so they are out of the habit of paying it.  Once the bankruptcy took place, they still didn’t pay because they couldn’t afford to, or they assumed that the short sale would take care of it.

But if you don’t pay, and there’s a foreclosure, you’re going to owe all HOA fees and assessments from the day that you filed until the day that you no longer owned the property. Because they banks don’t want to pay the HOA fees either, I have seen them take a couple years to actually repossess a house, especially if the family has already moved out.  $150/mo in HOA fees plus special assessments, attorney’s fees and costs adds up pretty quickly.

SO CONTINUE TO PAY THE HOME OWNERS ASSOCIATION FEES UNTIL THE PROPERTY IS SOLD OR FORECLOSED.  If you don’t want to pay the HOA Fees to the HOA because you expect a short sale to take care of it, put the HOA Fees into a savings account just in case the short sale doesn’t go through.  If it doesn’t go through you just pay them.  If it does go through, you have a small savings account to use as moving money, or maybe replacing your appliances.

Bankruptcy Attorney David Nelson

Temecula bankruptcy attorney, Murrieta bankruptcy attorney, Lake Elsinore bankruptcy attorney, Canyon Lake bankruptcy attorney, Menifee bankruptcy attorney, Perris bankruptcy attorney, Riverside bankruptcy attorney, Corona bankruptcy attorney, San Diego bankruptcy attorney, Los Angeles bankruptcy attorney, LA, and Orange County bankruptcy attorney