Top 10 Signs You Should See a Bankruptcy Attorney

These are difficult times and it is easy to ignore the signs of trouble when you are overwhelmed with work, spouses acting like children, children acting like teenagers and teenagers just being completely out of control.  So, to help you sort out the kind of trouble which warrants a visit to a bankruptcy attorney, here are my Top 10 signs you should see a Bankruptcy Attorney:

     10.  People are taking pictures of your house and it is not because they love your yard.

      9. You are contemplating taking money from your retirement account and you are not retired.

      8. You have taken money from your retirement account and you are not retired.

      7. You know all your creditors by their caller ID numbers.

      6. You cannot pay off your credit cards in full in the next 12 months and continue to eat.

      5. You go to get in your car and it is gone.

      4. You have run out of relatives willing to lend you money.

      3. Your wages are being garnished or your bank account has been levied.

      2. Your house is so far underwater that the sharks are circling and you do not live in a flood plain.

      DRUM ROLL PLEASE,

      1. You are actually contemplating moving in with your mother-in-law.

       If any of the above things are happening to you or have happened to you, it is time to see a bankruptcy attorney.  You did not make this economic meltdown, but you can make the CHOICE to stop letting it control your life.  The real estate speculation game is over for now. The banks won this round, but don’t let them continue to dictate your life.  Cut your losses now and leave the casino i.e. the house/car/motor home that is worth less than you owe on it.  Reclaim your financial future.  Save cash for your retirement.  It is much easier to buy food with cash than sheet rock.  There is not going to be any principal or long term payment reduction on home loans.  The banks are protected by this government and until that changes … (never), consumers must stop giving all the cards to the banks.  Cash is king.  If you don’t have the money to buy something outright, wait until you do.  The lenders have no problem doing what is in their best interest and you should not either.  I see people every day for a 30 minute FREE consultation at my offices in Walnut Creek, Antioch and Brentwood.   

WE ARE A DEBT RELIEF AGENCY. WE HELP PEOPLE FILE BANKRUPTCY RELIEF UNDER THE BANKRUPTCY CODE. THIS INFORMATION IS NOT PROVIDED AS LEGAL ADVICE AND SHOULD NOT BE RELIED UPON IN MAKING ANY DECISION REGARDING ASHORT SALE OR FORECLOSURE. THIS INFORMATION IS NOT A SUBSTITUTE FOR OBTAINING TAX & LEGAL ADVICE REGARDING AN INDIVIDUAL SITUATION. GRIMESBKLAW.COM (925) 939-1680 © 2011 Joan Grimes

Student Loans and Bankruptcy

If you are thinking about filing bankruptcy, but are worried about your ability to get student loans either for yourself or a dependent in the future, you are not alone.  If you are worried about repaying student loan debt, you are not alone.   These concerns are so common that the Bankruptcy Code specifically addresses them.  

Let’s address the easy issue first: Getting student grants and loans after a bankruptcy.  The Bankruptcy Code provides that no governmental unit may deny a student grant, loan, loan guarantee, or loan insurance to a person that is or has been a debtor in a bankruptcy case.  What this means is that student grants and loans are available to people filing bankruptcy as long as you meet other grant or loan program qualifications.  You should expect a credit report to be run when obtaining a student loan or grant. Therefore, it is a good idea to minimize other debt.

 Now for the more difficult problem: Repaying student loans.  The current Bankruptcy Code provides that student loans or obligations to repay funds received as an educational benefit, scholarship or stipend are not dischargeable in bankruptcy unless it would impose an undue hardship on the debtor. What this means is that 1) the debtor must show an inability to maintain a minimal standard of living based on current income and expenses, 2) that the existence of these additional circumstances is likely to persist for a significant portion of the repayment period, and 3) that the debtor has shown a good faith effort to repay the debt.  These conditions are extremely difficult prove andthere is a recent bankruptcy case in San Francisco where the bankruptcy judge held that a “minimal standard of living” does not mean a middle class lifestyle and the debtor can be required to make “major personal and financial sacrifices.” 

The good news is that on March 30, 2010, Congress enacted legislation to revamp the federal student loan program.  The new law eliminates fees paid to private banks and will expand the Pell Grant Program.  In addition, starting July 2014, the program will allow students to cap repayment at 10% of income above a basic living allowance.  In the meantime, if you have student loan debt which you cannot repay, I suggest you contact your lender and enroll in the Income Based Repayment Program (IBR). This program is designed to help people pay back their loans at a rate proportional to their income. 

The student loan debt crisis WILL be the next big crisis after we finish with the mortgage crisis.  There is more student loan debt in this country than credit card debt.  I fully expect some type of relief to be provided for student loan debt again under the Bankruptcy Code.  It is just going to take time.  However, I expect the relief provided will be dependent on a person showing evidence that some payment has been made on the debt. 

In conclusion, student loan debt should be avoided, unless it is absolutely clear that a future career will be sufficient enough to pay back the debt.  I strongly encourage you to minimize student loan debt for undergraduate school. Live at home, get a part time job.  Don’t sell out your future and the future of your children.   If you have other debt which can be discharged in bankruptcy, seek legal counsel.  Discharging other debt and focusing on the repayment of student loan debt will make it easier for you.  I see people every day for a FREE 30 minute consultation in my offices located in Walnut Creek, Antioch and Brentwood.

WE ARE A DEBT RELIEF AGENCY.  WE HELP PEOPLE FILE FOR BANKRUPTCY.  THIS INFORMATION IS NOT PROVIDED AS LEGAL ADVICE AND SHOULD NOT BE RELIED UPON IN   MAKING ANY DECISION REGARDING A VOLUNTARY DEFAULT, SHORT SALE, FORECLOSURE OR BANKRUPTCY.  THIS INFORMATION IS NOT A SUBSTITUTE FOR OBTAINING TAX & LEGAL ADVICE REGARDING AN INDIVIDUAL SITUATION. 

© 2011 Joan Grimes

Credit After Foreclosure, Short Sale or Bankruptcy

Are you worried about your credit after a foreclosure, short sale or bankruptcy?  Specifically, do you want to know when you reasonably expect to buy another home?  If this is concern for you, here is an overview of Fannie Mae credit guidelines. 

Foreclosure Sale-  A borrower will be eligible to obtain credit to purchase another principal residence 7 years from the date of the foreclosure sale.  However, if a borrower has “extenuating circumstances” they may be eligible for a loan in 3 years.  Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that resulted in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations such as illness, divorce, job loss or reduction of income.

Short Sale-  A borrower will be eligible to obtain credit to purchase another principal residence 2 years from the date the short sale is completed, but the borrower is limited to a maximum loan to value ratio of 80%.  If the borrower has “extenuating circumstances” as set forth above, the maximum loan to value ratio could be 90%.  If the loan(s) are current at the time of the sale, it may be possible to qualify even sooner depending on your circumstances.  Short sales can be reported various ways by the lenders, but the most common is a “paid in full” with a “settled for less than owed” code from the reporting agencies.  If the loan(s) are delinquent, the loans will also indicate delinquent status i.e. 60, 90, 120 or 150 past due.

Bankruptcy-  A borrower will be eligible to obtain credit to purchase another principal residence 4 years from the discharge or dismissal date of a Chapter 7.  In a Chapter 13 case, it is 2 years from the discharge date or 4 years from the dismissal date.  In a Chapter 13 filing, the borrower is given credit for repaying some or all of their debt.  On the other hand, if the Chapter 13 is dismissed, the time period will be 4 years.   There is an “extenuating circumstances” allowance in Chapter 7 cases, but not in Chapter 13. 

Re-Establishing Credit- It is very important that borrowers re-establish credit after a bankruptcy case and improve credit after a short sale or foreclosure.  To have credit, you need to use credit.  Probably the most important thing to do besides allowing time to pass is to open a few new credit accounts, use the credit and make payments in a timely manner.  To the extent there is a mix of old and new credit accounts, that is preferred.  Credit histories that include older, established accounts generally represent lower credit risk.  However, an older, established credit history that has many new accounts may indicate that the borrower is overextended.  Also to this point, we do not recommend any borrowers to use more than ½ of any credit available on an account. 

In conclusion, the above is an overview of Fannie Mae’s credit guidelines for credit after a Foreclosure, Short Sale and Bankruptcy.  However,  there are lenders who do not sell their loans to Fannie Mae or other governmental agencies.  Therefore, if you have a foreclosure, short sale or bankruptcy, it may be possible to obtain a home loan prior to the time frames set forth above depending on your income, down payment and other extenuating circumstances.  Also, it should be noted that Fannie Mae is having problems of its own.  Therefore, it is important to keep asking if there have been any changes to the guidelines.  Foreclosures, Short Sales and Bankruptcy are very serious matters.  You are in the deep end of the pool.  Before attempting to proceed with a short sale, foreclosure or bankruptcy, I urge you to seek legal counsel about the options available to you.  I see people every day for a FREE 30 minute consultation in Walnut Creek, Antioch and Brentwood.

WE ARE A DEBT RELIEF AGENCY. WE HELP PEOPLE FILE BANKRUPTCY RELIEF UNDER THE BANKRUPTCY CODE. THIS INFORMATION IS NOT PROVIDED AS LEGAL ADVICE AND SHOULD NOT BE RELIED UPON IN MAKING ANY DECISION REGARDING A VOLUNTARY DEFAULT, SHORT SALE, FORECLOSURE OR BANKRUPTCY.  THIS INFORMATION IS NOT A SUBSTITUTE FOR OBTAINING TAX & LEGAL ADVICE REGARDING AN INDIVIDUAL SITUATION.   GRIMESBK.AW.COM(925) 323-7772     © 2011 Joan Grimes