When falling behind on mortgage payments, foreclosure is not inevitable. Since the real estate market collapsed, more than 5% of all homes loans are in default. Today, workout situations are common. Lenders try to avoid repossessing homes, which in turn, bloats their balance sheet with non-performing assets. You may have time to workout an arrangement with your lender. Perhaps a loan extension is available. You may consider a different lender to refinance, focusing on high risk specialists. You may consider a deed in lieu of foreclosure if you cannot make mortgage payments.

In every situation, borrowers have unlimited options that include working cooperatively with creditors, settling debts, litigating disputes, and confronting creditors in the U.S. Bankruptcy Court system.

Bankruptcy automatically stops all foreclosure proceedings. The mechanism is known as the automatic stay. Each time a case is filed, under any chapter, the automatic stay prevents creditors from collecting debts. The stay provides broader protection by prohibiting repossession of assets, home foreclosure, and the continuation of lawsuits seeking judgments on debts.

The stay is not permanent. Borrowers who file bankruptcy have two options to bring payments current. In Chapter 7, actual payment is required to prevent the court from lifting the automatic stay. In Chapter 13, the court indulges legal fiction. The inclusion of payments in the plan creates an assumption that payments are current. To maintain a Chapter 13 case in good standing, monthly payments to a trustee are required.

Future mortgage payments must be made to avoid foreclosure in all bankruptcy cases. If you home has negative equity, homeowners in bankruptcy should carefully consider the long-term impact of keeping their home. You may surrender your home and treat the deficiency balance as an unsecured debt. All remaining unsecured debts are discharged when a case is closed. Chapter 7 typically lasts about four months unless creditors file objections. Chapter 13 cases last from three to five years before receiving a discharge.

Timing a bankruptcy case properly is critical for your success. You may file too quickly or too late to receive the maximum benefit available. If you file too early, you may not qualify for Chapter 7 because of the means test. If you file too late, you may unnecessarily waste exempt assets and potentially incur imputed income. Imputed income creates tax liability when lenders charge off debts. The best bankruptcy strategies begin well in advance of the filing date. In this way, you will gain the maximum allowed benefit and prevent the accrual of non-dischargeable tax liability. If you consider a few advanced strategies, you may adjust debts in a plan and receive a quick discharge by using your options at the proper time and in the proper sequence.

Dave Clark enjoys bankruptcy strategy questions. Can bankruptcy stop foreclosure? Find out more why Chapter 7 bankruptcy stops foreclosure temporarily through his website.

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Foreclosures are regulated by state law in every county and parish within the U.S. The process is always similar. Each mortgage holder must receive notice of the intent to foreclose and has a right to bring payments current. The typical notice period is 30 days, and notices are published as a public record. In the past, mortgage companies typically filed notices automatically once a homeowner slipped three months past due. You may have less time today.

Dealing with a foreclosure notice strikes fear in the hearts of homeowners. Your future is uncertain, you must find a place to live, or alternatively find a way to make past due payments. In most cases, payments would not slip past due if homeowners have funds available. For many people, this unfortunate situation is best resolved through filing bankruptcy. Filing will save your home.

The U.S. Bankruptcy Code, in 11 U.S.C. Section 362, contains a powerful provision creating an automatic stay of proceedings. A stay is similar to a federal injunction that prohibits all creditors, in all bankruptcy chapters, to collect debts. The stay also specifically applies to foreclosure sales. Once a case is filed, your mortgage company cannot proceed with foreclosure once receiving notice that you file. Written notice of filing provided by certified mail is sufficient and indisputable, even though a call providing oral notice is also acceptable.

The automatic stay is not a permanent injunction. In Chapter 7 cases, a mortgage holder must bring payments current or the court will entertain motions to lift the stay. The motion will be granted and foreclosure resume if you do not make all payments that are due. In Chapter 13 cases, past due payments are included in a proposed plan. Once included in a plan, payments are assumed current and the stay will remain in place. When filing a Chapter 13 case, you must make a proposed plan payment to the assigned trustee within 30 days. If this payment is not made, the stay may lift and the case is subject to dismissal.

The best time to plan a bankruptcy case is before receiving a notice of repossession, foreclosure or eviction. By allowing more time to plan, the benefits of filing multiply exponentially. You may optimize the means test result with only a few extra months. This test determines if you qualify to file Chapter 7 and the amount of your trustee payment if selecting Chapter 13.

Planning bankruptcy does not require that you retain an attorney. Most attorneys provide only one free initial consultation. Your means test however changes each month. You may compute the means test yourself, each month, and save $400 per test. To do this, you must use a customized form to maximize your results. The official form is cryptic at best and provides little meaningful guidance for individuals who want to file Chapter 7.

Can bankruptcy stop foreclosure? A better question is how long will bankruptcy stop foreclosure? Dave Clark welcomes all questions about highly optimized bankruptcy strategies using both Chapter 7 and Chapter 13.

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The election of Chapter 13 increases options available when filing bankruptcy. In exchange for at least partial payment on all debts, the added benefits in Chapter 13 frequently make it the best choice. You may include back taxes, past due mortgage payments and a wide variety of priority debts in the plan. The partial payment required may be minimal. In many cases, the percentage payment on unsecured debts is less than 5%. For a minimal payment, you may avoid tax seizures and home foreclosure.

Each person who is experiencing financial difficulty presents a unique set of challenges. Income, goals and necessities vary in each situation. Nevertheless, a solution exists for all financial problems. You may avoid filing bankruptcy if acting early. You may settle unsecured debts easily for less than 50 cents on the dollar without filing. You may need to file at some point in the future to gain the protection of the automatic stay. Keep your options open.

All people must pay income tax in all situations. The IRS receives a super-priority. These important debts may lead to the seizure of assets, including exempt property, if taxes remain unpaid. Chapter 13 is unique in that past due taxes are considered current when included in the plan. All tax seizures and levies must stop and the IRS must accept the plan payment. You may spread payment over five years.

Additionally, each person has a right to convert a Chapter 13 case to Chapter 7 if qualifying under the means test. This option becomes quite valuable if taxes are repaid and only unsecured debts remain in Chapter 13. In addition, during the time a Chapter 13 cases is pending, each debtor has power within their grasp to make small changes in their lifestyle. These changes may influence the means test result and later qualify any debtor to convert to Chapter 7.

You have an amazing variety of options and alternatives provided by law. The secret for using them wisely is to become familiar with each option. When you compare the real cost and actual benefits of each option, in a side by side comparison, you may be shocked by your potential results. Misinformation regarding debt relief options is common. The only way to know, with certainty, the value of your options is to compare them over an equal time period. You must use actual costs and realistic assessment of available benefits. Not all people qualify for all options.

This comparison is far easier than most people realize. You do not need an account or financial analyst to help you. You do not need an attorney to calculate the means test if you use a well prepared custom form. You could perform these calculations within the comfort of you home with the next few days.

The author enjoys all inquires about bankruptcy strategies, and advanced options using a chapter 13 bankruptcy strategy in combination with other alternatives. Custom means test forms are available.

Article Source:http://www.articlesbase.com/bankruptcy-articles/chapter-13-bankruptcy-strategies-1514825.html

Bankruptcy in the state of Florida can be filed by an individual without the aid of an attorney or document preparation agency. Yet, it is still recommended that anyone filing for personal bankruptcy should seek legal counsel.

The federal bankruptcy code creates different categories of bankruptcy, known as chapters, which gives debtors different ways of dispensing with debt. The two most common forms of individual bankruptcy available to any resident of Florida are chapter 7 and chapter 13. This brief “how to” guide is written in with a systematic process for both types.

Chapter 7

Note: After filing for a chapter 7 bankruptcy, a debtor must wait 6 years before they will be allowed to file again.

Step 1: Filing the Petition

A chapter 7 bankruptcy begins with a petition filed at the federal district courthouse servicing the area the filer lives in. Under federal and Florida law, an individual, partnership, or corporation can file chapter 7 regardless of the amount of debt. This petition paperwork is provided by the courthouse or can be obtained online at many legal websites.

Along with the petition, or shortly after the initial filing, the debtor must also submit several schedules listing current income, expenditures, and a statement of financial affairs, executor contracts, existing or potential lawsuits, and any recent transfers of assets. If a debt is omitted then it will not be covered in the bankruptcy.

Step 2: The Stay Period

Filing the petition automatically stops all creditors from trying to collect money that is owed. This stay period happens automatically without any judicial action. The stay period is effective from the time of filing, even if creditors are not aware of it until later. In this period, lawsuits, garnishment actions, and even phone calls to the debtor must stop.

Step 3: The Creditors Meeting

Once the petition is filed for a chapter 7 bankruptcy, the court immediately appoints a trustee to administer the overall case and liquidate any non-exempt assets to pay off creditors. The trustee will call a meeting for the debtor’s attorney and the creditors wishing to collect debt. The debtor must attend this meeting and creditors may attend in order to ask questions and examine documents concerning a debtor’s financial affairs.

In most individual bankruptcy cases, all of the debtor’s assets are either exempt or subject to valid liens, which leaves no assets for a creditor to pursue. These cases are called no asset cases and many times a creditor will not show up.

Step 4: Claims of Creditors

After the creditors meeting takes place, all creditors can file a claim against the debtor with the court. This is done so that a creditor can make a claim against nonexempt assets free of security interests.

Step 5: Liquidation, Discharge, and Reaffirmation

The idea of having a trustee is to liquidate the debtor’s non-exempt assets and pay off as many creditors as possible. A chapter 7 bankruptcy concludes when the trustee sells the debtor’s property, distributes any cash to the creditors, and discharges the remaining debt. The final discharge, ordered by a judge, ends the debtor’s remaining personal liability on the debt. Some debt is not dischargeable such as alimony and child support, most tax obligations, most student loans, and liability for damages resulting from willful or malicious acts.

During this process, creditors can ask the court to deny an individual debtor a discharge. The grounds for approval are based on whether a debtor fails to adequately explain the loss of assets, the debtor perjures him or herself or fails to obey lawful orders of the court, or the debtor fraudulently transfers, conceals, or destroys property that should be included in the bankruptcy case.

Chapter 13

Chapter 13 bankruptcy is considered a wage-earner plan because it is generally used by people with stable incomes who want to repay at least some of their debts but cannot handle the full brunt of it. The biggest advantage of a chapter 13 over a chapter 7 is that the debtor is allowed to keep his or her property and set up a court-approved payment plan. Only individuals with less than $100,000 in unsecured debts and less than $350,000 in secured debts are eligible to file chapter 13.

Step 1: The Petition

The petition is similar to that mentioned above in the explanation on chapter 7. The debtor provides the court with lists of all creditors including amounts and the nature of claims, the source and amount of income, lists of all property, and detailed descriptions of the debtor’s monthly living expenses, including groceries, clothing, shelter, utilities, taxes, transportation, and medical care.

Step 2: The Stay Period

The stay period is identical to that of chapter 7 except that chapter 13 contains a provision that prohibits creditors from collecting on a debt owed by a third person such as a cosigner.

Step 3: Chapter 13 Plan

Federal and Florida law state that within 15 working days of filing for a chapter 13 bankruptcy, a debtor presents a plan to the bankruptcy court listing out how he or she intends to pay off debts over a three-year period, or in some cases a five-year period. These must be paid out based on priority and federal bankruptcy law lists several categories of unsecured claims that have priority over other unsecured claims including costs of administering the bankruptcy, employee’s wages, salaries and commissions, contributions to employee benefit plans, deposits accepted by the debtor for personal items or services that the debtor did not deliver, and taxes.

Individuals seeking to fill out this plan should get the aid of an attorney to ensure it is filled out properly. If the plan is not done correctly the court can deny the document and the bankruptcy cannot proceed.

Step 4: The Creditors Meeting

A meeting is usually held about one month after the initial petition is filed. A trustee and filer must attend the conference, and creditors have the option of coming also. The idea of the creditors meeting is for the creditors and trustee to question the individual filing the plan about his or her financial affairs and any possible problems with their plan. Some problems can be solved at this meeting.

Step 5: The Confirmation Hearing

After the meeting mentioned in step 4, the bankruptcy court will make a final determination whether the plan is feasible and meets the standards set forth in the bankruptcy code. Creditors can dispute the plan if they believe that a debtor has not pledged enough income to the plan or that the creditors receive less than they would if the debtor’s assets were simply liquidated.

If the plan is approved by the court, a portion of the debtor’s paychecks will go to a court-appointed trustee who divides the money among the creditors. At that point, the creditors are prohibited from garnishing wages or repossessing property.

Step 6: The Discharge

Once all payments are made, the plan approved by the court is complete and the bankruptcy is successfully discharged. The discharge releases the debtor from all debts provided for in the plan.

Other Types of Bankruptcy

The Federal Bankruptcy code also allows an individual to file a chapter 11 or 12. Chapter 11 is available for individuals, but is generally used by troubled corporations and partnerships.

Chapter 11 allows the debtor to remain in operation and reorganizes debts in a way that they can pay them. It is designed to keep businesses up and running rather than liquidation.

Chapter 12 is available only to farmers and is very similar to chapter 11. Before choosing either chapter 11 or 12, an individual should consult an attorney.

Author: Kenneth Diaz
Mr. Diaz is a Legal Document Preparer in Florida and New York with over 15 years of experience. He has launched an informational website for self-representing litigants (pro se) in the state of Florida. You can read more about his site at Florida Court Forms. For more information about this article, visit his Florida Bankruptcy web-page.

Article Source:http://www.articlesbase.com/bankruptcy-articles/personal-bankruptcy-in-florida-steps-to-chapter-7-and-chapter-13-bankruptcies-1726462.html

5 Common Mistakes Bankruptcy Clients Make

Bankruptcy is governed by Title 11 of the United States Codes. Oftentimes, what makes sense in bankruptcy world does not make sense in everyday life. Here are the top 5 mistakes potential bankruptcy clients make.

1. Selling assets in an attempt to get out of debt

What assets you can keep in bankruptcy is governed by the specific statutes of each state known as “exemptions.” This sets forth rules regarding what property you can keep through bankruptcy. Oftentimes, we see clients liquidate their 401(k), or borrow against it, or sell their assets. Carefully consider if you can get out of debt by taking such measures. If at the end of the day, you still cannot get rid of your debt or get it down to an amount that you can deal with, it does not make sense to get rid of assets that would otherwise be protected in bankruptcy.

The best time to consult with a bankruptcy attorney is when you are struggling to stay afloat and simply do not see a way to get rid of all of your debts. Remember, filing for bankruptcy is a tool to shed your legal responsibility to repay the debt. Nothing in the bankruptcy code prohibits you from voluntarily repaying the debt after bankruptcy. It’s not about running away from your debt, but taking a responsible step at facing your financial situation.

2. Getting rid of assets for less than the fair market value

Another mistake clients often make is attempting to hide or get rid of their assets for the fear that they will lose the asset through bankruptcy. Any transfers of assets prior to bankruptcy must be disclosed in the bankruptcy petition. Remember, bankruptcy is for the honest debtor.

3. Repaying an “insider”

It’s a natural instinct to want to pay back family members, or business associates or other people whom you have a close connection to before paying back Discover, Chase or American Express. However, in bankruptcy, this is considered an insider transfer. It must be disclosed on the bankruptcy petition and the Trustee can go after the insider for the money if it was repaid within a certain time prior to filing you’re a bankruptcy petition

4. Incurring more debt in anticipation of bankruptcy

This can happen in two ways. One by tapping into lines of credit or other sources of credit you may have (for example, your home equity line of credit). The debtor may unwittingly convert an unsecured debt into secured. Remember that when you file bankruptcy, the duty to repay the debt on a secured debt is discharged, however, the creditor still has a security interest in the property, and can exercise its right to foreclose or repossess.

If a client maxes out his or her credit card, takes cash advances, takes a trip to Paris, with the anticipation of filing for bankruptcy, the client may be committing fraud. Bankruptcy fraud is a felony punishable by prison time. Credit card companies monitor its users for “abuse” and can object in the debtor’s bankruptcy proceeding. This will almost certainly mean additional attorney fees, and worse yet, non-discharge of your debt.

5. Not being honest

You are hiring your attorney to be able to spot potential issues and figure out solutions. The attorney is your ally and he or she should be treated as such. Maybe you’re simply embarrassed by something in your financial history, or there is something you’ve done that you do not want anyone to find out. The only issue your attorney cannot assist you with is one he or she does not know about. It’s important that you be upfront and honest with your <a target=”_blank” href=”http://www.jclawgroup.com”>san francisco bankruptcy attorney.</a>

About the authors: Jeena Cho and Jeff Curl are San Francisco bankruptcy attorneys practicing in San Francisco and San Mateo County. Their practice is focused on chapter 7 and chapter 13 bankruptcies for individuals, families and small businesses. They can be reached at (415) 963-4004

Article Source:http://www.articlesbase.com/bankruptcy-articles/5-common-mistakes-bankruptcy-clients-make-1693163.html