Monthly Archives: September 2011

I frequently get the asked whether consolidating debt harms or benefits your credit, says Bankruptcy Attorney  Victorianne Maxwell of Maxwell Law Firm, PLLC.

WHAT AFFECTS YOUR CREDIT SCORE

Your credit score is is affected by the number of inquires on your credit, number of accounts you have open, balances on those accounts, nature of those accounts, and payment history. Generally, when you apply for a new loan to consolidate your debt a new inquiry is made by the lender. If new inquiry into your credit history may slightly decrease your credit score, but that is easily repaired.

WHEN CONSOLIDATION WORKS

Having several high balance accounts can negatively impact your credit score. If for example you have equity in your home and an opportunity to refinance then you can apply the funds paid to you as party of the equity cash in towards student loans, credit cards, and other installment accounts. This is good because it will lower your balances and increase the amount of credit you are eligible for and will also increase your credit score. Another instance where consolidation is beneficial is when you consolidate your federal student loans, this gives you an opportunity combine balances and get a new lower monthly payment.

WHEN CONSOLIDATION WILL NOT WORK

In order to qualify for a consolidation loan you must show you have sufficient income and your credit score must be good. If you have negative items on your credit, delinquencies, and less income than necessary based on your debt to income ratio than chances are your loan application will be denied. Though it may makes sense to you to apply for a consolidation loan to pay off your debts, it does not to the lender. You have other options if you are unable to pay a debt, seek the advice of a Debt or Bankruptcy Attorney in your area.

Maxwell Law Firm represents clients in North Carolina with: bankruptcy court, filing for bankruptcy, chapter 7 bankruptcy, foreclosure defense, chapter 13 bankruptcy representation, and loan modifications. You may schedule your appointment by calling 704-780-1100 or save 25% off the fees and schedule online at http://maxwelllegal.com/consultations. In California and Nevada the Law Offices of Chirnese L. Liverpool assists debtors with Bankruptcy and debt related issues. They can be contacted by calling 818-714-2200.

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Over the last a year or so, I have encountered several clients who originally filed Chapter 13 and later filed a motion to have it converted to a Chapter 7 and received a Chapter 7 discharge.

DIFFERENCES BETWEEN THE TWO CHAPTERS

Chapter 7 is a liquidation bankruptcy where the debtor receives a discharge of all or most of their debts at the close of an  three to four month process. Chapter 13 is a much more extensive bankruptcy where a debtor must complete a three to five year plan and make payments towards all their debts. At the close of the chapter 13 some the debt is discharged and other payments directly secured or priority creditors may continue.

WHY WOULD SOMEONE CONSIDER CONVERTING A CHAPTER 13 TO A CHAPTER 7 ?

Often times people get into a Chapter 13 and things change, income, family size, valuation of the property that secures the debt. These factors can affect the ability to pay a plan payment in a Chapter 13. A case can be dismissed by a trustee if the debtor fails to make plan payments. Debtors are often faced with either taking a voluntary dismissal, or allowing the trustee to dismiss the case (involuntary dismissal), or converting their case to a Chapter 7.

WHY I DO NOT ADVISE A CONVERSION

Converting the case from a Chapter 13 to a Chapter 7 does not change the date of filing. This affects the dischargeability of certain debts. Normally tax debt that is due more than three years from the date of filing and accessed more than 240 days prior to filing, can be discharged in a Chapter 7.  For instance, if the debtor has 2006, 2007 tax debt and files Chapter 13 in 2008 and later converts the case to a Chapter 7 in 2010 then the debt tax debt will not be discharged. In such a situation, it is more advisable for the debtor to take a dismissal on the Chapter 13 case and re-file a new  Chapter 7 case. Where a previous Chapter 13 case is dismissed the six year bar will not prevent a Chapter 7 filing within 180 days after the dismissal or after.

Maxwell Law Firm represents clients in North Carolina with: bankruptcy court, filing for bankruptcy, chapter 7 bankruptcy, foreclosure defense, chapter 13 bankruptcy representation, and loan modifications. You may schedule your appointment by calling 704-461-1883 or save 25% off the fees and schedule online at http://maxwelllegal.com/consultations. Attorney Chirnese L. Liverpool assists debtors with filing for bankruptcy in California her office can be contacted at 818-714-2200.

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A lot of times Clients are confused about the foreclosure and the terminology  so I have complied a few relevant terms that I typically explain to them,, says Charlotte Bankruptcy Attorney , Victorianne MAXWELL OF MAXWELL LAW FIRM, PLLC

1. Acceleration – A term in a mortgage agreement that allows the lender to request entire balance of the mortgage loan be paid in full, typically occurs after default.

2. Arrearages—past due payments.

3. Arm—adjustable rate mortgage is a loan where interest rate adjusted periodically anywhere from every six months or a year. The rates are often below market, but continue to increase and may ballon to higher payments during the life of the loan.

4. Bankruptcy –federal legal right that provides debt relief assistance for individuals who meet certain income requirements.

5. Complaint—a claim for which claim on which relief is sought.

6. Credit history –a record of an individual’s or company’s past borrowing and repaying, including information about late payments.

7. Credit score—a numeric score that measures the credit worthiness of an individual based on credit history, payment history, credit balances, and the number of recent inquires.

8. Creditor –person or company who extends a credit to debtor (mortgagee, lienholder, lender).

9. Fixed Rate Mortgage— a loan with an interest rate that is fixed for the life of the loan.

10. Foreclosure –legal process by where a homeowner is disposed of their interest in real estate.

a. Judicial foreclosure –foreclosure process must be executed through state court. This means the creditor must sue the debtor/homeowner in state court to receive the possession of the property.

b. Non-Judicial foreclosure –foreclosure process can be executed by sale once default occurs, without initiating an action in state court. The power of sale clause is typically in the mortgage agreement.

11. Debtor – person who makes a promise to repay a debt owed to a creditor (homeowner, mortgagor).

12. Deed – Document that indicates title owner and is used to transfer ownership to a real estate.

13. Deed of Trust — A recorded mortgage instrument securing a note to a real estate, where a third party acts as a trustee.

14. Default - Nonperformance of a duty, failure to meet obligations of the (mortgage) loan.

15. Deficiency –difference between the amount owed on a mortgage note and what the foreclosing party receives on the sale of the foreclosed property at auction.

16. Equity –when the fair market value of real estate exceeds the amount of indebtedness on the property.

17. Federal Housing Authority (FHA) Loan—a federally insured mortgage loan.

18. Forbearance – When a lender agrees to postpone foreclosure in order to give the borrower time a catch up with arrearages.

19. Levy—the collection of a liability which occurs once a debt is defaulted upon and becomes mature.

20. Lien ­- A claim or interest on the real estate property stemming from an unpaid debt.

21. Lis Pendens—a suit pending in a court that concerns the title to land.

22. Loan modification – lenders agreement to change the terms of the mortgage agreement by either decreasing the amount of monthly payments, lengthen the term of the loan, and or decreasing the amount of interest on the loan.

23. Mortgagee—(SYN) lender, bank, creditor.

24. Mortgagor –(SYN) borrower, homeowner, buyer, debtor.

25. Negative equity—when the value of the property is less than the amount of indebtedness.

26. Note –promissory note securing an interest in real estate. Usually recorded in the county where the real estate is situated to evidence notice of the lenders interest in the property.

27. Notice—a period of warning required by law and or instrument (mortgage agreement).

28. Power of Sale-Clause in a mortgage or deed of trust giving the mortgagee (or trustee) the right and power to advertise and sell the property at public auction on default in the payment of the debt secured.

29. Primary mortgage– A first lien/mortgage on real estate property.

30. Priority—dictates which lien first in right (and time) to claim against real estate. In the case of foreclosure creditors or lienholders on a property get paid according to priority and often times not at all if they are after a primary lien holder.

31. Ownership classifications

a. Tenancy by the Entirety – The joint ownership by husband and wife where surviving spouse becomes the sole owner. Creditors of only one of the spouses cannot make claims to real estate titled to both spouses.

b. Tenants in common—co-owners in real estate without rights of survivorship.

c. Joint tenants—joint ownership by non-spouses who have the right of survivorship. Last tenant becomes the sole owner of the property.

32. Refinance –process by which a homeowner cashes in the equity in a property and pays off existing mortgage by acquiring a new one.

33. Right of Redemption –right of a homeowner to cure default prior to the close of foreclosure proceedings.

34. Sheriff Deed–

35. Sheriff sale—A court order authorizing the Sheriff’s office to conduct the sale in satisfaction of a judgment.

36. Short sale –process whereby a lender agrees to allow homeowner sells the piece of real estate for less than the amount of the mortgage debt, contingent on the lenders approval of the buyers.

37. Home owner Association (Planned Communities)—an association created by an individuals in a residential subdivision for the purpose of enforcing the planned community laws and or the bylaws created by a developer and or modified by that association.

38. Tax liens – a claim for unpaid taxes.

39. Title search –Search of public recorded information to determine the legal ownership to the property.

40. Trustee deed — Document conveying ownership of property to highest bidder at a Trustee Sale.

41. Writ –A form of written command in the name of a court or other legal authority to act.

Maxwell Law Firm represents clients in North Carolina with: bankruptcy court, filing for bankruptcy, chapter 7 bankruptcy, foreclosure defense, chapter 13 bankruptcy representation, and loan modifications. You may schedule your appointment by calling 704-780-1100 or save 25% off the fees and schedule online at http://maxwelllegal.com/consultations

The Law Offices of Chirnese L. Liverpool assist debtors with foreclosure defense and filing for Bankruptcy in California.

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CHAPTER 7 BANKRUPTCY

DEFINING CHAPTER 7

There are two types of Consumer Bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is a process where a debtor files requesting immediate relief from the court from his or her creditors and debts. It is often referred to as the liquidation bankruptcy. At the close of the bankruptcy the debtor is relieved or discharged of most their debts.

QUALIFYING FOR CHAPTER 7

In order for a debtor to qualify to file for Chapter 7 Bankruptcy they must pass what is called the Means Test. In this test, the debtors monthly income for the past six (6) months is measured against the Census Bureau’s Median Family Income Data for in the debtors geographical area (State). If the debtors income is less than the median income they have passed the test. However if their income is greater than the median they must then show that their reasonably necessary expenses are greater than or close their monthly income. A presumption of abuse arises when the debtor fails the means test and does not outright qualify for Chapter 7. The debtor can rebut this presumption with documentation, if they can establish the additional expenses and amounts.

CHAPTER 7 PROCESS

Once it is determined that the debtor qualifies for Bankruptcy. The debtor must complete a credit counseling course. Then, a bankruptcy petition is prepared by an Attorney. The petition contains schedules and statements with the debtors monthly income, expenses, household size,means test evaluation, property, and debts. The petition is filed electronically. Once the petition is filed the debtor is assigned a case number and Trustee who will oversee the bankruptcy case. The debtor must then complete a post filing financial management course. The debtor then receives a 341 Meeting Date. A the 341 Meeting the debtor affirms that they have read and signed the petition as prepared by their Attorney. Approximately sixty to ninety days later the debtor receives their discharge order.

YOUR ASSETS IN CHAPTER 7

Because Chapter 7 is a liquidation bankruptcy any non-exempt property is liquidated to pay off creditors according to priority. Nonetheless, the debtor has a certain amount property that is exempt from seizure by the Trustee and creditors in bankruptcy. The most common exemption is the Homestead exemption that allows the debtor to have a certain amount of equity in their home. There other exemptions for retirement accounts, vehicles, and other personal property.

FINDING THE RIGHT CHAPTER 7 ATTORNEY

Researching Chapter 7 and knowing the basics of of the law simply is not enough. Bankruptcy Law is complex and the majority of pro se cases (where debtor files their own petition) are dismissed for a number of errors. There are plenty of paralegal services and online legal sites that claim they can assist you filing for bankruptcy. At the end of the day, your name and signature is on petition with an oath swearing that you agree with all the contents. Only an Attorney can provide you with legal advice on your particular case and the implications of filing. The amount of money you save, if any, by going with these services will not be worth the headache of having to deal with issues, errors, and omissions in your bankruptcy petition. Keep in mind you could be charged with Bankruptcy Fraud for concealing information. Hiring a qualified Bankruptcy Attorney is necessary so that you can insure things are done properly and that you are fully informed of the implications of bankruptcy. Potential clients always worry about the fees and finding the right Attorney. Maxwell Law Firm, PLLC offers payment plans and flat reasonable fees for filing for bankruptcy. We also offer discounts for scheduling your appointment online. The Law Offices of Chirnese L. Liverpoolassists debtors filing for Chapter 7 Bankruptcy in California. You may contact them by calling 818-714-2200/

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