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Keeping Your Car and Home if You File bankruptcy

Many people worry that they will lose their homes or cars if they file bankruptcy. However, in most cases, this is not true and an individual who files bankruptcy will be able to keep his or her home and car. This is because state or federal exemptions can be used to protect a certain amount of equity that a person has in his or her car and home.

In a chapter 13 bankruptcy, a debtor may be able to keep secured property by paying the creditor the value of any equity he or she has in the property. A chapter 13 bankruptcy can even be used to stop a car repossession or home foreclosure by allowing a debtor to catch up on back payments and become current with the loan.

In a chapter 7 bankruptcy, people can also generally keep their homes and cars. However filing bankruptcy will not get rid of the security interest that a lender has in the property. This means that although a person’s legal obligation to repay the loan goes away after a bankruptcy, the lender can still take back the property if the person fails to continue making payments on the loan. A person who wants to keep his or her car or home after bankruptcy can keep the property by either signing a reaffirmation agreement with the lender, continuing to make voluntary payments on the loan, or by paying the lender the value of the property. The best option depends on the individual’s unique set of circumstances.

If you are considering filing bankruptcy and have questions about protecting your home or car, contact a local bankruptcy attorney for help.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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An Increase in Foreclosure Activity is a Good Thing

An Increase in Foreclosure Activity is a Good Thing

It is certainly a very scary time receiving a notice of default and having to go through the process of foreclosure.  There are few things worse than losing one’s home.  However, an increase in foreclosure rates may be a sign that the housing market is on its way to recovery.  As industry analysts put it, “the sooner the inevitable foreclosures get cleared out, the better.”

The Associated Press reports that in the month of October, more U.S. homes entered into the foreclosure process than in previous months.  The Associated Press also reports that there was a monthly increase in the number of U.S. homes scheduled for auction, repossession, and notice of default.  As a result of this increase in the month of October, homes that likely will be lost to foreclosure have reached a seven-month high.  Although these figures sound like terrible news for those struggling to make payments, industry analysts urge the necessity of the foreclosures in order to bring on the revival of the housing market.

It seems as if this housing crisis has been around for quite some time.  Some have contested that government intervention, which has required tedious filing practices on the part of the lenders, is behind this slowed process.  However, RealtyTrac CEO James Saccacio is optimistic that this will change, he remarks, “We’ll eventually see foreclosure processing go up.”

Insider trading data suggests that some already are beginning to feel the revival of the market.  Trading in the real estate and construction markets have lead some to believe that a rebound is not too far off.

 

Source:

Rebecca Lipman, Foreclosures Rising: Are We Nearing the End of the Housing Crisis?

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Foreclosure Sales Down, but Will Likely Increase Later in 2011

During the second quarter of 2011, almost one third of all home sales were foreclosures. According to RealtyTrac Inc., foreclosure sales made up 31% of home sales during April through June 2011. A foreclosure sale occurs when a home is purchased after the owner receives a notice of default or when a home is repossessed. The second quarter foreclosure sales represent a decrease from the foreclosures during the first quarter of this year. However, the figure is six times the percentage of foreclosures that is considered healthy for the housing market. Overall, 265,087 homes that were in foreclosure were sold during the second quarter.

The percentage of foreclosure sales would have been larger without a federal and state investigation into the foreclosure process. An investigation has been launched because of defective foreclosure paperwork kept by banks and mortgage servicers. The investigation has caused foreclosures to be delayed and foreclosures will likely increase when the investigation is complete.

Nevada had the highest foreclosure percentage, with foreclosures making up 65% of all home sales. Arizona and California followed, with foreclosures accounting for 57% and 51% of home sales. Michigan, Colorado, Florida, Illinois, and Oregon also had foreclosure sales that made up at least one third of home sales.

 

 

Source:

Associated Press, Foreclosures Likely to Surge Again This Year, https://realestate.aol.com/blog/2011/08/25/foreclosures-likely-to-surge-again-this-year/ (accessed August 25, 2011).

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Late Mortgage Payments Increase

According to the Mortgage Bankers Association, the number of borrowers who were late on their mortgage payments rose to 12.87% in the second quarter of 2011. Prior to the second quarter of this year, the number of homeowners who were delinquent on their mortgage payments had been decreasing for over a year.

The 12.87% refers to mortgages that were at least 30 days overdue or in the foreclosure process. The second quarter figure represents a decrease from the 14.4% in the second quarter of 2010, but a slight increase from the 12.84% at the end of the first quarter of this year. The figure corresponds to 6.3 million homeowners who are behind on their mortgages.

The actual foreclosure rate is near its lowest in four years. However, this is largely due to government assistance programs and an investigation into foreclosure documents that has caused lenders to delay foreclosing. The increase in late mortgage payments illustrates how the rise in unemployment can affect the struggling housing market.

 

 

Source:

Maggie Shader, Delinquent Mortgage Payments on the Rise (accessed August 25, 2011).

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Pitfalls Of Debt Negotiation

When a person is in financial trouble, one way of dealing with creditors is negotiating a settlement where the debtor pays a lump sum to the creditor. Typically a debtor will offer a small percentage of what is owed to the creditor and the creditor will then accept the settlement and forgive the debtor for any remaining balance.

There are a few drawbacks to this approach. The first is that debt negation can have tax consequences that the debtor is unaware of. The amount of the forgiven debt is often considered taxable income. For example, if a debtor settles a $10,000 debt for $4,000, then the debtor may have to pay taxes on the remaining $6,000 balance. Typically the debtor will receive a 1099 from the creditor at the end of the year. And the forgiven debt will be treated as income by the Internal Revenue Service.

The next most obvious drawback is that the debtor must actually have a lump sum of money available to pay the creditor. Most people in financial trouble do not have these funds available. To obtain these funds, many debtors will cash out retirement accounts. This will cause the debtor even worse tax issues. If the money is in, for example, a in a tax protected account, the debtor will have to pay taxes on the funds when they are removed from the account and then will again be taxed on the difference between the settled amount and the debt which was owed. In addition, the debtor will also have depleted his/her retirement account which can raise issues for the debtor when retirement rolls around.  Not only will the debtor have less money in the account, but he/she will miss out on the interest which would have accumulated from the removed funds.

Another way that debtors acquire the funds to settle the debt is saving up. The problem with this is that creditors will typically only grant settlement to delinquent borrowers. That means that the debtor would need to stop making payments in order to get the settlement. However when one stops making payments on a credit card for example, the credit card will likely raise the interest rate to nearly 30% and then tack on countless fees and late charges. A balance of $500 can quickly grow to twice its original size. When the debt is finally settled, the debtor might be paying half of the debt, but the whole of the debt will be more than the person owed to begin with.

Not making the payments can also result in the creditor pursuing legal action against the debtor. The creditor can sue the debtor and obtain a judgment against them and then start garnishing the debtor’s wages or levying their bank accounts making it all the more impossible for the debtor to ever come up with enough funds to settle the debt. A person who has hired a debt negotiation company is still vulnerable to these collection efforts.

Another issue which debtors often run into is that they do not obtain the proper paperwork from the creditor to prove that the debt has been settled and the debtors later find themselves dealing with a collection agency attempting to collect on the debt which was already settled. Creditors will often sell bad debt in bulk to collection agencies for pennies on the dollar. The collection agency then attempts to collect on the debt. If they are unable to get any funds, they in turn sell it to a new collection agency and then that collection agency attempts to collect on the debt. If the debtor who settled the original debt does not have the proper documents to prove that the debt was settled, the debtor will have a difficult time dealing with the subsequent collection agencies.

Another problem with debt negotiation is debt negotiation companies themselves. These companies often have a debtor pay them a monthly payment which they then hold in escrow awaiting enough funds to effectively negotiate a settlement. Many of these companies will assign most of the initial payments to their fees.

Some of these companies fail to disclose that they cannot protect an individual from collection activity while the individual is attempting to save money for a settlement. Many debtors are caught by surprise when their wages are garnished because they believed they were offered some type of protection by the debt negotiation company.

In some circumstances, debt negation can be a real benefit to a debtor. However, the pitfalls are many and need to be heeded and weighed before choosing this route to deal with financial difficulties.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Consumer Bankruptcies Decrease in July

Consumer Bankruptcies Decrease in July

According to the American Bankruptcy Institute, consumer bankruptcy filings in July were down 18% from July 2010. Nationally, 113,470 consumer bankruptcies were filed in July of this year. In July 2010, 137,698 consumer bankruptcies were filed. The decrease in July continues the downward trend in bankruptcy filings in 2011. The number of filings in July represents the seventh straight month in which bankruptcy filings were lower than 2010 filings.  July consumer bankruptcy filings were also down 5% from the number filed in June of this year.

Samuel J. Gerdano, the Executive Director of the American Bankruptcy Institute, has said that “the continued decline in consumer bankruptcies in tandem with a sluggish economy is a reflection of the deleveraging of household debts and tightening of consumer credit over the past year.” Total consumer bankruptcy filings for 2011 are expected to be lower than the number filed in 2010.

 

Source:

July Consumer Bankruptcy Filings Fall 18 Percent From Last Year, https://www.abiworld.org/AM/Template.cfm?Section=Home&CONTENTID=64221&TEMPLATE=/CM/ContentDisplay.cfm (accessed August 9, 2011).

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Burt Reynolds Facing Foreclosure

Burt Reynolds Facing Foreclosure

Merrill Lynch Credit Corporation has sued Burt Reynolds over his Florida home. According to the lawsuit, the 75-year-old actor is behind $1.2 million on the mortgage for his home in Hobe Sound, Florida. Reynolds has not made a payment on the home since September 2010. BankAtlantic holds a second mortgage of $750,000 on the home and was also named in the lawsuit. Reynolds’ Florida home is 12,500 square feet and is valued at $2.4 million. The actor attempted to sell the home in 2009, listing the property at $8.9 million. However, a poor housing market and high asking price made it difficult to sell the home.

The foreclosure suit is not the first time Reynolds has faced financial difficulty. In the 1990s, Reynolds filed for Chapter 11 bankruptcy after a divorce and poor career and investment choices. Reynolds also owns a home in Little Rock, Arkansas. He is currently filming a made for TV movie.

 

Source:

Tim Kenneally, Burt Reynolds Slapped with Foreclosure Lawsuit over Florida Home, https://movies.msn.com/movies/article.aspx?news=664577&GT1=28101 (accessed August 18, 2011).

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Lessons The Average Person Contemplating Bankruptcy Can Take Away From The Denny Hecker Case

Much attention has recently been given to the disastrous bankruptcy filing of Denny Hecker. Clearly, the Hecker case is not a run of the mill case; however average individuals contemplating bankruptcy should take note of the things which got Mr. Hecker in hot water. These things can happen to average individuals as well.

The most important lesson an average person should take from this case is that one should never attempt to hide assets in a bankruptcy. When an individual files a bankruptcy they are required to list all of their assets. Most people are allowed to keep their assets as long as they are properly disclosed. Not disclosing an asset will result not only in the loss of that asset, but may result in the revocation of one’s bankruptcy discharge. A discharge is the order given by the judge at the end of a bankruptcy which alleviates the bankruptcy filer’s obligation on his/her debts. If a discharge is revoked, the debtor will have a bankruptcy on their record and will still owe all of their debt.
Many people may wonder how a non-disclosed asset is discovered in a bankruptcy. Simply put, it’s not hard to find undisclosed assets. When a person files a bankruptcy, a trustee is assigned to his/her case. It is the trustee’s job to try to verify that a person has been truthful in disclosing his/her assets in the bankruptcy. The trustee will typically run a public records search on a bankruptcy filer; this search shows all car titles, boat titles and real property listed in the debtor’s name. The trustee will also examine bank records. These records will show if a debtor has recently been making large purchases.

In addition, a trustee will often review a divorce decree to see if assets have recently been awarded to the bankruptcy filer. A trustee may also get tips from creditors regarding potentially non-disclosed assets.

If a trustee finds a significant asset that has not been disclosed, the trustee may move to have the case dismissed.

Another lesson learned from the Hecker case which the average person should walk away with is that transferring assets to another person before filing a bankruptcy will not help an individual keep the asset. In fact it will cause significant legal issues for the person to whom the individual has transferred the property. It may also cause the individual filing to loss their discharge.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Mortgage Modifications in Bankruptcy

A new set of rules regarding the impact of a bankruptcy on a mortgage modification has taken effect as of June 1. Under these rules, a bankruptcy will not disrupt a HAMP modification.

Before this rule change, the filing of a bankruptcy would often disrupt the modification process. A modification typically will take several months to get set up. After it is set up, there is often a trial period usually lasting about three months. After the trial period the modification would be made permanent.

It used to be the case that if a bankruptcy was filed before the modification was made permanent, that the bankruptcy would halt the modification and the process would have to be started again. A new rule prevents the disruption of this process by a bankruptcy filing. Now a person can file a bankruptcy without having the modification halted.

In addition these new rules make it so that a mortgage company can not deny a HAMP modification because of a debtor did not sign a reaffirmation agreement after a bankruptcy filing. (A reaffirmation agreement essentially pulls a loan out of a bankruptcy. If an individual signs a reaffirmation agreement, they fully obligate themselves on the debt again. This is not always in the best interest of the debtor and mortgage companies often do not offer reaffirmation agreements if a person is behind on his/her mortgage. In addition, some mortgage companies simply do not offer the agreements.) It used to be the case that if an individual filed a bankruptcy and did not reaffirm the mortgage, the mortgage company would refuse to work with the person on a modification. Mortgage companies are no longer allowed to use the bankruptcy and the subsequent failure to reaffirm the mortgage as a basis deny a person a modification. In other words, a person may still receive a HAMP modification following a bankruptcy.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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