Federal bankruptcy courts oversee US bankruptcy filings. Most filers only need to appear in court once, but there can be exceptions.
STRAIGHT BANKRUPTCY- CHAPTER 7 In a straight bankruptcy under Chapter 7, a debtor files a petition asking the court to discharge his or her debts. The basic idea in a Chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up your property except for EXEMPT property which the law allows you to keep. In many cases, much or all of your property may be exempt. Property which is not exempt is sold and the money distributed to creditors. In most cases, Chapter 7 debtors KEEP all of their property. Filing for Chapter 7 bankruptcy places an automatic stay upon the attempts of your creditors to collect debts owed by you. In order that you get the maximum benefit from your bankruptcy, you must understand exactly what is required of you during the months that follow your filing. Under Chapter 7 you also have a number of important rights: RIGHTS 1. You cannot be harassed or contacted by any creditors. If a creditor calls, put them in touch with your attorney immediately. 2. You have a right to retain all of your property unless your attorney has stipulated otherwise. CHAPTER 13 BANKRUPTCY In a Chapter 13 case, you, the debtor, file a PLAN showing how you will pay off some of your past-due and current debts over an extended period, normally three (3) years. This is different from Chapter 7 bankruptcy, where you ask the court to wipe out (discharge) your debts. The most important thing about a Chapter 13 case is that it will allow you to keep valuable property – especially your home – which might otherwise be lost. You should consider filing a Chapter 13 plan if you: 1. Own your home and are in danger of losing it because of money problems; 2. Are behind on debt payments, but can catch up if given some time, and 3. Have regular income (including government benefits such as social security or public assistance). SECURED CREDITORS Certain creditors may have a SECURITY INTEREST in some of your property – that is, a right in your property to make sure you pay your debt. When you borrow money, the lender may take a security interest in some of your property (collateral). If you don’t make your loan payments, the lender may be able to foreclose on or repossess that property. Other creditors may not have any security interest in your property. Such creditors are called unsecured or general creditors. Secured creditors generally have greater rights to your property than unsecured creditors. A creditor may have a security interest or other claim against property which you claim as exempt. You may be able to keep this property in some situations. DISCHARGE If everything goes normally in a bankruptcy case, the final thing the court does is to grant you a DISCHARGE, which excuses you from paying all of your debts (except possibly for the few mentioned above). The discharge order also forbids creditors from doing anything to try to collect a debt that has been discharged. The court can refuse to grant a discharge, but only in very limited cases if you have done something improper, such as: trying to cheat a creditor by hiding your property; giving false information to the court; refusing to obey a court order, etc.
How Does Chapter 13 Bankruptcy Help? Chapter 13 bankruptcy has several benefits. After you file, it can enable you to: Repay missed arrears over time: You can arrange a repayment plan with your mortgage servicer. Typically, Chapter 13 bankruptcy enables you to establish a plan that lasts anywhere from three to five years. It gives you time to get your mortgage current. If your mortgage isn*t current and you*re otherwise in good financial standing, contact your lender to see if they*re willing to work out a deal, before filing for bankruptcy. Pay a fraction of or eliminate unsecured debts: With these debts reduced or eliminated, you free up cash to pay the mortgage. Chapter 13 bankruptcy requires you to apply disposable income to paying off your debts, in addition to any back taxes. Unsecured debt that remains after the three- to five-year term is discharged, except for student loans, child support, and other debt exempt from bankruptcy laws. Ask the court to reduce certain types of secured debts: A judge may reduce some types of secured debts, such as those related to your automobile, to the market value of that collateral. Interest rates may be reduced to the going rate as well. Reduced payments may mean more money to pay towards a mortgage. A court may also cram down debt for cars purchased at least 30 months (910 days) prior to a bankruptcy filing, rental or vacation homes, or personal property such as computers, jewelry, or furniture purchased at least a year prior to your filing date. Contest the legality of a foreclosure: The bankruptcy court can investigate whether a proposed foreclosure is legitimate. Perhaps the loan servicer was in error and misjudged the facts of why foreclosure was being sought. For example, you can contest that the mortgage servicer failed to properly credit your payments. If the court decides in your favor, the basis for foreclosure would be eliminated, particularly if you convert a Chapter 13 to a Chapter 7 bankruptcy case later. Turn your second/third mortgage into an unsecured debt: Homeowners often apply for a second mortgage to cover their down payment, and even a third mortgage to acquire a home equity line of credit. If you*ve fallen behind on your first mortgage, most likely you*ve done so on these too. Chapter 13 bankruptcy enables you to eliminate mortgages not secured by your home*s value. By reclassifying them as unsecured debts, you*re required to pay only a portion of these based on your disposable income. You may also get rid of liens on your home (from second and third mortgages) if they*re unsecured by the property. How Do I Get Caught Up on My Mortgage? Continue making regular payments to your mortgage lender if you want to keep your home. A discharge won*t eliminate the lien on your property, unless you*re stripping a wholly unsecured second mortgage from it. Depending on the court decision and your jurisdiction, you will make payments directly to the lender or the bankruptcy trustee. You typically have three to five years to catch up on missed payments under a Chapter 13 plan, while meeting your current mortgage obligations. If you continue to miss mortgage payments after filing for Chapter 13 bankruptcy, your lender can take action against you. They may file a motion with the bankruptcy court, and request the automatic stay to be lifted. This means collection actions could resume and the usual Chapter 13 benefits would not apply, including the luxury of keeping your home. A creditor may request an automatic stay be lifted if you*re behind on mortgage payments, automobile payments, or have delayed paying creditors while in a Chapter 13 plan. Such action may also be taken if you fail to keep your home or vehicle insured or your creditor holds a non-dischargeable debt and is seeking permission to collect it. In other words, alimony, child support, or criminal restitution could still be collected as these are not wiped out by bankruptcy. An attorney can help determine whether you should file for bankruptcy and which type of bankruptcy is right for you. They can also help negotiate the process and explain the rights provided by filing for bankruptcy protection. At OakTree Law, we can help you understand all the details of your Chapter 13 bankruptcy, stop all foreclosure procedures, and protect your property and possessions from a forced sale. Call us today or request a free evaluation to get started.
I NEED HELP ASAP!!! More than likely, you have just did not happen upon debt. More likely is that your debt has been growing over the years. Some of it you remember whilst other parts of it you have forgotten. Research has shown that most people wait 2.4 years before they consult with a bankruptcy attorney. That is 2.4 years of phone calls, letters, threats, and basically all out warfare from your creditors. Many people employ the three card shell game. Whereby they simply pay one debt and skip others. Either way it is exhausting and a long road before that first bankruptcy attorney consultation. But then like a light in the middle of the night and often as my phone records show, somethings causes you to ask for help. In fact many of my clients schedule their first appointment using my answering service in the middle of the night. Why is that? Because most of my clients have not slept well in years. Appointment Set, NOW WHAT? So you bit the bullet and did the unthinkable! You made an appointment to see the dreaded bankruptcy attorney. Often as a point of humor I will ask my clients upon entering my office "how are you doing." It's without a need for an answer because if you were doing great this meeting wouldn't happen. Often my follow up is "well I am not the adoption attorney so you probably are not happy to be here!" But you are here and now what? A bankruptcy attorney is a jack of all trades. We have to look at your entire life and see how declaring bankruptcy will effect. Usually it takes around 30 minutes of consultation to even get a picture of what issues your client will present. In order to build this picture you as the client can help your attorney by bringing a few things: 1) pay check stubs - best case scenario is every pay stub from every source of income for the prior six months. Why because, bankruptcy laws require us to look back at the least six months income to determine the income going forward 2) most recent state and federal tax returns - this helps the attorney color in the picture of your household income. 3) car registration - Post 2005 bankruptcy amendments, the car registration is needed to determine how long the client has owned the car. A vehicle owned for greater than 910 days is valued differently than a vehicle owned for less than 910 days. 4) statements and bills - Although less applicable nowadays because of the availability of credit reports, many times there are creditors that do not report to the three credit agencies. This is the case with many medical bills. 5) listing all your debts - This is the hardest for most clients to do. Whether it be because the client can not remember the debts or because sometimes it is just too nerve wrecking to conceptualize and realize the amount of debt on paper. However, a good list of debts can be the key difference between a great consultation and a long drawn out consultation. Many of my clients do not have any of the above when they come in. Do they not get seen? No, they just end up spending a lot more time reciting and trying to remember things while the consultation occurs. The more you bring the better the picture we can paint together. Don't let your google search replace my LAW DEGREE!! Most clients present in my office and have done tons of "google-lawyer" work. Meaning they drained their ipad and computer batteries researching bankruptcy on google. I once had a coffee cup that said "don't let your google search replace my law degree." That said, a successful bankruptcy consultation requires having a open mind. You can research everything on google and never get the right answer. Just do not use google to solve anything other than the ending to the movie you are watching. Google lawyering can cause extreme anxiety and without good cause. My dear friend once explained it like this, "there is no law that stops you from you yourself removing your own appendix rather than paying a doctor but no one thinks its a great idea to do without a doctor." Same principle applies to bankruptcy law. In fact bankruptcy law is so complex very few attorneys practice it. So yes, you can find answers online but probably just do not know what question the answers go to! My largest issue in consultations is when the client is hiding information because what the google lawyer or friend told them. Do not hide facts. If we know about things then we can work around them and plan. Just be an open book in the consultation. Again research says 2.4 years of weathering under debt before your make the first consultation with a bankruptcy attorney, all the better reason to have an open mind.
The Do's for Filing Bankruptcy Without an Attorney The following is a list of general directions to abide if you are filing your own bankruptcy case: 1. Organize Your Financial Records Before Filing. It is important that you have pay stubs, bank statements, and tax returns to submit to the Court and, if necessary, your assigned Chapter 7 Trustee. You will also need these documents to complete your bankruptcy petition and schedules. 2. List all of your creditors in the bankruptcy schedules. This includes loans from friends and/or family members. In the best-case scenario, failure to do so will result in the debt failing to be discharged. 3. List all your assets in the bankruptcy schedules. Keep in mind that this can include something as obvious as a house or a car, but also encompasses pending legal claims, family heirlooms stored in your attic, or even the right to inherit property! When in doubt: Disclose, Disclose, Disclose! Failure to do so may result in a denial of discharge * meaning, your debts will not go away * or, even worse, fines and/or criminal prosecution. More on that later... 4. Maintain timely payments on any loans that you're seeking to keep, or "Reaffirm". Usually, this will involve a car loan or mortgage payment. Sometimes, these lenders may hesitate to accept payments from you, in an effort to avoid violating your bankruptcy protections. Thus, its often a good idea to maintain payment records and, if you can, copies of checks, envelopes, or payment receipts, as applicable... just in case a bank refuses to take your payment then proceeds to complain about not receiving your payment! This actually happens more often than you might imagine. 5. Stop all automatic payments on debts that you plan to eliminate through your bankruptcy case. If you have questions about how to do this, inquiries can probably be directed to an employee at your local bank branch. 6. If you are being sued, make sure to include the address(es) of your opposing law firm(s). This will ensure that they stop their prosecutorial efforts shortly after your bankruptcy case is filed. If you do not list them, and one or more of your creditors do not "get the memo", you may have to take time-consuming efforts to re-notice them. 7. Keep copies of all documents relating to your bankruptcy case. This can pay off if one of your creditors "doesn't get the memo" and attempts to collect from you after your case is over. Plus, there are fees associated with accessing your case documents after they are filed. 8. If you owe money to a Credit Union, re-route your direct deposit if you owe money to it. If you hold an account with a Credit Union, and you also have taken a loan from this same Credit Union, you should strongly consider re-routing your paycheck direct deposit to a different account. Failure to do so could result in denial of access, or delayed access, to your account after the filing of your case. 9. Send requested documents to your Trustee, if any are requested, in advance of your 341 Meeting. This will ensure that the Trustee has the necessary information to push your case through the process more quickly. 10. Be 100% truthful to with your Trustee before, during, and after your 341 Meeting. The Trustee has the power to recommend that your request for bankruptcy debt relief be granted or denied - in other words, if they say "Jump", you say "How high?". 11. Be sure to complete your bankruptcy petition as truthfully and accurately as possible. Again, when in doubt: Disclose, Disclose, Disclose! The Don't's for Filing Bankruptcy Without an Attorney The following is a list of conduct to avoid if you are filing your own bankruptcy case: 1. Max out your credit cards shortly before filing your case. This is a very bad idea. This could lead to these debts being excluded from the bankruptcy discharge or, worse yet, the dismissal of your entire case for attempting to abuse the system. 2. Attempt to give away expensive gifts in anticipation of filing your case. Believe it or not, the Chapter 7 Trustee has the power to reverse transfers made before the filing of your case - this means that a Chapter 7 Trustee can actually sue the property recipient to get the transferred property back! Given that most Trustees tend to request current copies of bank statements, deeds, and/or vehicle titles, there's no point in being anything less than 100% truthful in your representations to the Court. 3. Fail to report assets in your bankruptcy schedules. Again, this is extremely important. Bankruptcy fraud is punishable by both gigantic fines and jail time. It doesn't matter how small or insignificant you think the value of the property in question is. When in doubt: Disclose, Disclose, Disclose! The bankruptcy forms where you're expected to report your assets are very broad in scope. Read them over very, very carefully, and make sure that you've listed everything before you file anything with the Court. 4. Cash out any IRA's, 401(k)'s, Pensions, Annuities, or other Retirement Accounts. ... At least not right before filing your bankruptcy case. While these funds are usually exempt - meaning that you get to keep them after your bankruptcy case is over - they only stay exempt if they remain inside of the retirement account they're currently deposited in. In short, you do not stand to benefit from cashing out your retirement accounts immediately before filing your case, so don't do it! 5. Take out a cash advance from a credit card. If done within 6 months prior to the filing of your bankruptcy case, liabilities associated with a cash advance may not be eliminated by your bankruptcy case. 6. Pay off a credit card, right before filing, in order to keep it after your case is over. Filing a bankruptcy case results in all 3 credit bureaus notifying the lenders on your credit report. In all likelihood, your credit card will probably be cancelled after you've just paid it off, anyway. 7. Lie to the Judge and/or the Chapter 7 Trustee. If you're filing for bankruptcy to get your life back on track, this is tactic will achieve the exact opposite. If you are caught lying to the Court and/or the Chapter 7 Trustee, the best-case scenario is that your request for debt relief is denied by the Court - without massive fines or jail time - if you catch my drift... 8. Conceal relevant financial information from the Court and/or Chapter 7 Trustee. If for no other reason, there's a high probability that you will get caught. Judges and their Court employees do nothing but process bankruptcy cases all day, every day - and they've likely seen it all. They have little tolerance - or sympathy - for dishonest bankruptcy filers. Conclusion Filing a bankruptcy case on your own will probably be an extremely daunting task. By following this list of "Do's", and avoiding the list "Don't's", you will be more likely to realize a successful outcome in relation to your case. Please keep in mind that these are general recommendations, and definitely not a complete guide to filing a bankruptcy petition - nowhere close! If you have questions about the law or rules of procedure, I*d strongly recommend that you consult with an attorney. Warner & Warner, PLLC, is a debt relief organization and assists people with filing for bankruptcy.
Here's the latest episode of my "Mr. Salorio Explains" podcast series, and this installment examines student loans and bankruptcy. #studentloans #bankruptcy
Pre-Foreclosure There are several pre-foreclosure steps the bank must take before commencing a foreclosure action. First, every mortgage has a clause that states that 30 days before a foreclosure begins, the bank will send you a notice that proceedings may commence. This is known as the *30-day default notice* or the *demand letter.* The clause requiring it can be found in your mortgage agreement. The mortgage usually states that the 30-day letter is to be sent by first-class mail. The mortgage also states that this is condition that the bank must comply with before bringing a foreclosure action. In New York, cases have been dismissed for failure for the bank to properly provide a 30-day notice. See Wells Fargo v. Eisler 2014, N.Y Slip. Op. 04753, 118 A.D. 3d. 982 (2014). Additionally, the bank must also send a notice under RPAPL * 1304, more commonly known as a *90-day notice* or a *1304 notice*. The 90-day letter is a specific form which the bank must send by first class and certified mail, in order to commence foreclosure proceedings. The 90-day letter must provide specific information and a date by which the borrower can cure the default. A failure to send a 90-day letter would preclude the bank from commencing a foreclosure action, or the action may be dismissed if the bank does not properly send the 90-day letter. See Aurora v. Weisblum, 2011 N.Y. Slip. Op .04184, 85 AD3d 95. If the borrower fails to cure the default, the bank will proceed and start a foreclosure action in court. A summons and complaint will filed, the court will assign an index number to the case and then the bank will serve the borrower at the subject home and/or the borrower*s last known address. You must properly be served with the summons and complaint, either by personal service at your usual place of business or at home, or you may be served by *suitable service**which means that if you are not home, you may be served by having someone who is of *suitable age* and *discretion* and the summons and complaint must be mailed to you. Failure to properly serve can lead to dismissal of the action. Once you are served, you have 20 days to file an answer, or 30 if the summons and complaint was mailed to you. The answer is your assertion of defenses in a foreclosure action. Certain defenses must be raised in the answer or they will be waived. The answer usually asserts defenses such as standing (whether the bank commencing the action is the owner of the promissory note), the 30-day letter, and the 90-day letter, personal jurisdiction, unjust enrichment, laches, among other available defenses. Certain defenses must be raised or they will be waived. For example, standing (the right of the bank to sue) will be waived unless it is raised with the filed answer. It is imperative to hire a NYC foreclosure lawyer to assist you in the preparation of the answer and defense of your foreclosure case. Foreclosure Settlement Conference and Litigation Once you file your answer, the bank will then proceed to filing a request for judicial intervention, and the court will schedule the case for a foreclosure settlement conference before a referee. It is imperative that you attend the settlement conference. The settlement conference is a mediation where you may be given a range of loss mitigation options. It is possible that the bank will tell you that you are eligible for a streamline modification, but will also present other options such as short-sale or give you a chance to apply for a permanent modification. During this process, the bank is not allowed to file any motion in the foreclosure action. This is a violation of the Customer Protection Financial Bureau*s *dual tracking* law. During this process, you may be given an opportunity for a trial modification for three months. If you make the required payments for a trial modification, the bank will convert it to a *permanent* modification and the case will be marked settled. Once marked settled, the case will be discontinued. In the instance that you have not filed an answer, you have 30 days to do so after the first settlement conference. If the case cannot be settled at the foreclosure conference part, it is released from the part, and the bank will proceed with litigation seeking to foreclose. In this case, the bank will file a motion for summary judgment, which argues that there is no triable issue of fact, and that the bank is entitled to judgment as a matter of law, and seek to have a referee appointed that will calculate the amount owed to the bank. The borrower/homeowner, then, would have an opportunity to oppose the motion. If the borrower is successful, the matter may go to trial. In many instances, trials will relate to standing or receipt of the 90-day notice. These are the *hotly contested* issues the courts are focused on at this time. If the homeowner is successful at trial, the case would get dismissed. If the bank is successful at trial, then they can move for a judgment of foreclosure and sale, which permits the bank to auction the property. You can also appeal the decision of the trial court. If you lose on appeal, a Judgment of Foreclosure and Sale gets filed, you can oppose it, but the likelihood of winning is small. Afterwards, the property goes to sale. The referee prepares the terms of sale for the auction, and the property is auctioned off at a public auction. You must be served with a Notice of Sale before the property goes to auction. In this instance, the property may not close, and you may have the opportunity to redeem it from the buyer. It is imperative that, as a borrower, you do not let the case get this far. There are many available options to you, and the foreclosure process in New York is long and complex. Therefore, it is very important that you contact our Queens and Brooklyn foreclosure attorneys to discuss your options. We are here to help you keep the property you worked hard to own and maintain.