Posted by admin on Nov 15, 2008 in
Uncategorized I hear that question more and more these days. Let’s first discuss what is Bankruptcy.
Bankruptcy is a term for a legal process to help payback or get rid of debt. The key is that it is legal.
There are a few forms of Bankruptcy out there. Law changes over the past few years have made it so that not all options are available to everyone. There are really two popular versions. Chapter 7 bankruptcy is where you ask the court to get rid of your debt and void your contracts. Chapter 13 bankruptcy is where you have the ability and would like to repay some of the debt you owe.
There is a finacial test that determines if you are eligible for a Chapter 7. You may have to switch to a 13 if you make to much money.
So what is the process to declare bankruptcy?
1) Find a good lawyer. You can declare bankruptcy yourself, I don’t recommend it unless you’ve been through it before. Finding a good lawyer is probably the hardest part. There are so many bankruptcy’s going on now. Find one that says they have done many cases with your exact situation.
2) You fill out a finacial statement for your attorney. You provide bills and list your creditors along with your tax returns for the last couple years.
3) Your attorney will fill out the court paper work. Once that is done verify and sign the papers. Most attorneys file electronicly now. So you should get your case number pretty quick. (You need that sooner than later.)
4) The court will send you and your creditors a letter saying when the trustee meeting is. These meetings sometimes have different names (first meeting of creditors, 341 hearing). Your creditors will also get a paper to verify the claim you made that you owe them money. If they forget to return it….to bad for them.
5) You go to the hearing with the trustee. Your creditors are invited but they generally do not attend. The trustee verifies who you are. They then walk through your paper work. They will ask questions if they have any. The trustee doesn’t ask how you got in the situation or what you did with the money. They just ask questions about your paperwork.
6) The trustee will let your lawyer know after the meeting if there are any issues or objections. Sometimes they may say that in the prior meeting to get it ironed out right then.
7) If there are no objections it will go to the bankruptcy judge 30 days later. You normally do not have to attened. Usually if there is an objection that cannot be solved then you may have to go. That is not normally the case. If it is a chapter 7 you will get a discharge and its all over. If it is a chapter 13 your plan will be confirmed.
8. On a chapter 13, you will get a discharge once all your payments have been made.
Here are some common questions:
Can you keep your cars? Depends. Can you afford them? Are they sports cars with an excessive price tag?
Can you keep your house? Depends again. Can you afford it? Chapter 13 will stop a foreclosure and get things back on the right track. Chapter 7 usually is a keep or loose. Payment plans are generally not an option in chapter 7.
I guess here might be a better way to explain it. The trustee helps keep the process fair to you and your creditors. If you have an average house with normal things, your pretty much don’t have to worry. If you can still afford your house and car you’ll probably get to keep them. If your living a millionaire life style and just want to erase your debt, then you may need to worry.
Do not be afraid of bankruptcy. It is a painless process. Usually people are stressed to begin with when they deiced about bankruptcy, so it seems worse. If your getting calls all day long from bill collectors, or are behind on your mortgage and the mortgage company wont help. Bankruptcy can help all of that.
The second you file your case, bill collectors have to stop calling. If you just got foreclosure papers, bankruptcy can stop them as long as the sheriffs sale hasn’t happened. A lawyer can better explain all your options and how they apply to you. Do not be scared to pick up the phone and call for help.
I am not a lawyer. This is all my opinion and observation from seeing the process from different vantage points. So always seek out an attorney. Get a good one.
Tags: attorney, bankruptcy
Posted by admin on Nov 13, 2008 in
Uncategorized 
CNN reported today that 85,000 more homes went into foreclosure last month. That number is likely higher if your throw bankruptcies into it. 279,561 families received notice that they were being foreclosed on. New lending is not the problem. Over the last few years millions of homes went into foreclosure. Many more foreclosures were stopped, but the credit of the people foreclosed on was trashed. So will the banks lower lending standards to allow those people to borrow again? No. So how is new money to lend going to help?
What I would like to know is how many families foreclosed on still have any income? My guess is probably 70% of the people are making some money and will be paying someone rent.
So let me ask this:
Why would a bank foreclose on someone and take a huge loss instead of re-evaluating the persons situation and adjust the loan?
I know. I’ve been there. Between the energy costs going up, medical care going up, and salary going down it was impossible to make our payments. Was the mortgage company willing to work with us? Sure if you consider a balloon payment after three months along with no guarantee they will re-adjust your mortgage working with you. When asked about the bail out and why they would choose to loose over 100k for there investors and make the tax payers pay, they responded they don’t care. I don’t see how a fixed rate loan with an extended term hurts them. But another empty house at a loss does not?
I have read hundreds of stories with the same general story line. Our government has backed away from buying bad mortgage assets and now wants to buy stock to help the idiots out.
Using the word idiots for educated banking professionals is a bit pathetic. When you are willing to take a loss and throw out a family you should be put in jail. The American thing to do is reach out a hand to your fellow American. At 85,000 a month you can’t keep peddling the sub-prime mortgage crap as the reason for the failure. A win-win situation is better. I would be all for the government covering the difference or an offset of the loss in revenue after an adjustment. As long as the loan wasn’t price gouging in the first place. Why should we the people foot the bill for a total loss because the bank is unwilling to work with its customers. Oh wait. Who is the customer? The customer is share holders and holders of the secruitized pool of mortgages. The debtors is just scum. We were customers when we were shopping for the loan. After it was given we are just debtors who owe.
A good for instance is my natural gas bill went from around $400 a month up to $1200 a month over three years. All because rates went up. Who gets blamed for the foreclosure….The customer who took the loan? The mortgage company who made it? But in the north you can’t live without heat. At 55 degrees inside all winter I can’t see doing better on conserving energy other than redoing the whole house insulation. So the banks and main stream media really don’t like to talk about all the reasons for the foreclosure mess. The fingers may start to point away from the banks.
In a good majority of the cases nobody is to blame, but collectively we are all to blame. When we watch our neighbors move out. When we watch our kids cry. The fact that we do nothing as a country but bill collect on our neighbors is sad. When we give billions to banks while kids get put out on the street is pathetic. While homes get over grown with weeds and set empty we continue to deal with homelessness is truly pathetic.
What can people do? Help your neighbor. If your a lawyer offer advice to your neighbor. If your a banker go look in the mirror and wonder if your next to be out on the street. Write and call your congressional representatives. We need to reach out to people.
Just like 9/11 when we said divided we fail. Divided on this topic will truly cause us to fail.
Tags: bailout, foreclosure
Posted by admin on Nov 12, 2008 in
Uncategorized Only in America can you loose a ton of money in the stock market casino and get your money back. Do I blame AIG for their bailout? Not really. If I was a CEO and in deep because I had little risk mitigation related to debt that was obviously going bad, I would ask for money. I would also love to keep my job as CEO with the promise to make it better. So let me ask these questions.
Will the bailout of AIG and others help the guy who lost his job and/or his home?
Will the bailout stop bill collectors from calling him/her every 15 minutes?
In the short term the answer is no. Then what about the long term?
I believe the answer is still no.
Every paper talks about a credit crunch. People can’t get access to credit. Alright lets take a look at this. People cannot get access to money that some loan shark bank is going to collect interest on. When did it become a sense of pride to be able to borrow 200k for a house. Then pay 600k over the life of the loan? Freeing up credit will short term help the economy but put people deeper in debt.
The first step on the road to recover is to stop using the credit. It should be a crime to put people into a situation where they have to finance a washing machine. Other countries do not work that way. Pride is owning that car with out a loan. Pride is looking at the house that’s 100% yours. Credit isn’t having something earned it’s having something borrowed with a fee added.
If a company pays all its bills, all its salaries, and has some money in the bank its doing good. When did it become required a company makes 100 billion in profit after expenses every year or else its doing bad. Companies blame the union, health care costs, and the economy when they don’t make 101 billion next year.
Companies say they have to send jobs over seas to get to the 101 billion mark (or what ever that number is). Boy, I sure want to cry a river on that one. When their product has saturated the market and nobody else will buy it, profits won’t go any higher, so they reduce cost. Not because the company is doing bad, but because the stock price will be effected. Who does that effect? CEO’s compensation is usually tied directly to the stock price not the USA unemployment rate. Shareholders are effected. The stock market has always been for at risk capital.
When did that change? Is the stock market now a bank? People put stocks into their 401k buy selecting options in their plan. Now retiree’s are effected. Wow. Were we blind sided by that. When was the stock market a guaranteed return on your investment?
So now were forced to reward companies for greed to save some retirement plans.
So what can you do?
Write your congress person and request oversight on the bailout. Also, stop supporting companies that take the money but there is no direct impact to the working class.
I’ll be having more rants soon. So stay tuned.
Tags: 401k, AIG, bailout