Hey, but don’t you lose most all your other assets in a bankruptcy? I don’t know bankruptcy. I suppose if you don’t have many assets to lose anyway, bankruptcy could work.
Any BK lawyers out there?
For many borrowers, this makes a Chapter 13 bankruptcy a better choice than a foreclosure. With a foreclosure, the borrower loses the house - and the 2nd lien holder might still pursue the borrower (unless they release the lien for some compensation, like under HAFA).
With a bankruptcy - under certain circumstances - the borrower keeps the house, and the 2nd lien is converted to unsecured debt and does not have to be paid in full. This is probably part of the reason for sharp increase in bankruptcy filings.
Boy, I don’t get this at all.
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RE Investor 07.16.10 at 10:14 am
My understanding is that under Chap 13, you set up a repayment schedule over a 3 to 5 year period, and are allowed to keep your property. The bankruptcy trustee can discharge some debts at their descretion, and in some cases (such as a second) the lender can elect to receive a settlement rather than chance the trustee discharging it. Totally depends on circumstances.
Chap 7 is when you are forced to liquidate non exempt property, which is usually up to $150,000 Equity in your primary home, $4000.00 for a car, and then various other amounts for household items. Frankly for most people who are not totally destitute, chap 13 is a better alternative. Hopefully under most circumstances, just getting the bank to the table is enough to make some changes. The biggest issues seem to be that when you contact the bank for a modification, the person you talk to is NOT the person that can make a decision, and then you get stuck in the bureacracy, whereas when you are at a Chap 13 (forget the legal term for the meeting) there is a person face to face with a trustee that can negotiate a settlement. That may be why a bankruptcy is better than foreclosure - at least you can talk to someone in authority from the bank.
russ 07.16.10 at 2:27 pm
13 didn’t work for me last year..this is not forgiveness, it is repayment….and lawyers lie do not trust what they say up front…I can’t make that any clearer……..
13 stops the foreclosure, but not forever. If you can’t agee with the bank on how to proceed (especially when behind on payments) then the bank can still foreclose.
I was told it would be 3 years. It actually was 5 years (is this way if you make more than 48k), which meant I would be paying back 70% on my other credit lines. (I negotiated them for 20-30% later on). And at end of 5 years you still owe the balances on the cards.
I was told the 2nd would be discharged….nope..the second became a giant credit card. The house had a single short sale bid for 256k after 100+ people looked at it, putting it under the second value. But they go by the BofA index, whatever that is..which had the inflated not true value at 340k…so no removal of 2nd. At end of 5 years you still owe balance on the second.
The trustee gets 10% of all the money you send in each month as a fee….thats 10% less to your creditors, and 10% more that you’ll owe to your creditors at the end of the 13.
No matter what you list for cost of living, they go by some “government standard” for the area for cost of living (not anywhere near reality as they don’t count food and fuel cost increases), which means you have to send in a lot more money each month than you think…
You cant do anything without going through the court..buy another car, etc.
If you get in increase in pay, all of the increase must goe into the monthy payment to the trustee.
John Wake 07.16.10 at 3:17 pm
russ, Holy Mackerel! What a terrible deal!
russ 07.17.10 at 12:12 am
that’s why I cancelled the 13 shortly after it was filed…
The lawyer lied through his teeth and I’m out 3500…
all the lawyer wants to do is file…they don’t give a damn about you, your situation, or if filing is good or bad for you…the lawyers just want to collect the filing fee and move on to the next victim…..
you have to solve your situation yourself…there is no place to turn to….
russ 07.17.10 at 12:14 am
another point…
even “credit counseling” outfits are just extentions of the banks to get you to pay back the 30% interest credit card bill…its not about you, its about the bank….
remember, there are no “Credit Card Companies”…credit cards are issued by banks….
Lee 08.12.10 at 10:35 pm
Russ,
I’d love to talk to you about Chap 13.
I’m thinking about doing the same thing but I’m worried the lawyers are only in it for the filing fee.
Plus, what did you say to the credit card companies to negotiate them down to repay only 20-30% of what you owed?
russ 08.13.10 at 10:54 pm
The lawyers are in it for the money…
Chapter 13 doesn’t clear out anything…it is a reorganization so you can pay back what you owe…at the end you still owe the balances due…its insane!..
The bank will only settle if you agree to pay the settlement within 93 days, over 4 payments…why 93 days?….cause when Obama got in the first thing he did was make it the law you have to pay back in 93 days. Thanks a lot obama!!!…Used to be any amount of time, and would always be more than 93 day. Also, the first payment is due immediatly, then the next at the end of the month, then the next two months. So negotiate at the beginning of the month. If you let the cc discharge from the bank, the collection agency can now do 5 months or whatever time, no law for them. One card I paid in one lump sum…4800 owed, 825 paid, case closed…..
Lee 08.15.10 at 2:30 pm
russ,
What department at the bank allowed you to pay $825 on $4800 owed?
I’ve been working with various banks who are happy to put me on “repayment plans” but nobody seems to have the authority to allow me to pay 25% what I owe and forgive the rest of the debt.
Please email me so we can talk about this more. I need to figure a way out of this mess.
Thanks,
Lee