As a Connecticut Chapter 7 Bankurptcy Attorney with over 30 years of experience I have seen clients make the mistake of contracting with Debt Relief Companies only to come see me months/years later after they discover they have incurred high fees and received no debt relief. There are some legitimate debt relief companies and in some circumstances they may offer the best option for debtors. There are also many companies which promise results they cannot achieve for their customers and these debtors only find out after they had money deducted from their checking accounts without significant reduction of their debt. Anyone having debt issues looking for relief options should first consult with a Chapter 7 bankruptcy attorney. When I sit down with clients to review their financail situation I can determine if the fresh start from a Chapter 7 filing is the best option for them. If they qualify which mainly is determined by the fact there are no means test income and non-exempt asset issues than Chapter 7 bankruptcy is a better option than a debt repayment plan. First, debtors generally can receive a Chapter 7 discharge of their debts close to 3 months after they file their bankruptcy. A debt repayment plan can take years to complete. Second, in most cases filing for Chapter 7 will allow debtors to rebuild their credit quicker than a debt repayemnt plan.Third, the costs of filing Chapter 7 are consideraly less than a costs of a debt repayment plan. One time flat legal fee plus filing fee cost versus signifiant monthly fees over period of years. Fourth, all eligible debts discharged in Chapter 7. For a debt repayment plan to be successsful all debts must be paid thru the plan if the plan is not completed debtors left with remainig unpaid debt and bad credit.. This unfortunately is a very common result. There may be still the stigma attached to filfing bankrupcty which may prevent debtors from filing. As part of my job as a bankruptcy attorney I counsel my clients that there is no reason they should not file if eligible. Iin practtically all the cases I have hasd in my long carreer my clients have experienced serious financial hardship and I tell them there is no shame to receive the relief bankruptcy offers them.
Connecticut Bankruptcy & Foreclosure Defense Blog
Bankruptcy and Foreclosure Defense blog with posts designed to provide helpful information in understandable terms to people facing financial problems by a Connecticut attorney.
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Thursday, October 19, 2023
Debtors Beware of Debt Relief Companies
Monday, November 9, 2020
Filing Bankruptcy in Connecticut During COVID19 Pandemic
COVID19 has affected all of our lives in so many ways including how my bankruptcy clients interact with me for filing their bankruptcies in Connecticut. With the emphasis on safety first I have developped a completely remote process to telephone or zoom conference with my bankruptcy clients with effective use of email to deliver the requisite notices and requirments and receive back the documents I need for their filings. After the initial client inquiry I schedule either a tele-conference or zoom conference depending on the client's preference and their computer capabilities to review with them the information and documents I need for their filing. In preparation for this conference I email to my clients my retainer letter with required Debt Relief Agency disclosures and other relevant documents for this conference. During the conference I review these documents with them including the credit report authorization form they need to return and credit counseling courses required; ask them questions to complete the bankruptcy worksheet and bankruptcy documents required checklist and review the timelines and process for Chapter 7 or 13 depending on which chapter is appropriate for them. I send them followup email(s) based on the results of this conference with forms and the list of diocuments needed to complete their bankruptcy filing including an authorization to e-file their bankruptcy without their actual signatures on the bankruptcy petition and schedules. The Bankruptcy Court for the District of Connecticut has issued an order allowing the use of this form in lieu of actual signatures due to the impact of COVID19. Once the bankrutpcy petiton and schedules are ready for filing I email my clients these documents for their review to confirm their accuracy before filing them. After they are filed the bankrutpcy court will schedule a telephonic creditors meeting which the Unites States Trustee has adopted as a safe method to conduct these meetings due to COVID19. After the creditors meeting the process continues to be conducted remotely including any court hearings, if scheduled, which the Bankruptcy Court now holds on the zoom.gov platform. In conclusion, if you need to file bankruptcy, but are concerned about doing it safely my remote procedures in conjunction with those adopted by the Bankruptcy Court allows you to do so safely with no threat to your health from COVID19.
Thursday, September 20, 2018
Cram Down of First Mortgage in Chapter 13 Bankruptcy
Regular Mortgage Debt: $200,000.00
Balloon Payment: 75,000.00
Total Due: $275,000.00
Property Market Value: $150,000.00
Mortgage Debt reduced by $125,000.00 to $150,000.00 by cram down motion
$150,000.00 = $2,500.00 monthly plan payment toward mortgage for 5 year plan
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In this example the $125,000.00 reduction will be treated as unsecured debt so best case scenario is a debtor who has enough monthly income to pay the reduced mortgage debt thru their plan with little to nothing else left to pay unsecured creditors thereby discharging unsecured claims upon completion of their plan. Another point to keep in mind is that with this cram down plan the debtor is only making their plan payments to completely pay off the mortgage debt unlike the more common Chapter 13 plans where debtors make their plan payments toward the mortgage arrearages due at time of filing combined with their regular montlhy post-petition mortgage payments going forward outside of their plans. In summary, if you have an underwater property you want to try and keep with a mortgage maturity date coming due in close to 5 years the exploration of this cram down option with an experienced bankruptcy attorney in your area is advisable.
Tuesday, October 10, 2017
I Need to File Chapter 7 Bankruptcy When Should I File?
A) Debtor wants to delay foreclosure and prolong stay in home. Under this scenario as long as there are no other pressing needs to file right away, for example a pending wage execution, delaying the filing till right before a foreclosure auction or on the debtor's law day if there is a judgment of strict foreclosure will maximize the additional delay bankruptcy can provide.
A) Expecting parents may need to wait for the birth of their child to increase their household size to bring their income below the household median to avoid the means test. There also are the increased expenses of a new born baby that in some cases will eliminate any problematic excess monthly income to qualify for Chapter 7 filing.
Thursday, June 15, 2017
How to Avoid Unwanted Surprises at Chapter 7 Bankruptcy Creditor Meetings?
Tuesday, May 16, 2017
New Bill to Allow Bankruptcy Discharge of Student Loans Submitted to Congress
It may take until 2018 with the possible control of the House and/or Senate being transferred to the Democrats. Also the undpredictability of the current occupant of the White House and how long he may stay there also will come into play. The need for reform is clearly there. Will this current government take the necessary action to address it is unclear at best. I encourage anyone concerned with this issue to reach out to their Congressperson to advocate for the passage of this amendment to bring the relief needed to those debtors suffering from the burden of excessive student loan debt. This crisis affects all of us not just these debtors since it a major drag on our economy and once these debtors especially young struggling adults are freed from this debt they will be able to start families, buy homes and related items to help grow our economy for the benefit of all.
Thursday, December 15, 2016
FANNIE MAE and FREDDIE MAC Announce New Mortgage Modification Program for 2017 as HAMP Expires
The Flex Modification loan program replaces a the HAMP foreclosure-prevention policy that's set to expire at the end of this year. HAMP was enacted to help distressed homeowner due to the mortgage crisis that started in 2007-2008. Loan servicers have until October, 2017 to start the program.
The new loan modification guidelines are expected to increase the population of homeowners eligible for lower monthly payments, short sales and other alternatives to foreclosure, according to Fannie Mae.
"We believe the program is flexible to adjust for regional and even local differences in housing," said Bill Cleary, vice president of Fannie Mae's single-family servicing policy. "It provides the greatest amount of assistance to those areas in need." HAMP, was adopted in 2008 as millions of homeowners fell behind on their payments. Over time, more than 1 million trial mortgage modifications were started . Many ended in new defaults, but eight years after the collapse, nearly 360,000 borrowers are still in the program and continue to make payments on their modified loans, according to the Federal Housing Finance Agency. The statistics show the higher percentage of successful modification involved the ones that decreased monthly mortgage payments the most.
The goal, with HAMP and its replacement, is to prevent foreclosures and preserve homeownership and limit losses to taxpayers, which stand behind the mortgages guaranteed by Fannie and Freddie. In general the costs to modify a loan are less than to foreclose one and take possession of delinquent borrowers homes.
"By avoiding the high costs associated with foreclosures, the Flex Modification will result in significant savings for the Enterprises and taxpayers," FHFA Deputy Director Sandra Thompson said in a written statement. "And it will provide borrowers who face permanent hardships with a sustainable modification." This is good news for both borrowners, lenders and taxpayers that meaningful mortgage modifications will still be an option after Decemeber 31, 2016.