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Archives for February 2009

Should I Reaffirm a Debt?

Posted on February 15, 2009 Written by

If you are thinking about reaffirming, the first question should always be whether you can afford the monthly payments.  Reaffirming any debt means that you are agreeing to make the payments every month, and to face the consequences if you don’t.  The reaffirmation agreement must include information about your income and expenses and your signed statement that you can afford the payments.

If you have any doubts whether you can afford the payments, do not reaffirm.  Caution is always a good idea when you are giving up your right to have a debt canceled.

Before reaffirming, always consider your other options.  For example, instead of reaffirming a car loan you can’t afford, can you get by with a less costly used car for a while?

Source: Your Legal Rights During and After Bankruptcy:  Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

Filed Under: Discharge, Mortgages, Vehicles

Free Credit Reports Aren't Really Free

Posted on February 14, 2009 Written by

The frequently advertised free credit report websites aren’t really free–there is a catch.  But there is a place you can get free credit reports once a year without any traps.

Yes, you get a free report on the advertised website, but you have to enter a credit card number and sign up for a monthly credit monitoring service.  That’s free, too, for 30 days, but if you forget to cancel the service after the first month, you automatically get charged for each month thereafter.

Go to www.annualcreditreport.com

On this site you truly can get your own credit reports once per year from each of the three credit reporting agencies. Consumer advocates suggest you pull one of the three reports every four months so you can monitor your own credit at no cost to you.

Filed Under: Credit, Financial Help

Do I Have to Reaffirm the Same Terms?

Posted on February 14, 2009 Written by

No.  A reaffirmation is a new contract between you and the lender.  You should try to get the creditor to agree to better terms such as a lower monthly payment or interest rate.  You can also try to negotiate a reduction in the amount you owe.  The lender may refuse but it is always worth a try.  The lender must give you disclosures on the reaffirmation agreement about the original credit terms, and any new terms you and the lender agree on must also be listed.

Source: Your Legal Rights During and After Bankruptcy:  Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

Filed Under: Discharge, Mortgages, Vehicles

Lenders Halt Foreclosures Three Weeks

Posted on February 13, 2009 Written by

JP Morgan Chase & Co., Citigroup Inc., Morgan Stanley and Fannie Mae have announced they are halting home foreclosures until March 6, 2009, while the Obama administration develops its policy for helping the U.S. housing market.

Filed Under: Foreclosure, Mortgages

Beware of Tax Refund Loans

Posted on February 13, 2009 Written by

Tax refund anticipation loans

Some tax return preparers offer to provide an “instant” tax refund by arranging for loans based on the expected refund.  The loan is for a very short period of time between when the return is filed and when you would expect to get your refund.  Like other short-term loans, the fees may seem small but amount to an annual interest rate of 200 percent or more.  It is best to patient and wait for the refund.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

Filed Under: Credit, Financial Help

Can I Change My Mind After I Reaffirm a Debt?

Posted on February 13, 2009 Written by

Yes.  You can cancel any reaffirmation agreement for sixty days after it is filed with the court.  You can also cancel at any time before your discharge order.  To cancel a reaffirmation agreement, you must notify the creditor in writing.  You do not have to give a reason.  Once you have canceled, the creditor must return any payments you made on the agreement.

Also, remember that a reaffirmation agreement has to be in writing, has to be signed by your lawyer or approved by the judge, and has to be made before your bankruptcy is over.  Any other reaffirmation agreement is not valid.

Source: Your Legal Rights During and After Bankruptcy:  Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

Filed Under: Discharge, Mortgages, Vehicles

NPR Airs Story on Judicial Mortgage Modification in Chapter 13 Bankruptcy

Posted on February 12, 2009 Written by

Here is a report that aired on National Public Radio this morning about the judicial mortgage modification bill pending in Congress.

“On Capitol Hill, Democrats are supporting a bill that would let judges block home foreclosures. The measure would allow bankruptcy judges to alter home loans. Industry insiders say that would cause more harm than good, but economists disagree.”

Listen to today’s National Public Radio story

on judicial mortgage modification in chapter 13 bankruptcy.

Filed Under: Bankruptcy Legislation, Chapter 13, Foreclosure, Mortgages

Do I Have to Reaffirm Any Debts?

Posted on February 12, 2009 Written by

No.  Reaffirmation is always optional.  It is not required by bankruptcy law or any other law.  If a creditor tries to pressure you to reaffirm, remember you can always say no.

Source: Your Legal Rights During and After Bankruptcy:  Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

Filed Under: Discharge, Mortgages, Vehicles

Congress Considers Judicial Mortgage Modification in Chapter 13 Bankruptcy

Posted on February 11, 2009 Written by

The Helping Families Save Their Homes in Bankruptcy Act of 2009 is pending in Congress.  If passed, chapter 13 debtors will be able to  rewrite their delinquent mortgage loans by lowering the loan balance to the value of the home, reducing interest rates, eliminating the variable rate and fixing the interest rate, and stretching out the mortgage over 40 years.  The goal is to lower the payments enough to make them affordable for the borrower to keep the home and avoid foreclosure of the mortgage.

Mortgage bankers want your home not your money. They oppose the law change and are lobbying against the proposed legislation.

Filed Under: Bankruptcy Legislation, Chapter 13, Foreclosure, Mortgages

Mortgage Loan Modification Programs

Posted on February 11, 2009 Written by

Here is a collection of voluntary mortgage loan modification programs from various lenders in the United States collected by the National Consumer Law Center, America’s consumer law experts.

Some lenders will modify and some won’t.  Mortgage modification agreements are being offered by some lenders. But all mortgage modification agreements are not equal.  Here’s what’s happening in the real world, today.

Relying on lenders to do voluntary mortgage modifications has not been successful thusfar.  Less than 10% of the voluntary modifications result in reduced principal, more than half capitalize the unpaid interest onto the loan balance, and a third of the modifications reduce the monthly payment while almost half have monthly payments increases.

Filed Under: Financial Help, Foreclosure, Mortgages

What Is Reaffirmation?

Posted on February 11, 2009 Written by

Although you filed bankruptcy to cancel your debts, you have the option to sign a written agreement to “reaffirm” a debt.  If you choose to reaffirm, you agree to be legally obligated to pay the debt despite bankruptcy.  If you reaffirm, the debt is not canceled by bankruptcy.  If you fall behind on a reaffirmed debt, you can get collection calls, be sued, and possibly have your pay attached or other property taken.

Reaffirming a debt is a serious matter.  You should never agree to a reaffirmation without a very good reason.

Source: Your Legal Rights During and After Bankruptcy:  Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

Filed Under: Discharge, Mortgages, Vehicles

Kansas Gasoline Supplier Files Chapter 11 Bankruptcy

Posted on February 10, 2009 Written by

Crescent Oil Company, Inc., of Independence, Kansas, filed a chapter 11 bankruptcy proceeding in the Kansas Bankruptcy Court in Kansas City, Kansas. The company is a gasoline supplier to retailers in six midwestern states.

The petition for bankruptcy relief was filed by Attorney Lisa A. Epps of the Kansas City law firm, Spencer Fane Britt & Browne LLP. Bankruptcy Judge Robert D. Berger has been assigned to the case.

Information about the case 09-20258 can be found on the Kansas bankruptcy court’s website.

Filed Under: Kansas Bankruptcy News

Do I Still Owe Secured Debts (Mortgages, Car Loans) After Bankruptcy?

Posted on February 10, 2009 Written by

Yes and No.  The term “secured debt” applies when you give the lender a mortgage, deed of trust, or lien on property as collateral for a loan.  The most common types of secured debts are home mortgages and car loans.  The treatment of secured debts after bankruptcy can be confusing.

Bankruptcy cancels your personal legal obligation to pay a debt, even a secured debt.  This means the secured creditor can’t sue you after a bankruptcy to collect the money you owe.

But, and this is a big “but,” the creditor can still take back their collateral if you don’t pay the debt.  For example, if you are behind on a car loan or home mortgage, [Read more…]

Filed Under: Discharge, Exemptions & What You Get to Keep, Filing Bankruptcy, Mortgages, Vehicles

Which Debts Do I Still Owe After Bankruptcy?

Posted on February 9, 2009 Written by

When your bankruptcy is completed, many of your debts are “discharged.”  This means they are canceled and you are no longer legally obligated to pay them.

However, certain types of debts are NOT discharged in bankruptcy.  The following debts are among the debts that generally may not be canceled by bankruptcy:

* Alimony, maintenance, or support for a spouse or children.

* Student loans.  Almost no student loans are canceled by bankruptcy.  But [Read more…]

Filed Under: Discharge, Filing Bankruptcy

I Want to File a Medical Bankruptcy

Posted on February 8, 2009 Written by

The high cost of health care is one of three primary causes of individual bankruptcy.  Frequently, people are left with unaffordable medical bills even if they have health insurance.  We get lots of inquiries about  “medical bankruptcy“.  But you can file bankruptcy just for medical debt.

There really is no such thing as a “medical bankruptcy“.  People think there is because they want to get rid of their medical debts in bankruptcy, yet keep their house and car payments.  This is a misunderstanding.

Most consumer bankruptcies discharge all unsecured debt such as medical bills and credit cards so it may seem like a medical bankruptcy.  But, all creditors must be listed as creditors on the bankruptcy paperwork and notified of the bankruptcy filing.  The house and car lender must know about the bankruptcy and those loans must be paid to keep the house and car.

Filed Under: Discharge, Filing Bankruptcy

Can I Keep One Credit Card Out of My Bankruptcy?

Posted on February 8, 2009 Written by

Clients sometimes ask me if they can keep just one credit card out of the bankruptcy?  They want to omit it from the bankruptcy paperwork and keep paying the credit card payments after the bankruptcy filing so they can have one credit line.  Usually, this request is prompted by the fear of not having credit after the bankruptcy filing for emergencies.

Omitting a credit card account from the bankruptcy schedules generally BACKFIRES.  Most of the credit card lenders will FIND OUT out about the bankruptcy, even if the account is not listed, and CANCEL the credit line.  Lenders subscribe to electronic services such as Banko to tell them about all bankruptcies filed every day.

Many credit cards such as JC Penney and Dillards are actually the same creditor and notice to one account at GE Money Bank will result in cancellation of all accounts through that bank.  Often lenders run your name through the credit reporting agencies on a periodic basis.  The lender will FIND OUT, it is just a matter of when.

Once the lender finds out about your bankruptcy, the credit card account will be canceled, any post-bankruptcy payments will be forfeited, your account will be sent to collection for any post-bankruptcy charges and you will have negative post-bankruptcy credit history.

Omitting creditors from your bankruptcy schedules is wrong.  Intentially leaving off creditors in your bankruptcy case is fraud and a federal crime.  The discharge of debts is a reward for honest debtors who make full disclosure of their finances.  In addition to risking prosecution for perjury, you could be denied your discharge.

Can I list the credit card and keep it by reaffirming?  Generally, no.  Most creditors will not agree to a reaffirmation of unsecured debts and most bankruptcy judges will not approve such reaffirmations.  Your attorney is not likely to be willing to sign a required affidavit that reaffirmation of credit card debt is in your best interest.

Filed Under: Bad Outcomes, Fraud, Crimes, Discharge, Filing Bankruptcy Tagged: , , , , , ,
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