Q. I have received letters and solicitations from individuals
and companies telling me that I can save my home and avoid filing
Bankruptcy. Are their claims true?
A. The short answer is NO. These are
predators, preying on your assumed lack of knowledge about how bankruptcy
works, how your credit scores work and on your fear of losing your home.
These people want to “steal” your home from you and they
do this for a living. You owe it to yourself and to your family to speak
to a knowledgeable bankruptcy attorney before you even consider such
a drastic step as responding to one of these solicitors. A free consultation
with Capone and Keefe can explain how the foreclosure process works,
how the bankruptcy process works and how your credit scores are affected.
Capone and Keefe can lay out all your options for you so that you
have the information necessary to make an informed, knowledgeable
decision about the course of action you should take. At the very
least, you owe that to your family and yourself.
Q. I am presently out of work or disabled and have limited
income. Is it still possible to file a Chapter 13 and save my
home from foreclosure?
A. Absolutely. While a Chapter
13 does require that an individual to have regular income, that
income can come from any number of sources, including unemployment,
Social Security, family contributions, rent, etc. Additionally,
there are numerous creative plans of reorganization that can
be filed with the Bankruptcy Court, all of which will result
in your saving your home from foreclosure. Capone and Keefe takes
special pride in its ability to craft a Chapter 13 Plan that fits
your specific needs.
Q. If I file a Bankruptcy will my credit
be ruined forever?
A. Absolutely NOT.
What you need to understand is that if you are presently in the
position of considering filing a bankruptcy, your credit is most
likely damaged. By filing a Chapter 13 and stopping the downward
spiral, you will actually begin to rebuild your credit. It will
depend on what you do post-filing. If you make all of your post-filing
mortgage payments in a timely fashion, you will begin to rebuild
your credit. If you make all of your Trustee payments in a timely
fashion, you will begin to rebuild your credit. Capone and Keefe
work closely with various mortgage companies that have very good “bankruptcy
bailout” programs. We have had
very good success refinancing clients out of their Chapter 13 case
once they have re-established credit worthiness. Capone and Keefe
can place you in touch with these mortgage companies prior to filing
your case so that you can see what you will need to accomplish
within your Chapter 13 case to re-establish your credit.
Q. Are there alternatives to filing bankruptcy?
A. Sure, if
your financial problems are only temporary, it is sometimes possible
to negotiate with each individual creditor and request that each
creditor accept lower payments or grant an extended payment schedule.
If you are in foreclosure, most mortgage companies have a Loss
Mitigation Department, whose purpose is to attempt to help its
customers who have defaulted on their mortgage loans. These departments
will generally request a significant amount of financial information
from you, similar to when you originally applied for the mortgage,
and then will normally takes months before they inform you of whether
or not they can help you. Be very wary of counting
on this route being the solution to your problem. For starters, the
mortgage company will proceed with its foreclosure action the entire
time you are dealing with the Loss Mitigation Department. Secondly,
more often than not, the best deal the mortgage company will offer
you is to pay half of your arrears immediately, with the other half
paid out over 6 months, in conjunction with the resumption of your
regular monthly mortgage payments. However, by the time the Loss Mitigation
department makes this type of offer, the arrears are so significant
that most people can’t come up with that type of lump sum payment.
Q. What is the difference between a Chapter 7 bankruptcy
and a Chapter 13 bankruptcy?
A. Primarily the difference
is that a Chapter 7 is liquidation and Chapter 13 is reorganization.
In a Chapter 7, a Trustee is appointed to administer the assets of
your estate. The Chapter 7 Trustee’s function is to determine
if there is any value in your personal and/or real property above
and beyond what the Bankruptcy Code allows you to exempt. The Chapter
7 Trustee will liquidate any non-exempt property and use those proceeds
to pay your creditors. Upon completion of the liquidation process
or upon the Trustee’s determination that there are no assets
to be liquidated, you will be discharged from your remaining unsecured,
In a Chapter 13, a Trustee is appointed, however, you remain in
possession of all of your assets. In return, you file a plan with
the Bankruptcy Court outlining how you will reorganize. Certain debts
have to be paid back, like mortgage arrears, real estate tax arrears,
and certain income tax debts, etc. While others like credit card
debt, medical bills and certain income tax obligations may be paid
back in full, partially or not at all, depending on factors specific
to your particular situation. Upon completion of your plan, which
can range in time period from 36 to 60 months, you will receive your