Helping You Get a Fresh Start. We’re Your Legal Guides.
Deciding whether or not to file for bankruptcy is a personal decision and one that should not be done hastily. Many people don’t even call a lawyer until they have made the decision for themselves. It can be very helpful to work with an attorney right away, to help you understand your options and the legal processes. Without knowing these things, you could be making your decision blindly.
At Park & Caporrino, LLP, we know the intricacies of bankruptcy law, and with more than 25 years of experience handling these matters, we can educate you about any and all options for seeking relief from your debt. We will listen to your needs and look over your finances to help you choose the best option for you.
Chapter 7 Bankruptcy
When you are facing substantial debt, and it feels like there is no way out, you might want to consider a Chapter 7 bankruptcy. Even though some people feel embarrassed about needing to declare bankruptcy, the fact is, the law has given us this option to help lift us out of our debts and get a fresh start on life.
Chapter 7 Basics
Chapter 7 bankruptcy is a debt liquidation option that:
- Can eliminate most, if not all, of your outstanding debt
- Usually requires you to relinquish the assets that you own except certain exempted under the bankruptcy exemption law
- Is usually the best option for people because it gives a clean slate and a fresh start, compared to Chapter 13, which requires you to reaffirm many of your debts
- Will not harm your credit after a bankruptcy as much as you might think
- Can stop creditor harassment, foreclosures, repossessions, garnishments, and liens
Chapter 13 Bankruptcy
If you are considering bankruptcy, you have several options. If Chapter 7 isn’t right for you or you do not qualify, Chapter 13 can still provide you with a positive resolution when the usual Chapter 7 might not work for you. Perhaps you have too high of an income to qualify, or there are certain assets that you can still afford and want to keep. When you start considering your bankruptcy options, you should work with the attorneys who have the experience to get you the best results possible.
Chapter 13 Debt Repayment Plan
Most people that we work with have chosen a Chapter 13 bankruptcy because they didn’t qualify for a Chapter 7. This usually happens because of:
- Excess income
- Significant assets above Chapter 7 exemptions
- Too much non-dischargeable debt
Filing for Bankruptcy Before and After Divorce
Clients often come to Park & Caporrino, LLP with both financial and marital issues they need to resolve. As our attorneys at our firm are also experienced in handling divorce cases, we understand the impact divorce and other family law matters can have on your finances, and specifically how it will impact your bankruptcy proceeding.
With divorce comes the establishment of separate households, property division, and court expenses. These costs quickly escalate, resulting in one or both spouses being buried by debt. No matter how or why the relationship ended, experienced legal counsel can help you determine what debt relief solution is best for you.
Pros and Cons of Loan Modifications
A loan modification may seem like an attractive option for both the borrower and the lender. In most cases, the bank would rather keep you paying something every month than have to foreclose on your property and maintain and sell it after you vacate. The federal government also has several programs that offer incentives to encourage lenders to agree to a modification. The terms of a loan modification are somewhat flexible too; a workout can lower your principal balance, lower your monthly interest rate, or re-amortize your loan to bring your monthly payments down. However, obtaining a loan modification is a difficult process that requires a lot of work on the part of the borrower.
In addition, there are several downsides, including:
- The lender controls the process and dictates the terms. They also typically control how long the process takes. For many people struggling with debt, 4-5 months is a long time to wait.
- The lender may agree to a temporary plan, but then later deny the modification after you have paid thousands of dollars to get a loan mod for you.
- Banks are reluctant to negotiate workouts with consumers who have a high debt-to-income ratio.
- Even a successful loan medication on your mortgage has no effect on your other debts. Credit card companies and other creditors may still harass you about your delinquent accounts.
- Many lending departments won’t even discuss a modification until you are already late or in default, and foreclosure proceedings have begun. In this case, your credit is already damaged by the lender, making it less desirable to want to work with that lender.
In contrast, bankruptcy solves many of the problems presented by a loan modification. Bankruptcy is controlled by the court, and banks and other creditors are required to accept any bankruptcy plan approved by the court, even if they don’t like it. Both Chapter 7 and Chapter 13 create an automatic stay, which puts an immediate stop to foreclosure proceedings. In addition, Chapter 13 allows the homeowner to catch up past payments on a feasible schedule and end the foreclosure altogether. This is done through the bankruptcy court and does not require the homeowner to try to negotiate with an unwilling lender. Also, if the home is subject to a second or third mortgage, but the value of the home is less than what is owed on the first mortgage, it may be possible to strip away these junior liens, leaving only the primary mortgage.
Stop Repossessions: Bankruptcy Protection
If you are like most of us, you depend on your car and house. Facing a mortgage that you can’t afford can be terrifying because you might lose these things that are so important to your life and survival. By filing for bankruptcy, you might be able to stop the foreclosure process and potentially save your home.
It is much easier to save your home from foreclosure now than it will be to get your home back later. Contact us as soon as you feel you may be starting to miss payments, so we can save your home before it’s too late.
The process of stopping foreclosure or repossession is much like the process for stopping creditor harassment:
- Representation: By simply hiring us, your creditors need to work with us; we can negotiate with them to work out alternate arrangements so that you can keep your house.
- Filing for bankruptcy: Filing for either Chapter 7 or Chapter 13 bankruptcy forces your creditors to cease all collections, repossessions and foreclosure activities, including enforcement of liens and garnishments, allowing you the time you need to make sure you will still have credit after bankruptcy.
- Intervention: If your creditors still don’t cease their collections activities, we can stand in for you and make sure they have the stay from the court demanding them to stop collections, and we can take action if they still don’t stop.