Chapter 7 vs. Chapter 13 Bankruptcy

SUMMARY of Transcript:

Chapter 13 bankruptcy is more appropriate for someone who got a little behind on their mortage payment, and they want to pay back debts over time. A Chapter 13 bankruptcy gives them a chance to reorganize their finances, and gives them up to 5 years to pay back their debts.

Chapter 7 is more appropriate for someone who has a lot of debts that they want to wipe out completely. Most of the time these are credit cards debt, personal loans, or business lines of credit. These are the kinds of debt we can help wipe out for our clients.

Chapter 7 vs. Chapter 13 Bankruptcy

Chapter 7 is commonly used when:		Chapter 13 is commonly used when:
You have little property except for the basic necessities like furniture and clothing.		You have significant equity in a home or other property and you want to keep it.
You have little or no money left after paying basic expenses each month—or you’re not even meeting basic expenses.		You have regular income and can pay your living expenses, but you can’t keep up the scheduled payments on your debts.
Advantages of Chapter 7:		Advantages of Chapter 13:
Most unsecured debts can be completely eliminated.		You can keep most of your property (house, car, business) while making payments over time to pay past due accounts.
You may receive your discharge in just 4 months.		You can create a payment schedule with your bankruptcy trustee to pay off your delinquent accounts over a 3-5 year period.
You cannot be contacted by creditors while the automatic stay is in effect.		After making one monthly payment to the trustee for distribution of payment to your creditors, you will no other direct contact with creditors during the protection period of 3-5 years.
		Co-signers may be protected.
Who can file under Chapter 7?		Who can file under Chapter 13?
Debtors who have qualified under the ‘means test’ and completed a required pre-filing session with a credit counselor.		Any individual debtor whose unsecured debts are below $336,900 and whose secured debts are less than $1,010,650.
Record of bankruptcy remains on credit record for up to ten years from the date of filing.
Contact REYES LAW GROUP, APLC, to see which bankruptcy option is best for you.

Top 10 Mortgage Servicer Abuses and Chapter 13 Bankruptcy

1. Creation of Junk Fees such as monthly property inspections, monthly property preservation fees, broker price opinion fees, proof of claim preparation fees, review of Chapter 13 plan fees, and other similar and related charges.
2. Failure to disclose junk fees
3. The sinister collection of these fees post-discharge in Chapter 13 cases when the debtor no longer has the benefit of a bankruptcy attorney or any other party who can review a payoff statement for accuracy.
4. The use of these fees to create negative payment  histories that result in motions for relief from stay.
5. Attorneys for the mortgage servicers who are guilty of the repeated and systemic filing of false representations of defaults in motions for relief from stay
6. The attorneys for the servicers who do ask for court approval of their legal fees in connection with a motion for relief from stay are also guilty of making false representations to the Court, the Trustee, the debtor, and the attorney for the debtor.
7. The creation of bogus “escrow” accounts to fund unlawful corporate         advances.
8. The practice of including undisclosed legal fees in attachments to proofs of claim and then inserting language in a hidden addendum that the failure of the debtor to object to these fees constitutes a waiver,  estoppel, or res judicata defense
9. The placement of forced-place insurance with a captive company (i.e., a wholly owned or related subsidiary) when debtors have such insurance. This triggers an escrow review, an enhanced payment, and more money for the suspense accounts.
10. The advancement of funds against the debtor’s mortgage loan for monetary damages actually paid to the same debtor for violations of the bankruptcy law. The servicer will also charge the debtor for the attorney fees incurred in defending such action

I’m facing foreclosure and want to keep my home. Is bankruptcy my best option?

Chapter 13 bankruptcy allows homeowners to delay or prevent foreclosure and pay off back debt on their mortgages. In some cases, homeowners can also eliminate the amount of second or third  mortgages. For homeowners behind on their mortgage payments, Chapter 13 bankruptcy is particularly helpful. It allows  homeowners the needed time to get current on their payments so they can keep their home indefinitely.