Why More Chapter 11s? When the 2005 bankruptcy law was adopted by Congress it created a new “means test” that borrowers had to pass to qualify for a Chapter 7. Congress limited this requirement only to debtors with primarily consumer debt. Debtors who had incurred most of their debt from a failed business could avoid having to pass the means test in order to file Chapter 7. The provision allowed business debtors to file Chapter 7 even though their budgetRead more
Student Loans in Your Budget
How much student loan debt is reasonable? For example, student loan debt of $25,000 is affordable for a single person with an annual income of $30,000 to $40,000. If the debt increases to $50,000 someone earning only $40,000 to $50,000 annually is going to face budget problems. At that amount of debt, student loan payments would be about $450/month, almost equal to what would be spent on food. Student loan balances of $75,000 require an annual salary of $60,000 orRead more
Mortgage Modifications
Mortgage Modifications Success & Failure A new report released in January 2013 from the NCLC reveals both the successes and failures of mortgage modification programs used by top mortgage lenders and servicers. As many as ten million homes are still estimated to be at high risk of foreclosure. With nearly four million foreclosures having been completed between 2007 and 2012. The report looks at the track record of the Home Affordable Modification Program, created in 2009 to address the needRead more
Before You Agree to A Debt Management Settlement Scams… Read This
Each year, one of our clients discloses that before contacting us about bankruptcy they had tried to settle their debts with the help of a debt settlement company. In every case the company led our clients to believe their debts could be settled without the need for bankruptcy. Our clients had frequently paid thousands of dollars to the companies with little relief to their overall financial situation. What Happens In These Scams? Even if one or two of the debtsRead more
How Does A “Chapter 20” Bankruptcy Work?
Most people are familiar with Chapters 7, 11, 12 and 13 of bankruptcy. Chapter 12 is for family farmers. Chapter 11 is often used by large corporations. Chapters 7 and 13 are used for consumers But what’s a “Chapter 20?” You won’t actually find mention of Chapter 20 anywhere in the bankruptcy code but it’s the commonly used name for a Chapter 13 following a Chapter 7. But why would anyone file two bankruptcies, one right after the other? HereRead more
Burying Your Head?
The debt was so out of control she almost felt like she deserved the punishing phone calls she was getting from her creditors. In fact, she got to the point where she was just too frightened to answer her phone anymore. They found out where she worked and tried to reach her boss. They threatened to arrest her at her office. They called her names, used profanity and made her feel like a failure. Finally one day she said, “EnoughRead more
Foreclosure Scams: Beware!
Scam-artists are trying to cheat Iowans caught up in the nationwide foreclosure crisis. Mortgage foreclosure “rescue” schemes ask you to pay thousands of dollars up-front for so-called assistance or “rescue” from foreclosure. But, they just take your money and do little or nothing to help. The scam puts you in a deeper financial hole, does nothing to save your home and diverts you from getting real help. The Iowa Attorney General’s Office has received scores of complaints from families connedRead more
Credit Repair Scams
Late night television and the Internet is full of advertisements for companies promising to remove: bankruptcies judgments negative information from credit reports. Sometimes they even offer to help you create an entirely new credit identity. These promotions need to be approached cautiously though. In truth, no one can remove negative information from your credit report if it’s accurate. And some of the tactics suggested by credit repair companies are illegal or ineffective. Like applying for an Employer Identification Number underRead more
Student Loan Deferrments
Deferring payment on student loans is necessary when circumstances prevent a borrower from staying current on payments. There are many types of deferments available depending on the kind of student loan and the situation. For instance, deferments on private loans are completely discretionary to the lender. If a private lender wants to grant or deny a deferment they can, without consequences. But the lenders may also charge a borrower for seeking a deferment, For example, Sallie Mae often charges $150 forRead more
Sheriff Sales
According to the latest reports, over 4000 Iowans who have a Fannie Mae or Freddie Mac mortgage loan are delinquent in their payments. The number of delinquent borrowers is even higher when you include non Fannie or Freddie loans. What is a sheriff sale? A sheriff’s sale is the final step to getting out from under a home they can’t afford. Many people are deciding to walk away from mortgages that now far exceed the value of their home and theirRead more
