In the past, debtors filing Chapter 13 bankruptcy were hindered by unimaginative and unwieldy federal rules and policies towards the payment of federal student loans. When a Chapter 13 was filed, the Department of Education would kick debtors out of any income driven repayment plan they’d been on prior to filing bankruptcy. Debtors would lose 3-5 years of repayment of their federal loans, delaying the possible discharge of their loans after a certain number of years, depending on the termsRead more
Avoid Foreclosure Relief Scams
With pandemic-related moratoriums on home foreclosures ending soon, scam foreclosure relief companies will also start taking advantage of desperate homeowners again. Both federal and state law limit what companies can do for people struggling to pay their mortgage. “Foreclosure consultants” are regulated by state law and federal regulations apply to companies claiming to offer mortgage assistance relief services. Here are some of the rules applying to these companies: Foreclosure relief companies must provide detailed notices explaining a homeowner’s rights, includingRead more
Mortgage Payment Defaults in Chapter 13 Bankruptcy
Chapter 13 bankruptcy is often used to “cure” mortgage defaults. Debtors can spread the amount of the default over five years to get caught up on mortgage payments and avoid foreclosure. It’s a better approach than the typical loan modification offered by mortgage lenders that attach the default balance to the end of the loan. Those modifications result in interest being paid on interest and a loss of home equity. Sometimes though, and especially during the recent pandemic and economicRead more
Stimulus Payments Safe in Bankruptcy
A common concern of people already in bankruptcy and people thinking of filing bankruptcy is the status of the stimulus payments resulting from Congress’ passage of the 2020 CARES Act and the more recent American Rescue Plan Act (ARPA). People are concerned the money will be taken by the bankruptcy trustee to pay creditors. Fortunately, Congress anticipated that concern and inserted language in the laws preventing stimulus payments from being taken by a trustee. The laws specifically say stimulus paymentsRead more
Attorney Fees and Support Obligations
In a Chapter 13 bankruptcy, debts given “priority” status by the bankruptcy code must be paid in full during the plan (usually 3-5 years). Priority debts include “domestic support obligations,” such as delinquent child support and alimony. What qualifies as child support and alimony is usually obvious, but what about attorney fees often ordered to be paid in a divorce decree? Are attorney fees also considered domestic support obligations? A recent decision from the 8th Circuit Court of Appeals BankruptcyRead more
Credit Counseling in Bankruptcy
One of the requirements for filing Chapter 7 and Chapter 13 bankruptcy is the need to take a credit counseling course before and after filing. The credit counseling requirement was added in 2005 and is a silly and generally useless expenditure of time, but it’s not something to be feared. It can be done on a computer or over the phone and usually takes no more than 2-3 hours of time total for both courses. The cost for both coursesRead more
Don’t Make Bankruptcy Your Last Resort
The old adage is that consumers in financial stress should look to filing bankruptcy as their last resort. I’m sure the saying was created by lenders and others hoping to keep people from eliminating debt. But waiting to file bankruptcy can be dangerous. That’s why I think people in financial trouble should consider bankruptcy as a first resort instead. Figuring out how bankruptcy might help right from the onset of financial problems will make people better informed. It may helpRead more
Foreclosure in Iowa
Foreclosure is a scary word. The prospect of losing your home and having to find somewhere else to live can create a lot of stress. Foreclosure doesn’t have to be as frightening as it sounds if you understand how it works and how Chapter 13 bankruptcy can be used to stop the foreclosure and put you back on the road to keeping your home. Foreclosure Without Redemption The most common method of foreclosure in Iowa is called “foreclosure without redemption.”Read more
Chapter 13 bankruptcy
Chapter 13 bankruptcy is my favorite type of bankruptcy because of what a debtor can do to deal with debt. What is a Chapter 13? It helps a person reorganize debts and may be one of the best ways to save a home. Over a 3-5 year period, debtors make payments to a trustee, who disburses the funds to creditors. Unpaid debts remaining at the end of the 3-5 year period are discharged. Secure creditors will receive money by theRead more
Did You Know That Chapter 13 Bankruptcy Can Stop Foreclosures?
Government and lender mortgage modification programs have resulted in little success at helping people permanently modify home loans who are facing foreclosure. Many debtors tell of lenders losing paperwork, not responding to inquiries, misunderstanding modification program requirements and offering modifications that do little to respond to their needs. There are options available to people facing foreclosure. Some debtors have successfully challenged a foreclosure based on improper servicing by the lender. Others have used Chapter 13 bankruptcy to cure mortgage loanRead more
