It takes 7 seven years for a normal item to drop off of a credit report. Some things like judgments are always there and if a judgment is renewed it will remain collectable for a lifetime. Filing bankruptcy can actually help a person recover their credit life in as little as a year after filing.
Although the credit score formulas are trade secrets, it is known that three of the major factors are Debt to Income, Debt to Credit, Payment History. Debt to Income is the amount of a person’s income compared the monthly payments to service the person’s debt. Debt to Credit is the ratio of the amount of available unsecured credit available to the amount of unsecured debt owed. Payment history is the number of on time payments, late payments and missed payments a person has in the credit history file. Filing bankruptcy will not fix a person’s payment history prior to filing but it will stop the continued accumulation of late payments on debt the person cannot pay. The other two ratios are instantly set to zero when the debts are discharged in bankruptcy.
After filing bankruptcy and receiving a discharge, a person may begin to rebuild their credit score. The simplest way is to prove that the person is credit worthy according to the formulas used to develop the credit score. I recommend obtaining a secured credit card from a local credit union. A secured credit card is obtained by depositing money in a blocked account that the credit union holds as security against the credit that is issued with the credit card. If the person fails to make the credit card payment, the credit union closes the credit card and pays off the balance with the money in the blocked account. I recommend obtaining a credit card with a $500.00 credit limit. Most of the local credit unions require a $750.00 blocked account as security for the credit card. Most people will see a 100 point increase one year after discharge if the obtain a $500.00 credit card and carry a $300.00 balance and make the payments on time. Do not pay off the card every month because when the credit union reports to the credit bureaus, there needs to be the $300.00 balance. There is no guarantee that filing bankruptcy will fix a person’s credit but in many cases it helps. A person should seek competent legal advice before taking any legal action such as filing bankruptcy.]]>
A Chapter 13 Bankruptcy can give you relief from the second mortgage. The Court makes a determination that the second mortgage has no security interest in your home and therefore is discharged. There is no cost to call and speak with an experienced Sacramento bankruptcy attorney to evaluate your situation. Find out if there is something that you can do to make your financial future brighter, or you can keep your head down and continue pushing through the muddy waters of finical uncertainty. If you are struggling to make your payments or just don’t know if there will be any retirement or whatever the financial uncertainty is, Peter Cianchetta would be happy to meet with you and discuss your situation at no cost to you. Call today for your free confidential Sacramento bankruptcy consultation with Peter at 916-226-2740!]]>
Governor Schwarzenegger signed California Senate Bill 931 into law. This new law adds Section 580(e) to the California Code of Civil Procedure. While this is great news for borrowers insisting on a short sale, it only applies to the first mortgage. Existing law, CCP 580(d) does not allow a deficiency for a property foreclosed on by the lender that did the foreclosure. Many times lenders would insist on the right to seek a deficiency when they agreed to a short sale. That would substantially alter the rights of the borrower under CCP 580(d). Many borrowers would halt the short sale because of this provision. Now the lenders cannot add the provision
Warning! This new law does not affect a junior lien holder (Second Mortgage). That means that the anti-Deficiency Laws that did not apply to Junior Liens (Second Mortgages) are not changed by this new law. If you have a second mortgage (or a junior lien) before you sing any short sale documents you should consult with an attorney to ensure you make an informed decision based on accurate information. That does not mean that you cannot negotiate with the junior lien holder to eliminate a deficiency. Contractual rights are negotiable between the parties and in some cases junior lien holders are willing to completely release the borrower if the circumstances meet the criteria established by the lender.
If you are in a situation where you may lose your home, you should explore all of your options, including short sales, foreclosure, and bankruptcy. In many situations a home can be preserved through a bankruptcy. Chapter 13 allows the borrower to make up the past due payments over time. If keeping your home is important to you then you should seek competent legal advice.
The new law is shown below for illustration purposes below.
580e. (a) No judgment shall be rendered for any deficiency under a note secured by a first deed of trust or first mortgage for a dwelling of not more than four units, in any case in which the trustor or mortgagor sells the dwelling for less than the remaining amount of the indebtedness due at the time of sale with the written consent of the holder of the first deed of trust or first mortgage. Written consent of the holder of the first deed of trust or first mortgage to that sale shall obligate that holder to accept the sale proceeds as full payment and to fully discharge the remaining amount of the indebtedness on the first deed of trust or first mortgage.
(b) If the trustor or mortgagor commits either fraud with respect to the sale of, or waste with respect to, the real property that secures the first deed of trust or first mortgage, this section shall not limit the ability of the holder of the first deed of trust or first mortgage to seek damages and use existing rights and remedies against the trustor or mortgagor or any third party for fraud or waste.
(c) This section shall not apply if the trustor or mortgagor is a corporation or political subdivision of the state.
At the time the Debtors filed bankruptcy, the combination of the exemptions and the encumbrances (mortgages) on their homes left no equity for the Trustee to distribute to the unsecured creditors. The Debtors were discharged, however their cases were not closed. After 18 and 21 months in the two cases consolidated for appeal, the homes had appreciated where there was sufficient equity for the Trustee to sell the homes, pay the debtors their exempt amount, pay the encumbrances, and distribute money to the unsecured creditors. How could this be? The Debtors filed bankruptcy in 2003 and the cases were open until 2006 when the Trustee moved for an order to sell the debtors homes. The Trustee argued that the exemption was for a dollar amount because it was for “interest in real property” and did not exempt “Real Property.” The Court agreed with the Trustee, therefore the Debtors only received the dollar amount of their exemption.
The Debtors should have ensured that, since their case was not closed shortly after their discharge, that the property was abandoned. This is possible by filing a motion under 11 U.S.C. § 554(b), requesting the Court to order the Trustee to abandon the property back to the Debtor as burdensome to the estate or that is of inconsequential value and benefit to the estate. A motion under this section forces the Trustee to make a decision without the benefit of appreciation of an asset. This may seem to be inconsequential in the current Real Estate market, however the same issue may be applied to other property such as stock, business interests, or any other asset that may appreciate. If a case is not dismissed shortly after discharge a 11 U.S.C. § 554(b) should be considered.
The consolidated cases are In Re Gebhart 07-16769 and In Re: Chappell 07-35704. Read the entire case on the Ninth Circuit Court of Appeals web site at http://www.ca9.uscourts.gov/datastore/opinions/2010/09/14/07-16769.pdf]]>
For example, a home has a First Deed of Trust and a Second Deed of Trust. This is very common in the California housing market. Many homes were purchased with two loans the first for 80% of the purchase price and the second for the remaining 20% of the purchase price. This allowed the first loan to be a conforming loan and qualify for better terms. For this example we will assume the home was purchased for $300,000. The first deed of trust was $240,000 and the second was for $60,000. The current Fair Market Value (FMV) is $225,000. The remaining balance on the First Deed of Trust is $235,000 and the remaining balance on the second is $59,000. In a chapter 13 bankruptcy, the debtor files a Motion to Value the Collateral of the Second Deed of Trust. The Bankruptcy Court would find the collateral securing the Second Deed of Trust is $0.00 because the Senior lien, the second Deed of Trust is greater than the FMV of the property, and therefore the value of the collateral of the Second Deed of Trust is Zero. The court would calculate the value of the collateral of the Second Deed of Trust by subtracting the balance of the senior Lien from the FMV which results in a negative number. ($225,000 – $247,000 = $22,000)
There are 94 federal judicial districts, most of these districts have Bankruptcy Courts. The Sacramento Bankruptcy Court is the Eastern District of California, which is in the Federal Ninth District. The Ninth District decided a case titled In Re Lam 211 B.R. 36 (9th Cir. B.A.P. 1997). Lam held that a lien-strip was possible without an Adversarial Proceeding, but could be accomplished with a noticed motion. The Eastern District allows the lien-strip motion to be included in the original Chapter 13 Plan and if properly noticed will not require an additional noticed motion to accomplish. The motion is granted if there is not opposition filed to oppose the motion and confirmation of the plan.
In the current market where home values continue to decline, a potential bankruptcy debtor should consider filing a Chapter 13 if lien-stripping would make keeping their home feasible given their circumstances.
Filing Bankruptcy in Sacramento or any other Court is a complicated process. Debtors should seek competent legal advice from a qualified bankruptcy attorney before attempting to file on their own. Often Sacramento bankruptcy attorneys will allow some of the attorney fees to be paid through the chapter 13 plan. The Law Office of Peter Cianchetta makes arrangements to pay some or all of the attorney fees to be paid though the Chapter 13 plan.
An Adversarial Proceeding is an ancillary case to a bankruptcy case. It is a case in and of itself to decide a specific issue. An Adversarial Proceeding often has an evidentiary hearing where there is live testimony of witnesses, presentation of evidence and the judge renders a final ruling. The final ruling in an Adversarial proceeding is an Appealable Order that may be brought to the Bankruptcy Appellate Panel or to the Court of Appeals.]]>
You may also request your free credit reports by telephone or mail by following the links on the annualcreditreport.com web site.
If you believe your identity has been stolen, contact all three agencies immediately and place a Fraud Alert on your credit profile. Placing a Fraud Alert on your credit profile will make it more difficult to open an account using your information. There are specific steps that must be take to obtain credit once a fraud alert is in place. You may also contact the Federal Trade Commission to inform them of the identity theft and for more information.
If you have errors on your credit report contact the agency and the creditor in writing to correct the error. After an investigation of your reported error, the credit reporting agency will reply to you with the action they have taken in response to your report.
The individual agencies may be contacted at the following addresses.
The addresses of the three Credit Reporting Agencies are:
P.O. Box 740256
Atlanta, Georgia 30374
P.O. Box 9554
Allen, Texas 75013
P.O. Box 6790
Fullerton, CA 92834
1550 Peachtree St., NW
Atlanta, GA 30309
475 Anton Blvd.
Costa Mesa, CA 92626
555 W ADAMS ST
TRANS UNION LLC
CHICAGO IL 60661
Agent for Service of Process
Kent E. Mast, Agent for Service of Process
1550 Peachtree St., NW
Atlanta, GA 30309
C T Corporation System, Agent for Service of Process
818 West Seventh St.
Los Angeles, CA 90017
The Prentice Hall Corporation System, Inc., Agent for Service of Process
2730 Gateway Oaks Dr. Ste. 100
Sacramento, CA 95833
IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER.
If you decide to seek bankruptcy relief, you can represent yourself, you can hire an attorney to represent you, or you can get help in some localities from a bankruptcy petition preparer who is not an attorney.
THE LAW REQUIRES AN ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST.
Ask to see the contract before you hire anyone. The following information helps you understand what must be done in a routine bankruptcy case to help you evaluate how much service you need. Although bankruptcy can be complex, many cases are routine. Before filing a bankruptcy case, either you or your attorney should analyze your eligibility for different forms of debt relief available under the Bankruptcy Code and which form of relief is most likely to be beneficial for you. Be sure you understand the relief you can obtain and its limitations. To file a bankruptcy case, documents called a Petition, Schedules and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court. You will have to pay a filing fee to the bankruptcy court. Once your case starts, you will have to attend the required first meeting of creditors where you may be questioned by a court official called a `trustee’ and by creditors.
If you choose to file a Chapter 7 case, you may be asked by a creditor to reaffirm a debt. You may want help deciding whether to do so. A creditor is not permitted to coerce you into reaffirming your debts. If you choose to file a Chapter 13 case in which you repay your creditors what you can afford over 3 to 5 years, you may also want help with preparing your Chapter 13 plan and with the confirmation hearing on your plan which will be before a bankruptcy judge. If you select another type of relief under the Bankruptcy Code other than Chapter 7 or Chapter 13, you will want to find out what should be done from someone familiar with that type of relief. Your bankruptcy case may also involve litigation. You are generally permitted to represent yourself in litigation in bankruptcy court, but only attorneys, not bankruptcy petition preparers, can give you legal advice.]]>
Filing Chapter 13 bankruptcy Sacramento may save your home from foreclosure. Chapter 13 is for people with income that need to have some time to repay their debts. The Typical Chapter 13 plans are from three to five years long. Some debtors are able to completely eliminate their second mortgage and third mortgage and home equity lines of credit on their homes. Also some are able to reduce the amount paid on their automobiles to the current value as well as reducing the interest rate at the same time.
Chapter 13 has limitations, first the debtor must have a source of income sufficient to fund the Chapter 13 plan. The total debts cannot exceed the limits for secured and unsecured debts. The current debt limits are $1,081,400 secured and $360,475 unsecured debt.
How can someone find out if they qualify to file Chapter 13 bankruptcy Sacramento? The best way to find out is to call the Law Office of Peter Cianchetta to schedule your free consultation. Peter will personally meet with you and review your situation to see if you qualify and if Chapter 13 bankruptcy is best for you. If you will be better off filing Chapter 7 bankruptcy of not filing bankruptcy at all, Peter will tell you. The Law Office is not looking to crank out as many bankruptcy petitions as possible, they are here to serve you with the best legal advice available. Call today for your appointment with your attorney.]]>