The post Homeowners should be wary of mortgage modification scams first appeared on Oliver & Legg.
]]>Many scammers know this and try to profit from homeowners’ desperation by offering a quick mortgage fix that they cannot provide.
Under loan modification, homeowners struggling financially may be able to negotiate new mortgage terms with their lenders. Adjustment options may include modifying the existing interest rate, lowering monthly payments, extending the length of the loan or, more rarely, decreasing the loan’s unpaid balance.
Companies that offer debt adjustment services must have licensure through the New Jersey Department of Banking and Insurance. Examples of businesses that have legal authority to handle loan modifications include:
In general, it is a good idea for homeowners to be careful if a company makes a loan modification offer that seems too easy or too good to be true. Borrowers should also be wary if a business requests a large, up-front fee for modification services or gives instructions to stop making mortgage payments without contacting the lender. Borrowers should also be wary of companies that give instructions to make future payments to a different company/individual without informing the lender
Homeowners seeking mortgage modification services should be sure to check that the company they work with has a debt adjuster license with the state Department of Banking and Insurance. Borrowers can find a listing of licensed loan modification businesses on the DOBI website.
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]]>The post Does receiving disability keep people from filing for bankruptcy? first appeared on Oliver & Legg.
]]>It may especially help those who suddenly find themselves unemployed or on disability, neither of which disqualifies individuals from filing for bankruptcy. However, those receiving disability benefits must factor in special considerations when filing.
A major fear with those on disability is that filing for bankruptcy will cost them the benefits they need to live. The loss of funds already deposited in the bank from previous disability payments is usually the main concern. However, disability benefits are generally exempt to some extent from seizure.
VA disability and disability that falls under the Social Security Act do not factor into the average monthly income calculations and forms that determine if a person can file for a Chapter 7 bankruptcy. They also are not considerations when filling out the similar monthly income calculations and paperwork for Chapter 13 bankruptcy that help to determine the potential duration of the payment plan. However, individuals must include their benefits when they calculate Schedule I income, which, combined with estimated living expenses, helps determine net monthly income.
People receiving disability benefits do not have to worry about losing their benefits, including previously paid money in the bank, as a result of filing for bankruptcy. However, they do need to include the benefits they receive when performing certain calculations and filling out specific forms during the bankruptcy process.
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]]>The post What you should know about mortgage loan modifications first appeared on Oliver & Legg.
]]>However, if you still cannot pay your mortgage payment, you may have another option. These are some things you should know about mortgage loan modifications.
The purpose of a loan modification is to reduce your monthly payment to one you can afford. Banks can modify your interest rate, increase your loan repayment period or reduce your loan balance to reduce your payment. You do not actually sign a new loan, but your existing loan terms change. However, the lender determines what loan terms change.
This option is typically only available if you cannot refinance your loan. For example, your loan may be higher than the current value of your home, or you may not have sufficient credit to qualify for a refinance loan. In addition, you need to experience long-term financial hardship. This typically requires months of financial lack, e.g., losing a job or unexpected ongoing medical expenses. Finally, you need to be months behind on your mortgage payments or face the likelihood that you fall far behind in the near future.
Your bank may notify the credit agencies that you modified your loan. This can cause a dip in your credit score. However, it is much lower than the hit your score will take if your bank forecloses on your home.
Because the Home Affordable Modification Program and Home Affordable Refinance Programs have expired, your lender can modify your loan at their leisure, and this modification can be temporary or permanent. Therefore, find out the terms of your modification before you finalize your modification.
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]]>The post Reviewing the 341 meeting and the accompanying 521 documents first appeared on Oliver & Legg.
]]>You will also have to provide “521 documents” to the bankruptcy trustee. This is a good time to review information from these sections in the United States Code.
The 341 meeting, named after Section 341 of the United States Code, is also called the meeting of creditors. Your creditors may attend and ask you questions related to the bankruptcy proceedings. However, they rarely appear since they do not lose standing in your case if they choose to stay away. The meeting is important from your point of view because it is here that you will meet the trustee from the Office of the United States Trustee who will administer your case. The trustee will question you about your debts and current financial status. You must answer truthfully under penalty of perjury.
Named for Section 521 of the U.S. Code, the 521 documents usually include bank statements, retirement account statements, mortgage statements and information about your domestic support obligations, if applicable. You must also submit 60 days of pay stubs. Your attorney will know which documents the trustee specifically wishes to see and will provide the paperwork on your behalf.
The 341 meeting will occur between 21 and 40 days after you file for bankruptcy. It will take place outside of court and no judge will be present. You will only need to bring a government-issued photo ID and proof of your Social Security number. The meeting only lasts for a few minutes, but it is an important stop on your way to a brighter financial future.
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]]>The post How can foreclosure impact your credit score? first appeared on Oliver & Legg.
]]>In addition to losing your home, foreclosure can affect your credit score. Understanding these effects is crucial for mitigating them, as explained by this guide.
While the details can vary depending on the situation, most foreclosures begin after 120 days of non-payment of mortgages. In this case, you may be subject to a judicial foreclosure, which entails a court hearing initiated by the lender. With nonjudicial foreclosure, the lender can proceed with repossessing and selling the home without a court’s involvement.
Foreclosures stay on credit reports for seven years. The official starting point is the time of your first missed payment, and not the foreclosure itself. In terms of the impact, most foreclosures cause a substantial dip in your credit score, as your payment history is integral when it comes to calculating it. Once seven years have passed, the foreclosure will no longer be on your record.
Many lenders will work with borrowers facing hard times, so you should contact them as soon as you know you can no longer make payments. They may offer a payment plan or defer payments until your financial status improves. This will buy you time and prevent the foreclosure process from affecting your credit negatively.
You must also keep up with correspondence during the process to pursue the best possible outcome. Be sure to return phone calls and respond to letters in a timely manner. Ignoring correspondence will not make the problem go away, and it may prevent you from working out an alternate arrangement with the lender.
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]]>The post Statistics on non-business bankruptcies first appeared on Oliver & Legg.
]]>It is also helpful to look at data on non-business bankruptcies, not only to keep in mind that you are not alone but to understand how many other people in similar situations handle their debts. Sometimes, bankruptcy helps offer a sense of hope and a fresh financial start.
According to statistics published by the U.S. Courts, people filed roughly 15.3 million non-business bankruptcy petitions between October 2005 and September 2021. Chapter 7 bankruptcies made up 67% of these filings, while Chapter 13 bankruptcies represented 32% of these filings.
Between 2010 and 2019, the percentage of Chapter 7 filings in comparison to all non-business bankruptcy filings went down. However, the percentage of Chapter 13 filings went up during the same time period.
In 2006, the U.S. Courts reports that 1,085,209 personal bankruptcies occurred. In 2021, 418,400 such bankruptcies took place. 2021 saw over 301,000 Chapter 7 bankruptcies and more than 116,800 Chapter 13 filings.
Regardless of the type of bankruptcy that you decide to move forward with, it is pivotal to have a clear understanding of the steps you need to take when filing a petition and successfully working through the process.
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]]>The post What is the difference between secured and unsecured debts? first appeared on Oliver & Legg.
]]>Forbes explains that you will pay your priority debts first. Common examples include unpaid taxes, alimony and child support. From there, your bankruptcy plan will determine how to handle your secured and unsecured debts.
To take out a secured loan, you need to put up collateral. Many people apply for secured loans to pay for a home or an automobile. Secured debt is what you owe on this kind of loan.
Chapter 13 bankruptcy does not discharge secured debts, but it can give you time to catch up on overdue loan payments during your bankruptcy period. Bankruptcy may help restore your financial condition so that you can resume normal payments to your creditor after you emerge from bankruptcy.
You do not back unsecured debt with collateral. This means the creditor cannot take your property if you fail to pay back the debt. Bankruptcy courts place unsecured debt last in payment order. Unsecured debt usually consists of unpaid credit card bills, rent and medical bills.
Bankruptcy courts generally look at the disposable income of the bankruptcy filer to determine how much unsecured creditors should receive. They may get a full or a partial payment, or perhaps no payment at all if a court discharges the debt. So even if your outstanding bills seem insurmountable, Chapter 13 provides options to relieve your debt load and help you return to financial solvency.
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]]>The post What happens to your credit score when you file for bankruptcy? first appeared on Oliver & Legg.
]]>While bankruptcy gives you the reprieve you need to get your finances in order, it will also affect your standing in the eyes of lenders and financial institutions for the foreseeable future. Your credit score reflects your financial standing, so it is important to understand how it relates to bankruptcy.
Your credit score falls on a scale between the numbers 300 and 850. Experts explain that an average score of around 680 can fall by as many as 150 points as a result of bankruptcy. This is because filing for bankruptcy marks you as someone who requires assistance in handling matters of credit and debt.
Because lenders may consider an individual with a lower credit score to be a risky borrower, it can lead to difficulties in securing a mortgage, financing a car or even opening a new line of credit with your bank. However, you can rebuild your creditworthiness by promptly paying future bills on time. You can also build credit by paying off purchases with a secured credit card that you can easily qualify for by paying an up-front cash deposit.
Filing for bankruptcy can immediately result in a 100 or even 200-point drop in your credit score. However, you can steadily rebuild your credit by acting to prove that you are a reliable borrower going forward.
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]]>The post Should your business file Chapter 7? first appeared on Oliver & Legg.
]]>Before you file, it is essential that you understand what filing Chapter 7 means and how it will impact your business.
The US Courts explain Chapter 7 requires selling off your business assets to repay your creditors. You have little control over what stays and what goes. Typically, you will completely liquidate all the assets of your business, which will mean you have to close the doors. You will walk away without remaining debts, giving you a clean slate to begin again or move on to something different.
Usually, the choice to file Chapter 7 is the last resort for a business. Since it means the end of the company, deciding to file means you feel there is no possibility that you will be able to revive your business through the alternative bankruptcy option under Chapter 11, which reorganized your assets and debts to create a plan for repayment.
Filing for Chapter 7 will allow you to get out from under a failing business that has little to no ability to revive itself. If you have dropping sales and rising debt with no signs of anything getting better, Chapter 7 can help save you from drowning in your bills and the stress of trying to keep your business afloat. Once you walk away from the bankruptcy, you can move forward to a future where you can begin again.
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]]>The post How does Chapter 13 bankruptcy work? first appeared on Oliver & Legg.
]]>According to the U.S. Courts, Chapter 13 bankruptcy provides you with the opportunity to repay the total or a partial amount of your debts. The court will set you up with a plan that lasts three to five years and at the conclusion of this time period, you will not have to make any additional payments on your debts.
One of the main advantages of Chapter 13 bankruptcy, when compared with Chapter 7 bankruptcy, is that you can prevent foreclosure on your home. However, you must continue to make payments on your mortgage during the bankruptcy process. Filing Chapter 13 bankruptcy can also help you protect your other assets that may be subject to repossession.
As long as the total sum of your secured and unsecured debts is less than $2,750,000, you can file Chapter 13 bankruptcy. However, you cannot file Chapter 13 bankruptcy if, during the last 180 days, you filed a bankruptcy petition and you did not appear before the court.
You should approach the decision to file Chapter 13 bankruptcy carefully. Although this type of bankruptcy can be a helpful way to restructure your debts and alleviate some of your financial stress, there are still consequences that come from filing Chapter 13 bankruptcy.
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