Creditors Will Put A Lien On Your Property

Many creditors will put a lien on your property.  They are trying to ensure they get paid for the debt you owe.  There are judgment liens when you lose the lawsuit.  And there are tax liens when you don’t pay your income taxes.  A lien against your property creates many problems for you.

A lien can be placed on just about anything you own.  Usually liens are placed on your home and/or cars.  They make it hard for you to sell the property.  They also give the creditor the right to take your property and sell it.

A lien on your house gives the creditor the right to foreclose on your house.  Even if the creditor does not foreclose the lien causes other problems.  If you try and sell your house the creditor gets paid.  If you try to refinance your mortgage the creditor gets paid.

Liens are very costly.  Some creditors obtain the lien and wait.  They sit back until you to try to sell or refinance.  The whole time the debt is getting bigger with interest.  That $5000.00 credit card debt is now $7000.00 five years later.

Chapter 7 Bankruptcy will prevent liens from attaching to your property.  However, once attached liens are not discharged in Bankruptcy.  A lien may be able to be removed during the bankruptcy process.  This generally requires additional procedures.  Creditors will put a lien on your property, it’s a cheap way for them to get paid.

Income Taxes After Your Home Foreclosure

You may have to pay income taxes after your home foreclosure.  Currently many can escape foreclosure with just the loss of their home.  Starting in 2013 foreclosed homeowners may also be paying taxes to the IRS on the forgiven debt.  Most tax debt is not dischargeable.

Current federal tax laws generally do not tax consumers for forgiven debt from home foreclosures.  The current law will expire at the end of 2012.  If the law is not extended, many consumers will pay federal income taxes on forgiven foreclosure debt.  Think paying taxes on an extra $30,000 to $100,000 of income.

Mortgage modifications were supposed to help.  I have seen very few success stories.  You make too much money or you make too little money. Sorry, but thanks for trying.

The only real mortgage relief is Chapter 7 Bankruptcy.  Take care of the mortgage debt.  Avoid paying taxes on forgiven debt.  Clean up your other debt at the same time.

The Bankruptcy laws have been around longer than the current tax law.  Rely on a remedy that has staying power.  If you are in a current foreclosure you need to act fast.  Contact a local Bankruptcy Attorney to learn more.  Don’t pay income taxes after your home foreclosure.

Wage Garnishment-How Much Can Be Garnished?

Wage garnishments can be very painful.  They greatly reduce your ability to continue to provide the necessities of life for you and your family.  They are a legal remedy your creditor obtains from the court to ensure they are paid the money you owe them.

In Ohio you typically will receive a notice of wage garnishment.  The wage garnishment will take 25% of your paycheck after taxes have been deducted.  This is a significant amount.  It will put a major strain on your household budget.  It will most likely cause you to fall behind on your car payment, your rent or house payment, or your utility bills.  It may also cause you to not be able to provide the necessities for your family such as food, clothing, and medical needs.

Below is an example of how a wage garnishment will reduce your available monthly income for a person earning $30,000 per year:

.                                                        Before                         After

Monthly Gross Income           $2500                          $2500

Required Taxes                          $500                            $500

Garnishment                                N/A                             $500

Insurance                                    $250                            $250

Available Income                    $1750                          $1250

As you can see, the garnishment for the example above reduced the available monthly income by $500 per month.  If your budget is already tight, that means you will not be able to maintain your household necessities.  You are going to begin to miss payments on your car, rent/mortgage, or utilities.  Your family is going to suffer.  Please contact a local bankruptcy attorney to find out how you can stop a wage garnishment.

Wage Garnishment

A wage garnishment is a legal method a creditor uses to collect the money you owe them.  Generally this follows a lawsuit to collect the debt.  Once the court has determined that the debt is owed, the creditor has a legal remedy to collect the debt by ordering your employer to withhold money from your paycheck.  In Ohio, wage garnishments take 25% of your paycheck after taxes.

Bank Garnishment

A bank garnishment is a legal method a creditor uses to collect the money you owe them.  Generally this follows a lawsuit to collect the debt.  Once the court has determined that the debt is owed, the creditor has a legal remedy to collect the debt by ordering your bank to freeze all your assets and turning them over to the court.  Currently in Ohio, an individual can protect $425.00 from being garnished from his or her bank account.

Tired of Harassing Collection Calls

Harassing collection calls place a tremendous amount of stress on you and your family.  How the collections are handled vary greatly depending on who is collecting.  On one end you have the original creditor trying to collect and on the opposite end you have the third party collectors or debt buyers.  And likewise the collection methods change depending on who is collecting.

Most original creditors have some decency and professionally conduct their collection activities.  They will send you letters notifying you that your payments are late.  They may call you later to see if any kind of arrangements can be made.  If the account has been delinquent for some time, they usually send you a final notice that your account is being turned over to collections and that they may take legal action.

Collection companies who work for the original creditors are also generally professional.  They will typically send a letter notifying you that your account has been turned over to them for collections.  The letter will generally inform you that the account is overdue and inform you of the amount due and the methods to pay the account.  If this is unsuccessful they will generally send out additional letters and possibly contact you by phone to try and arrange payment.  They may even offer to settle the account for less than full value.  And if no payments are made, they or the original creditor may initiate legal action.

Many times the debt obligation is sold to third party collectors either before or after legal action.  When this happens, prepare yourself for harassing collection calls.  At this point, the professional conduct of the collection company can vary significantly.  Some third party debt buyers and their collection companies are very professional and follow the same type of conduct describe above, yes they may sue you but they generally don’t cause your phone to ring nonstop.  On the other hand, there are collection companies that are relentless and ruthless.  Harassing collection calls are used to try to scare and coerce you into paying them something.  They will call repeatedly.  The will tag team you with an investigator and a collection agent.  They will call your work.  They will call your relatives.  They will threaten to serve you with a summons and that the sheriff is on his way if you don’t agree to pay them now.  And believe it or not, some have threatened that they will sue you for fraud and that you are going to go to jail.

How do you stop harassing collection calls?  You have a couple options.  First of all you can pay the account.  Secondly, if it is a third party collector whose conduct is abusive, you can hire an attorney and bring a lawsuit against them for violation of the Fair Debt Collection Practices Act, but this will likely cost you more money and take many months to resolve.  And thirdly, you can file bankruptcy, which gives you Federal Court protection under the Bankruptcy Code.

If you are receiving abusive, relentless harassing collection calls, please call me to find out if bankruptcy is an option for you.

Will Filing Bankruptcy Affect Your Credit Score?

Will filing bankruptcy affect your credit score?  Yes, but chances are that your credit score is already declining or will be shortly if you are considering filing bankruptcy.  Every missed payment decreases your credit score.  Enlisting in a debt settlement or debt management program has a negative impact on your credit score.  And yes filing bankruptcy will have a negative impact on your credit score.

Will filing bankruptcy affect your credit score forever?  That all depends on what you do following bankruptcy.  Your credit worthiness, which is what your credit score is supposed to reflect, will improve to some degree because you will have discharged a significant amount of debt.  Your debt to income ratio will improve after filing bankruptcy.  Your actions following bankruptcy will determine how soon your credit score recovers.

Keep in mind that it is primarily the creditors that you obtain loans from or have a charge account with that normally report to the credit bureaus.  Making timely payments on existing loans that you have reaffirmed, like car loans, will help to improve your credit score.  Obtaining new credit, within reason and that is manageable, and paying off the balances on time will improve your credit score.  There is no magic formula for how soon or when your credit score rebounds because it all depends upon what you do personally with your financial life after you have filed bankruptcy.

History is an important part of how your credit score is determined.  Establishing good financial practices over time will improve your credit score.  Establishing a savings plan to pay for unexpected expenses or to purchase something that is needed will help you avoid the tendency to rely credit.  Learning from past mistakes and avoiding the temptation to rely on credit to make ends meet will serve you well in the future and help you improve your credit score.  Will filing bankruptcy affect your credit score – Yes, but in the long run the affects may be positive.

Will I Lose My House if I File Bankruptcy?

This is a common concern for many people who are contemplating whether or not they should file bankruptcy.  The vast majority of people who own a home have one or two and sometimes three mortgages secured by their home.  Because of these mortgages, there is generally little equity or value beyond the amount owed on the mortgage(s).

Chapter 13 bankruptcy is available to most people who have a steady stream of income.  One of the goals of Chapter 13 is to allow people to keep their property while they pay some money back on the debts they owe.  So no you will not lose your house if you  file Ch 13 as long as you have sufficient income to meet your basic living expenses and can still afford to make the mortgage payments.

If Chapter 7 bankruptcy is the option you prefer, you will generally not lose your house as long as you are current on the payments, and your income is enough to allow you to continue making the mortgage payments and cover your basic living expenses.  In Ohio you also have exemptions of approximately $20,000.00 (single) and $40.000.00 (married) that allow you to claim as exempt against any equity you have in your residence.  So unless your house is will sell for an amount far exceeding the amount you owe on it, and you can continue to make the mortgage payments, you should not lose you house if you file Ch 7 bankruptcy.

But what about the Trustee, can’t he/she take my house anyway?  The trustee works for your creditors.  The Chapter 7 trustee’s job is to find assets he/she can turn into cash to pay to your creditors.  In order for the trustee to benefit from taking your house he has to be able to sell it for a profit after he pays the mortgage(s), taxes, and you for your exemption amount.  Typically you will not lose your house because the trustee will not profit from selling your house.

Please contact me at 740-369-6812 to discuss your situation and answer any further questions.

Can I Keep My Car if I File Bankruptcy?

Generally speaking the answer is “Yes you can keep your car if you file bankruptcy.”  With a few exceptions that will be discussed later, you can keep your car if you file bankruptcy provided you have the means to continue making payments and pay for your basic living expenses.  Most people still have a loan against their car that is close to the amount the car is worth.  In Ohio, you have an exemption in the amount of up to $3,450.00 for one car.  What does this mean?  If you own a car free of any loans or your car is worth more than you owe on it, you can claim as exempt from the trustee an amount up to $3,450.00.  Keep in mind that the trustee represents your creditors and is trying to find assets that he can sell and turn into cash to pay your creditors.  The trustee has to decide if he can take your car and sell it for a profit above and beyond the amount you owe on it if you have a loan plus your exemption of $3,450.00.  The trustee will also incur expenses trying to sell your car that he has to take into consideration, such as appraisal fees, storage fees, and auction fees.  So generally speaking, most people who file bankruptcy get to keep their car.

There are a few exceptions.  If you cannot afford to continue making payments on the car, then your car loan company will be the one who tries to take your car because you cannot afford it.  If you own your car free and clear of any loans and it is worth a significant amount more than your exemption of $3,450.00, then chances are good the trustee would be interested in taking your car and selling it.  You still get your exemption amount of $3,450.00.  If you have more than one car per debtor titled in your name, and they are worth more than the loans, the trustee may pursue the car you cannot apply your exemption too.  The scenarios are many and the best solution is to call an attorney to discuss your individual situation to find out if you will be able to keep your car if you file bankruptcy.