How long does Bankruptcy take: The Bankruptcy process usually takes about 3 months.  However, sometimes it is necessary to plan for your bankruptcy before filing and this may take up to 6 months. 

Do I lose my property:  The Bankruptcy court allows you to keep a certain amount of property.  It is possible that you may own more property than you are allowed to keep. 

What is the difference between a Chapter 7 and Chapter 13:  In a Chapter 7 petition, the goal is to eliminate all your debts while protecting as much of your property as possible.  To qualify for a Chapter 7 you must have a low enough income or very high expenses.  If you still have income left over after deducting your expenses then you are a better candidate for Chapter 13.  A Chapter 13 plan allows you to repay your debts at a reduced rate over a 3 to 5 year period.  In a Chapter 13 plan you can keep all your property if you choose to.  Therefore, if there is property you want to protect and your income is sufficient to pay some of your creditors, a Chapter 13 is better.

Can I still keep my home:  If you are in the process of modifying your home you can continue to do that in both types of Bankruptcies.  You can use a homestead exemption to allow you the ability to keep paying your modified mortgage.  If you are still in the process of getting a modification it is probably best to wait and see the terms of your modification before declaring Bankruptcy, so that you can more readily decide if you want to include the mortgage in your petition and eliminate that debt or choose to reaffirm that debt and continue to pay it.  If you choose to eliminate the mortgage debt the bank still has the right to foreclose on your home and take possession of it, but now you will no longer be PERSONALLY responsible for any deficiency on the mortgage. 

Modification. Modification of your current loan is the reorganization of your loan to get you a better interest rate or better payment terms. Normally, your options are to request that the bank lower your interest rate, extend the time frame for repayment of your loan, forgive/forbear past due amounts or penalties, and lastly lower the balance of the amount owed. Let us help you to determine your eligibility for a loan modification and to discuss your potential options.

Foreclosure:  If you home is currently in foreclosure it is possible that the bank can pursue you for the deficiency on the mortgage.  If they sell your home at the foreclosure auction for less than what is owed on the mortgage you may be held responsible.  Alternatively, the bank can decide to forgive that debt and issue you a 1099COD for the difference.  You must declare this as income on your tax return and pay taxes on it.  If you are insolvent you do not have to pay taxes on this amount, however, it is necessary to determine this with an accountant.  To avoid the liability for the mortgage deficiency or having to pay taxes due to the 1099COD it is important to declare Bankruptcy BEFORE the bank declares this amount as a loss on their books.  Some banks declare the loss at the foreclosure auction and other banks declare the loss quarterly, or at year-end.  It is impossible for us to predict when you will become liable for the 1099COD income.  Once it becomes income that you must pay taxes on, you cannot eliminate the tax liability the following year in a Bankruptcy.  Schedule an appointment BEFORE your property is sold at the foreclosure auction to be on the safe side.     

How long does Bankruptcy show on my Credit Report:  The Bankruptcy will appear for 10 years on your credit report.  However, it is possible that in declaring Bankruptcy it will improve your credit score since a majority of your debts will be eliminated.  Furthermore, it is likely that you will be able to receive credit within 3 years, although at higher interest rates. 

If you are drowning in debt and can't handle it anymore schedule an appointment to see us and we will discuss your Bankruptcy options and the chance to start over!