Top Reasons Why the Elderly Don’t Want to File Bankruptcy (But Should)

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Being elderly, living on a fixed income, and dealing with mounting debt can be frightening.  Although retirement funds, pensions and social security checks are almost completely protected from creditors looking to recoup their money, they can still harass you for payment and make life difficult.

 

Here are some of the most common reasons elderly people give for avoiding bankruptcy and why those reasons are invalid. 

It’s embarrassing. 

We’ve all been taught to pay our debts and not shirk our obligations.  However, in a predatory lending environment like the one we’ve seen in this country over the past 10 years, it’s far too easy for people to be taken advantage of by unscrupulous lenders who pile on so much interest that it’s almost impossible to repay the debt.  The embarrassment should be on their part—not the victim of their predatory lending. 

It costs too much money. 

Actually, many bankruptcy attorneys will take payments and in consideration of the amount bankruptcy saves you through discharged debts, it costs less than doing nothing at all. 

It ruins your credit. 

In many cases, particularly Chapter 7 bankruptcy, filing for bankruptcy can actually raise your credit score—particularly if you’ve been behind on payments for a while, or are more than 90 days late on several accounts.  If your credit score is indeed lowered, a few months of paying your now-reduced and affordable payments on time will quickly raise it. 

It sets a bad example for the children.

Taking responsibility and admitting that you are in over your head is the best example you can set, and that’s what bankruptcy allows.  If you pass away with all that debt in your name, your estate will not go to your children and family—it will go to creditors.  With that in mind, which approach do you think your family would most benefit from?  The answer, of course, is bankruptcy.  

Car Loans and Bankruptcy: What You Need to Know Before Filing

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If you think that the car dealer who sold you the car you drive was or is concerned about whether you can handle the payment, think again.  In fact, the majority of car dealers are quite happy to place a customer in a car and car loan with high interest rates and unaffordable payments for one reason and one reason alone—they still get the commission from the sale, whether that customer can afford the car or not. 

In fact, for some car dealers, there are no limits to the amount of “tweaking” that can be performed to an applicant’s application to make sure the deal happens.  Whether it’s using the entire household’s income to get the applicant approved, or encouraging the applicant to use credit cards as down payments, car dealers and salespeople are certainly not in your corner (from a wise financial standpoint) when trying to sell a car. 

Many people end up filing for bankruptcy partly due to driving a car they can’t afford.  The good news is that in most cases, if the car is repossessed, the balance that remains can be discharged (eliminated) through bankruptcy.  In cases where you need that car to drive to and from work, some auto loans can be retained despite filing for bankruptcy. 

Under Chapter 13 bankruptcy, if the car loan is less than 910 days old, you might have to pay the full value of the car loan to keep the car.  However, there is a possibility that the interest will be reduced under the bankruptcy restructuring.  If the car loan is older than 910 days, the bankruptcy court will likely provide a prorated payment amount based on the vehicle’s worth, not the amount necessary to pay off a high-interest loan.  In Chapter 7 bankruptcy, you’ll likely be given the opportunity to either reaffirm the debt, redeem the car or surrender it.  

What will happen to my car and car loan if I file bankruptcy?

Knowing the Right Bankruptcy Tools Essential to Saving Your Home

When people get into serious financial difficulty, to the point where their very home is threatened as they fall behind on loan and mortgage payments, they often turn restlessly to bankruptcy as a solution.  Unfortunately, they often only have a vague idea of how these tools can be used most effectively – and using the wrong tool can be disastrous.

The RV as Primary Residence

One complicating factor is how you define your home – if you used a loan to purchase an RV and then fall behind on that loan, what form of bankruptcy can help? The wrong choice can leave you homeless: Chapter 7, for example, won’t protect you from having the RV repossessed by your lender, even if it’s your primary (or only) residence.  Many people make the mistake of thinking that banks and other lenders can’t (or won’t) put your family on the street.  The fact is, they can – and they will - unless you use the right tools.

The Right Tools

In this scenario, Chapter 13 Bankruptcy is a much better choice.  Chapter 13 can prevent repossession/foreclosure as it enters you into a five-year plan for paying down your debt.  You’re assigned a court-appointed trustee and a payment plan is created.  As long as you make your payments, you can’t be pushed out of your home or RV.

Even better, Chapter 13 can be organized with what’s known as a “cramdown” mechanism that can help people whose homes or RVs are “underwater” – that is, worth less than they owe.  Using a cramdown provision, the filer can pay just what the home is worth plus reasonable interest over the course of the five-year period instead of the full balance of the loan, and emerge fully paid.

The right tool is essential in any bankruptcy filing.  If your financial situation has you frantically researching bankruptcy on the internet, contact a professional today for sound advice as to what tool you should be using.

How does filing for bankruptcy during divorce proceedings affect support payments and property division?

My wife recently lost her job and we will be unable to pay our Chapter 13 bankruptcy payments. Is there any way we can get the bankruptcy court to lower our required payments?

My mortgage lender has sent a foreclosure notice on my home. What are my chances of just working it out with my lender to get extra time to catch up?

How Can Chapter 13 Bankruptcy Help You Save Your Business?

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America was built on the small business owner.  Like everyone else, they may be facing difficult economic times.  Are you one of these people?  Are you earning 50% of what you made a few years ago, causing you to fall behind on both your personal and business obligations? Do you want to keep the business open?   This is where a Chapter 13 personal bankruptcy could be used to save the business and protect it from creditors until profits can be seen. 

You will likely be able to save your business through Chapter 13 bankruptcy if:

1.       You can show that you have income that is “sufficiently stable and regular to enable [the] individual to make payments under a plan under chapter 13” (Section 101(30) of the Bankruptcy Code.)

2.       You can show that you (or you and your spouse) have less than $360,475 in unsecured debts (which means debts with no collateral) and less than $1,081,400 in secured debt (which means debts with collateral). 

3.       Your company is an individual (or sole) proprietorship.  If it is a corporation, limited liability company (LLC) or business partnership, there are other rules related to filing that go beyond the rules for a personal bankruptcy. 

Filing Chapter 13 bankruptcy will help you stay on your feet with your sole proprietorship business, and you will be able to use the filing to deal with your personal and business debts in one shot.  This means that creditors who are harassing you, whether for personal debts or business debts, will be placed under an “automatic stay,” meaning they can’t make any effort to collect against your personal or business assets.  You will be able to keep the important assets needed for your business to run properly without worrying that these will be taken from you through a judgment or lien.

Chapter 13 is an effective way of helping you keep your business if you are facing financial difficulties.  Talking with a bankruptcy attorney is the first step to helping you get back on your feet and keeping your business running as it should.  

Florida Foreclosures – What Happened and How Can I Protect My Home in Florida?

Let’s get one thing straight: the reason that you need professional legal assistance when you are facing the potential foreclosure of your Florida home is because the bank or mortgage company who owns your mortgage will not look out for your best interest.  The global financial crisis that resulted, in part, from fraudulent business practices on Wall Street created a situation in which your home mortgage – and the rights to it – has likely been sold as bonds to multiple stakeholders.  What this means is that there is no one at your bank or mortgage company who will lend a sympathetic ear to your financial hardships, regardless of how devastating they might be, because there are multiple corporate interests involved. 

In fact, many of these companies have moved your mortgage around between themselves that they are unable to provide original documents proving that they, indeed, hold the loan.  This has created a situation in which companies are using falsified documents to take your home from you—and these documents are passing through the courts unnoticed because of the wave of foreclosures that are happening around the state.  The same companies who participated in throwing Floridians in a tailspin with sub-prime mortgages and unethical business practices are now welding their power to take residents’ homes away from them. 

This is why a foreclosure defense attorney is a valuable asset to have on your side if you are facing the threat of foreclosure of your Florida home.  With the right defense in place, you will have a much greater chance of delaying, or even winning, the foreclosure claim that has been placed against you.  Foreclosure defense attorneys know what to look for to make sure that your bank or mortgage company is playing by the rules (because so many of them don’t!) and know all of the legal processes to keep you in your home for as long as possible, even if you have missed a payment on your mortgage.  

What other services does Bellinson Law offer?