If I live in an RV or mobile home as my primary residence and I'm behind on my payments, can I be evicted if I have nowhere else to live? Can bankruptcy prevent this?

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

Image courtesy of suphakit73 / freedigitalphotos.net

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.  

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.

Bankruptcy: What You Really Need to Know

Bankruptcy serves a distinct and important purpose in the modern world, and it’s slowly shedding old negative associations as more and more people come to understand how it works and why it exists.  In fact, over a million people a year file for bankruptcy in the United States, seeking the protection of the court while they put their affairs in order.

The fact that so many people have chosen to pursue bankruptcy as a final solution to their financial problems should not, however, give the impression that bankruptcy is no big deal or can be a casual solution to reckless spending.  Bankruptcy is complex and has a long-lasting effect on your life; it should never be entered into lightly.  Here’s what you need to know:

• There are two main kinds of bankruptcy: Chapter 7 has the ability to erase your debts completely, and it removes you from contracts with creditors.  Chapter 13 involves a five-year payment plan before your debts are completely removed.  Each has specific advantages and disadvantages – know them before you file.
• Don’t hesitate.  While bankruptcy shouldn’t be an option while you still have resources, you also shouldn’t wait until disaster has already struck.
• Don’t commit fraud.  If you think taking cash advances on your credit cards or transferring assets into a relative’s name just before declaring bankruptcy won’t be noticed by the courts – think again.
• Hire an attorney.  An attorney who specializes in bankruptcy law is essential – don’t try to go it alone.  Bankruptcy law is complex and your finances are complex.  Whatever you think, you need a qualified expert on your side.

 

Bankruptcy can save your retirement funds, your home, and other assets while giving your creditors a chance to salvage something from the loans made to you – this is an essential aspect of the modern world and shouldn’t be treated lightly, for any reason.  The better prepared you are for bankruptcy, the better the process will serve you.

Bankruptcy is Saving the World

For a lot of people, the term “bankruptcy” refers to a trick: People rack up immense debts they can’t hope to pay back, and when justice begins to close in on them they can jump in the escape pod marked Bankruptcy and wriggle out of the consequences, only to repeat the cycle.  This, of course, isn’t true, and as bankruptcy rates skyrocket during the worldwide economic slowdown we’ve been experiencing, more and more people are realizing that bankruptcy serves a legitimate purpose in the world.  To put it in dramatic terms: Bankruptcy allows civilization to exist, because it gives us rules and structure for dealing with financial ruin.

The Bad Old Days

In the past, an inability to pay bills was dealt with via a destructive and unrealistic hostility.  People were even thrown into jail because they failed to pay their bills, and even where debtor’s prison didn’t exist, there were usually endless rounds of punishments that sank people into a hole they would never crawl out of.  While that might seem like justice to some folks who have smugly never missed a payment in their lives, the fact is it was totally harmful to society: The debtor had no chance not only of paying off that specific debt; they had no chance to pay off other debts either.  Punishment therefore spread like a cancer to all the interested parties.

The Modern Method

In contrast, bankruptcy today allows for an orderly and fair review of the debtor’s assets and debts, and as many debts as possible are made whole.  Lenders are able to negotiate to get at least some minimum amount of their principal back, and the debtor is allowed to rebuild their lives and their finances not only after their debts are discharged, but during the process as well – which benefits everyone.

More and more people are realizing this – more than a million people filed for bankruptcy protections under either Chapter 7 or Chapter 13 in 2012 and 2013.  The two main types of bankruptcy differ slightly in the details of how they work, and a professional should be consulted before making any decisions involving bankruptcy.  But if you are at a point where paying your debts has become impossible, it’s a better choice to alert your creditors and work with them under a legal structure than to deny what’s happening and let chaos rule the day – as it surely will if you don’t file.

 

Can Bankruptcy Help My Tax Debts?

Image courtesy of adamr / freedigitalphotos.net

While some people who file bankruptcy are burdened with credit card debt, some are burdened with debt to Uncle Sam for past due income taxes.  Tax debt can be included in a bankruptcy, but there are rules and in most cases, you will have to pay your taxes.  To understand the difference in the way tax debt can be discharged, you have to understand two most common types of bankruptcies.  Chapter 7 wipes away all of your debt and you are no longer obligated to pay it.  Chapter 13 reorganizes your debt and puts you on a plan to repay your debts.  If income tax debt is included in a Chapter 13 payment plan, it is considered a priority debt and must be paid before other debts. 

Some people have misconceptions about tax debt and bankruptcy.  Here are three common myths.

1. Myth: Income tax debt is never discharged.  Fact: If you file a Chapter 7 and you have tax debt that is more than three years old and your taxes were filed on time, in some cases that debt can be discharged. 
2. Myth: Interest and penalties will continue to accrue if I put my income tax debt in a Chapter 13 payment plan.  Fact: You will have to pay all of the interest and penalties up until the time you filed your Chapter 13 but you will not be assessed any additional fees after you file.  The accrued interest and penalties will be included in your bankruptcy. 
3. Myth: Filing bankruptcy will wipe out any liens from the IRS.  Fact: If the tax lien is not secured, it will become a priority debt and it must be paid in a Chapter 13.  It is not dischargeable in a Chapter 7.  If the IRS has filed a secured claim, it cannot be discharged.

Most other types of taxes do not qualify for discharge if you file bankruptcy.  These include estate taxes, gift taxes, sales taxes or fuel taxes. 

Tax law is very complicated and sometimes there are exceptions to what can be discharged that are unique to the client.  Even if you cannot include you tax debt in your bankruptcy plan, getting relief from your other debts will help you pay your taxes.  You will not know what you can do about your tax debt until you consult with a bankruptcy attorney.  We have helped hundreds of clients determine how they can handle their tax debt.  

Life After Wage Garnishment: Can You Live on Less?

Image courtesy of Stuart Miles / freedigitalphotos.net

Some people are living paycheck to paycheck with no savings to rely on if there is a crisis.  Those people may also be behind on their bills and are facing judgments from their creditors.  In some cases, that person may be unaware that a creditor has gained a judgment to garnish their wages until they see less money in their paycheck.  If this happens to you, can you live with up to 25 percent less of your paycheck? What bills will not get paid if this happens to you? How will your family survive?

You can protect yourself and your wages from garnishments.  Filing bankruptcy can keep creditors from getting your money and help you get back on your feet.  You may also be able to keep many of your assets.  You have two bankruptcy options:

• Chapter 7:  This will wipe out your debts.  If you are worried about keeping your house or car, you can file to keep them by asking for an exemption.  This is called the “fresh start” bankruptcy because you are no longer responsible for paying the debts included in the bankruptcy. 
• Chapter 13: This is like a debt reorganization that protects you from your creditors.  Basically, you will be able to pay off your debts, often at a reduced interest rate and keep your property.  If you are a homeowner, there is a program that can eliminate your second mortgage or home equity loan and just pay off your first mortgage.  In a Chapter 13, you will be making a monthly payment to a bankruptcy trustee for three to five years. 

What happens if you wait too late to file for bankruptcy protection? Garnishments can proceed and you could be forced to live on less.  That could cause you to get behind in your other bills like your mortgage or car payment.  A bankruptcy protection plan keeps your assets and money safe from creditors. 

Deciding to file bankruptcy is a decision that should be well-thought out and discussed with your family.  It is not an easy process and it’s not an option for everyone.  Our firm has helped hundreds of South Florida families avoid wage garnishment.  But you must not wait until the wolves are at the door before you protect your assets.