Apr 20, 2020 | Bankruptcy Blog, Blog
People who are considering filing for bankruptcy in order to gain credit card debt relief or help with other kinds of deep indebtedness, often ask what effect this action will have on their credit score. They’ve been told and taught that they will never recover their credit score if they file for bankruptcy. However, the truth is quite the opposite. True recovery and true credit score recovery start with debt relief. Modern credit scores depend on low debt levels, and this starts immediately after the filing of a bankruptcy petition.
It depends on your starting point
Filing for bankruptcy will be reported on your credit report, but the effect on your credit score will depend on your credit score before filing, and how you rebuild your credit score through sound post-bankruptcy and proven practices for credit restoration. Most Connecticut residents seeking debt relief are great payers with falling credit scores due to their unhealthy debt-to-income ratio as reported on their FICO scores as high utilization. High credit scores are only available to those who have low debt loads. Perfect payers no longer have perfect scores. They waste hundreds or thousands of dollars each month and still endure falling credit scores.
People file bankruptcy for debt relief, but it actually improves credit scores.
The Best Way to Rebuild Your Credit Score
While it’s not good that you find yourself in a situation where you have to file for bankruptcy, it is actually the best avenue to raise your credit score and keep it solidly high. The myth of “no credit after bankruptcy” is not true. People don’t need to fear the solutions provided by the country’s bankruptcy protection laws. In fact, Lenders love post-bankruptcy clients. If you don’t file for bankruptcy and your unpaid debts continue to accumulate, this will be far more damaging to your credit score than any bankruptcy filing. Additionally, your debt-to-income level will continue to ruin your credit score. Unpaid bills create tanking credit scores that require solid advice and a sound solution.
Post-bankruptcy clients qualify for regular rate credit cards immediately along with solid rate car loans. Often these loans are far better than any pre-bankruptcy offerings. We don’t file bankruptcy to improve your credit, but it will eventually give you the highest credit scores available.
Bankruptcy, while often delivering a short-term knock to your credit, not only enables you to reduce your debt load and get your true finances under control, but it also immediately starts the process of rebuilding your credit. If you come to the point where bankruptcy is your best option to obtain financial recovery, rest assured that the damage to your credit will be temporary. In addition to solving your financial problems, bankruptcy is an effective tool for revitalizing your credit and re-establishing the highest possible credit score.
If you are looking for credit card debt relief, contact the Law Offices of Neil Crane, LLC, the most experienced debt relief attorneys in Connecticut. Please call us at 203-230-2233 or fill out our online Contact Form or call to speak with an attorney directly today.
Apr 13, 2020 | Foreclosure Blog
If you reach a point where you are struggling to meet your mortgage payments, you can get the help of a foreclosure defense attorney, which means you can stop struggling! Although your mortgage repayment plans may seem to be set in stone, you are well within your right to renegotiate it if you find yourself in financial difficulty.
Modifying a Loan
If you find that your payments are unaffordable, there are a number of steps you need to follow.
- First of all, keep in touch with your creditor. Do not avoid their calls, letters or emails. While it is in their best interest to avoid foreclosure. You need to present a good plan to solve your problem with them. Be transparent about your situation and discuss your options. The lender may agree to temporarily suspend payments. This is a short-term solution, however, and if you need something more permanent, then you should consider modifying the loan.
- Secondly, if you do decide to modify the loan, read the terms of your modification carefully – is it helpful? Is it fair to you?
- Thirdly, you must be able to present evidence to show that you have hit upon hard times financially and cannot service the debt as it stands, but you have a good chance to pay the modified loan requested.
- In the fourth step, get the help of an experienced and specialized foreclosure defense attorney. They will know the correct way to maximize your chances for success.
- Step Five is the application itself. You or your lawyer will contact the lender’s loss and mitigation department, and your eligibility will be assessed. You will then receive the application to complete and, once this submitted, along with your motivation letter, pay stubs, bank statements W-2 forms, and tax returns, you should receive a response within a few weeks to a month. The application should be organized and complete with a hardship letter and a new well-Powered solution submitted with pay stubs, bank statements, profit & loss records for the self-employed, tax returns, and other backup documents.
It’s always best to enlist the help of a consumer and foreclosure defense attorney to make your loan modification application smoother and easier. Contact the Law Offices of Neil Crane, LLC, the renowned Connecticut debt relief, bankruptcy, tax and foreclosure defense attorney.
Apr 6, 2020 | Bankruptcy Blog, Blog
Most people see bankruptcy as a terminal sign of financial ruin. With a Chapter 13 bankruptcy lawyer, however, Chapter 13 can be a comprehensive start to a new reorganized financial life. Chapter 13 of the Federal Bankruptcy Code provides protections for individuals seeking to reorganize all different types of debt through a customized plan for the payment of important debts, and the reduction or elimination of other less important debts, without any loss of assets.
How Does It Work?
With Chapter 13, you are given the opportunity to formulate a plan to repay your debt from personal income from any source. With the help of a Chapter 13 attorney, the petitioner submits a reorganization plan that protects assets against foreclosure or repossession and provides forgiveness or restructuring for other debts. The petitioner’s attorney creates a three to five year plan for reorganized past debt in accordance with each family’s current income and expenses.
Who Is Eligible for Chapter 13?
Chapter 13 is only for individuals, not for businesses, but the individual can be self-employed, a business owner, or an employee.
How Does the Filing Process Work?
Applicants should first secure a Chapter 13 lawyer, who will review and submit some of the following documents:
- A list of creditors,
- Disclosure of the amount and sources of income,
- A list of property and assets,
- A breakdown of the applicant’s living expenses, and
- Tax information, such as tax returns, statements, and the like.
After filing, your Chapter 13 attorney submits a repayment plan that you have reviewed and approved before your case is filed. The Chapter 13 plan calls for the full or partial repayment of an individual’s debt in order of importance through a single monthly payment after paying for regular monthly household living expenses. The debtor is not required to interact directly with his/her creditors; instead, any and all communications must and should be through an appointed mediator to handle all communications. Once a repayment plan is granted, the monthly payments are set, although acceleration of payments and early settlements are permitted. Chapter 13 bankruptcy is a rarer form of bankruptcy than Chapter 7, but it offers the most protections for individuals and homeowners of any form of bankruptcy law.
Do you think you may benefit from Chapter 13 bankruptcy? Do you live in Connecticut? Then contact the Law Offices of Neil Crane, LLC, we are highly experienced and successful Chapter 13 bankruptcy attorneys in CT.
Mar 16, 2020 | Foreclosure Blog
Many people worry about what happens after foreclosure. If you are going through foreclosure, it is good to understand what you might still be responsible for or what the bank may due after a foreclosure. We’ll go through what a deficiency judgment is as well as the tax implications.
Deficiency Judgments: Money Banks Seek After Foreclosure or Repossession
Deficiency judgments represent the money due when a foreclosure or other form of forced sale does not produce enough proceeds to cover the debt owed. Given the high debt due under most defaulted mortgages and low real estate values in today’s market, deficiency judgments can be very large amounts, since they are overdue, they are immediately and fully enforceable court judgments.
In most Connecticut foreclosures you lose your house and still owe the bank for the remaining money borrowed, including interest, fees, costs and other bank charges. This is a disastrous result that is widespread throughout Connecticut and in the 40 other states that allow for deficiency judgments.
Any bank that completes a foreclosure with a debt amount due that exceeds the value of the property can bring a Motion for Deficiency Judgment and preserve their right to sue for money “unpaid” if they file it within 30 days of the Foreclosure Judgment.
With real estate values at historical lows, deficiency judgments result from the vast majority of Connecticut foreclosures. It is rare that banks receive enough proceeds from forced and often slow sales to satisfy the large amount of mortgage debt, fees and costs that result from a foreclosure.
Unpaid second mortgages, credit lines or liens are also the personal responsibility of the borrower, even after a foreclosure.
Second mortgages and unpaid credit lines can be very large amounts that are due in full by suit, lien, attachment or other means of court collection. It is important to understand that mortgages or liens that are on your home before foreclosure generally become unsecured Judgments due against the homeowner after the first mortgage foreclosure, even if the first mortgage doesn’t seek a deficiency judgment. Avoiding personal liability for large second mortgages, credit lines and other liens requires experienced counsel with knowledge in all forms of debt relief, including filing for bankruptcy under the revised requirements for Chapter 7 eligibility and relief.
How We Can Help You Avoid A Deficiency Judgment
Avoiding a deficiency judgment should always be pursued with the assistance of a highly qualified Connecticut deficiency judgment lawyer. There are three major ways to avoid a deficiency judgment in Connecticut. Two of the three require bank permission and assistance:
- Chapter 7: provides full relief from all Deficiency Judgments by discharging personal liabilities in full. All debts, including other mortgages, liens and court judgments still remaining after a foreclosure are also discharged from personal liability. This allows the post-foreclosure family to proceed forward with a clean slate on foreclosure debt and all other forms of general unsecured debt, including full credit card relief, so the Bank and any creditors are barred from proceeding against you, your assets, or future earnings.
- Full Discharge under Chapter 7 never requires permission or assistance from your Bank or creditors. It’s a right provided to you under federal law.
- Deed-in-lieu of foreclosure: This is the process where, through negotiation, your lender agrees to accept the title to the property in full satisfaction of your debt prior to the end of the foreclosure. This process should only be used if it assures that the homeowner who gives back their house will have no deficiency still due to the Lender. This is a result rarely ever seen. Furthermore, it is always made more difficult by the involvement of junior liens or credit lines. A deed-in-lieu requires complete cooperation, assistance and permission from all lenders. This option is not always available when dealing with mortgage lenders and servicers, but our attorneys know how to maximize your chances for deed-in-lieu success whenever this option will fully resolve your financial difficulties.
- Short sale: This is the process whereby the Bank allows you to sell the house for less than the total debt. A short sale is an important and huge financial decision that should never be undertaken without the advice from a short sale legal representative or an experienced bankruptcy attorney. Short sales don’t solve other debt problems or tax issues as you leave your home. Never do a short sale that leaves you with a deficiency. The Bank needs to assure you that the short sale proceeds are taken to satisfy the whole debt. Short sales are uncommon in today’s difficult banking environment where large banks are slow and servicers are unlikely to coordinate all the parties and steps necessary for a successful short sale. Under certain specific circumstances, short sales can be a foreclosure and deficiency solution when properly pursued by our experienced short sale attorneys.
Tax Consequences of Short Sales, Deficiencies and Solutions
Foreclosures create perilous results for uneducated homeowners long after the foreclosure is completed.
Deficiencies resulting from refinances, second mortgages and credit lines can have disastrous tax consequences if any of the borrowings were not utilized solely for the purchase or the improvement of your house. These forms of debt cancellation create taxable income in the form of a 1099-C that can be very large.
Tax problems created by foreclosures and other debt cancellation can cause long lasting and often unsolvable tax consequences if you don’t seek experienced legal help. Foreclosure can be a taxable event. The Mortgage Tax Forgiveness Act was lost in 2018 and 2019, but is due back in 2020, and you need to carefully understand it. Don’t lose your house and get stuck with a huge non-dischargeable tax debt because you didn’t just make a call and seek legal advice.
Chapter 7 allows for full debt discharge before or after a foreclosure with no tax consequence to the homeowner. All liability for deficiencies and all other non-tax debt is relieved tax free. This ensures no post foreclosure obligations and a true fresh start.
Deed in Lieu of Foreclosure can create a serious tax ramification if it is not properly handled and documented before the date of transfer. Don’t ever give back a home and create a non-dischargeable tax debt. This depends on careful and precise documentation. Get proper legal counsel and never rely on the Bank’s forms or lawyers.
A Short Sale creates a perilous situation for all homeowners. They’re faced with the loss of the home, the potential for remaining deficiencies liability, and the serious negative effects of income cancellation tax debt. If done incorrectly prior to the short sale transfer the ramifications can be serious and long-lasting. A short sale is a real estate closing with many parties involved – Banks, lenders, brokers, buyers, seller, courts…Get excellent and experienced local short-sale or bankruptcy counsel. Short sales need to be perfectly coordinated with an experienced attorney working for you.
Recovery After Foreclosure
Unfortunately, many Connecticut residents have lost their homes to foreclosure, very often without the help of legal representation. While the consequences can be dire, there is no question that you still have a road to financial recovery and various legal avenues to completely regain your financial future. Recovery through legal rights granted under Federal law gives foreclosure victims in even the seemingly worst of circumstances a path to recovery after home loss to foreclosure. To learn how you can create recovery after foreclosure, contact our team of bankruptcy and foreclosure attorneys. We always offer a free consultation and are available to answer your questions directly by phone at 203-230-2233.
Understand the myths about Foreclosure by reading our 10 Common Myths about Foreclosure article
Mar 15, 2020 | Foreclosure Blog
The new Bank needs to honor your Mortgage Modification.
Does my mortgage modification control future banks or servicing companies if my mortgage changes hands or is sold or assigned?
The simple answer is YES. New holders or servicers are legally bound by the terms and conditions of a properly modified permanent modification. A permanent loan mortgage modification is a legally binding new mortgage with terms that control and override the original mortgage. These terms will always obligate any future holders or servicers of your mortgage. Be careful about your payments when your mortgage changes banks.
Many transfers result in payment processing problems between old lenders and replacement lenders. Payments can be misapplied, returned, or late processed, causing improper mortgage defaults, late charges and credit reporting problems. Problems with escrow payments, insurance payments, and proper allocations to principal and interest can occur each time a mortgage changes hands.
What Happens to My Trial Modification if My Mortgage Changes Hands?
Trial Mortgage Modifications from one Bank or Lender does not bind a subsequent Bank or Lender. This problem occurs when homeowners have a temporary or trial Modification with one Lender, who sells or assigns the loan during the trial period and refuses to honor a prior Lender’s trial Modification. With the slowness of the Mortgage Modification process and the reality of continuing mortgage assignments and transfers without any borrower’s consent or involvement, trial Modifications can be broken with a transfer during the trial Modification period. The results can be a disaster for the homeowner, who has no control or right to enforce a trial Modification against the new Lender.
Contact Specialized Mortgage Modification Attorneys
The best protection for your home is the prompt involvement of an experienced and specialized Connecticut Foreclosure attorney. At the Law Offices of Neil Crane, we have been saving homes all across Connecticut since 1983. Call us at 203-230-2233 or complete our online contact form to explore your options with our team of Mortgage Modification attorneys. Our offices are in Hamden, Connecticut; New Haven, Connecticut; Waterbury, Connecticut; Rocky Hill, Connecticut; Ridgefield, Connecticut; and Bridgeport, Connecticut.
Mar 15, 2020 | Foreclosure Blog
Should I Pay My Second Mortgage if I’m Not Paying My First Mortgage?
If you’re not paying your first mortgage or have missed payments, there really is no logic to paying a second mortgage. There is also no reason to pay on credit card debt if it is overwhelming your budget. But all of these decisions require solid, experienced legal advice from a specialized Connecticut home-saving attorney.
The critical step when you’ve missed a mortgage payment is to save the money and contact experienced legal counsel for free advice and a solid solution.
There really is no advantage to paying on a second mortgage if you aren’t paying on the first mortgage. But you always need to be sure that you are saving the money you don’t pay to the second mortgage or the first mortgage. Missing payments and not saving money is the biggest mistake made by homeowners in trouble. While it’s never good to miss any payments, paying on a second mortgage while you don’t pay the first mortgage doesn’t really accomplish anything useful toward saving your home.
Many people make payments on second mortgages while not paying first mortgages because they really want to pay, they don’t want to be behind on any bills, and therefore, pay the second mortgage despite the fact that it uses precious resources and won’t help save their home or get a modification. Although long-term solutions require relief on all debt fronts, mortgage companies often ignore second mortgages or other debt entirely when they review applications for first mortgage modifications.
Saving money by defaulting on a second mortgage or credit card obligations is generally the correct choice and done properly, it is the sensible decision for people seeking to save their homes and/or obtain a mortgage modification. As with many other financial matters, any attempts to save a home or missed payment should involve the assistance and advice of an experienced professional and a well-thought-out future plan for full financial recovery.
Many Second Mortgages are Removable
While not all second mortgages are removable, any second mortgage that doesn’t have property equity to support the mortgage is subject to removal in Chapter 13 bankruptcy. If your first mortgage exceeds the value of your home, all junior encumbrances are subject to complete removal or lien stripping under Chapter 13 or Chapter 7. Lien stripping is a powerful tool for removing all liens and getting back to the proper circumstance of a primary mortgage with no other encumbrances on your home.
Missed Mortgage Payments are Legally Solveable
Any time you stop paying on a mortgage, you need to get a prompt consultation with a lawyer who knows your legal options, the proper procedures and the appropriate steps to properly fix your home financial concerns.
Making Payments on Other Debt While Not Paying My Mortgage
Given the importance of your home and the non-importance of many other debt payments, all types of debt payments have different levels of priority and choosing which to pay and not pay is a critical decision often made incorrectly by frightened Connecticut homeowners trying to pay everything. Nonetheless, this bill prioritization is an essential first step in any approach to solving your personal financial problems.
Without good guidance, homeowners in trouble often pay on low priority obligations just to avoid further battling with other creditors or phone calls from collectors. This isn’t a good choice or a concrete plan, but it is a very common mistake made without outside guidance from a legal professional with experience in correcting mortgage problems.
As experienced legal counsel with decades of success in saving Connecticut homes, here’s our payment priority list:
- Food
- Utilities
- Car Insurance
- Car Payments
- Income Taxes
- Rent
- First Mortgage Payments
- Second Mortgage Payments
- House Taxes, Auto Taxes
- Credit Cards
- Personal Loans
- Medical Bills
Any solid financial reorganization involves a comprehensive and customized plan created for your circumstances by an experienced legal professional that prioritizes money available, time allowed for a solution, and the prioritization of limited funds to the most important debts in accordance with set goals. Plan, prioritize and execute.
Get A Free Consultation to Prioritize your Payments
Get a free consultation and analysis – This is new to you and everyone in your circumstance, but to us it’s clear and predictable. We know what the beginning, the middle and the successful end of the process looks like to all homeowners who miss mortgage payments on first mortgages, second mortgages or other obligations.
At the Law Offices of Neil Crane, we have been helping Connecticut families understand their options for saving their homes and getting back on track to financial recovery since 1983. Call us at 203-230-2233 or complete our online contact form to explore your options with our team of CT attorneys. Our offices are in Hamden, Connecticut; New Haven, Connecticut; Waterbury, Connecticut; Rocky Hill, Connecticut; Ridgefield, Connecticut; and Bridgeport, Connecticut.
