Archive for the ‘Bankruptcy’ Category

The Top Five Bankruptcy Myths and the True Truth About Bankruptcy

Saturday, September 26th, 2009

First you should know that there are many more myths, but these are the most important to understand. After describing and debunking the five big myths, I have a section explaining where the misinformation come from. I hope this helps clear some of the misconceptions out there and helps you to make the best decision possible for your situation.

1. The Failure Myth (that bankruptcy is your fault)
For more details, you can click on the blue link to read my article titled “Why You Are Not the Problem“. However, the short explanation is that even if you made some mistakes, the fact that you are in this situation is because of much bigger problems than anything you have done. Nobody wants to file bankruptcy. Though the ‘anti-bankruptcy’ fanatics like make it seem another way, the truth is that less than 1% of people who file bankruptcy are abusing the system. Almost everyone who files bankruptcy is honest, hard working and good. In fact, a Harvard University Study found that most bankruptcies are importantly linked to health crises.  Whatever the reasons, it is clear that most people are not in bankruptcy because they didn’t ‘work hard’. People are in bankruptcy because despite their best efforts, the job market, or job loss, or the medical problem, or the unexpected expense, the divorce or the crazy interest rates, were just more than any person could handle. At Waltzer Law Group we don’t just want to help you with bankruptcy. We want you to keep your dignity. We want to help you understand that even if you have things you can do better, you should not feel badly because of your hardship. It might also make you feel better to click on the blue link to see the list of famous, brilliant and beautiful people who also filed bankruptcy.

2. The Myth That Bankruptcy Will Ruin Your Credit (and your ability to get a house or car)For 10 Years
Special Note about This Myth From Attorney David Waltzer.
This might be the most famous and terrible myth out there. The debt negotiation companies, credit card companies and debt consolidation companies LOVE this myth becaue it scares a lot of people away from bankruptcy (and scares them into wasting money on debt negotiation). However, it is a total lie.

Bankruptcy will not prevent you from getting a really good credit score (even above 700) in less than two years after your discharge. Bankruptcy will not prevent you from getting a good low rate on a car or a house even as soon as two years after your bankruptcy!My clients do it all the time. They are always amazed how quickly their credit score recovers.

So, what is the ‘ten year’ thing you keep reading about?
Here is the Trick. Most People think that having a bankruptcy listed on your credit report automatically means that your credit will be bad or ruined. People assume that if bankruptcy is listed on your credit report, you will not be able to buy a car, buy a house or get another loan. This is totally wrong.

It is true that bankruptcy can stay listed on your credit report for up to ten years. That is where the “Ten-Year” number comes from. However, after a little while, it is almost meaningless. Most people who filed bankruptcy improve their credit within months. Sometimes, bankruptcy can even IMPROOVE your credit score.

Special Note Regarding This Myth From Attorney David Waltzer.
Thank you for visiting my site. There is so much confusing information out there, particularly about this issue. I want to remind the reader that when it is best for our client, my firm does EVERY KIND OF DEBT SOLUTION (debt negotiation, debt advisement, etc). Like everyone else in the industry, we make more money with a debt-negotiation or debt-settlement case than with a bankruptcy case. The difference is that we don’t advise our clients to do what makes us the most money. We advise our clients to do what is BEST FOR THE CLIENTS. The truth is that if you qualify, bankruptcy is usually better for your bank account, better for your credit score, better for your family, and better for your life. Don’t believe the ‘scare-tactics’ out there.

3. The Myth That You will Lose Your Stuff
Most people who file bankruptcy do NOT lose their stuff. To be sure, you need to consult your bankruptcy attorney. What you can keep depends on the state where you live and on what things you have. Many of my clients get Chapter 7 Bankruptcy even though they have houses or apartments, and they get to keep their houses and apartments! Many of my clients can keep their cars and household belongings too. The Bankruptcy Law provides Bankruptcy Exemptions that work like an invisible shield and protect specific amounts of your stuff. Don’t guess. Speak with an expert bankruptcy lawyer and be certain.

4. The Myth That You “Cant File Bankruptcy Any More Because of the New Law”
So many of my clients believe that they can not get bankruptcy anymore because of the law change in 2005. The truth about bankruptcy is that if you need a bankruptcy, most likely you CAN get a bankruptcy now. It is a little bit more expensive than it used to be, and there are a couple of extra hoops-you must jump through, and having a bankruptcy lawyer is much more important now than it used to be. So, it is a little harder. Don’t lose heart. Almost everyone who could get a bankruptcy before 2005 can get a bankruptcy now. The crazies that tricked congress into imposing the terrible 2005 laws on the American people scared our congress people with tales of ‘bankruptcy abuse’. However, almost five years later, it turns out that the new laws didn’t impact how many people were able to file bankruptcy. The bankruptcy filing rates are the same or higher now as they were before 2005. What does that show? It shows that the ‘dishonest debtor’ was mostly myth. The law doesn’t stop honest debtors and since most people in bankruptcy are honest debtors, the law hasn’t done much of anything but make everyone suffer a little more. If you need bankruptcy, you can most likely get bankruptcy.

5. That Myth That Married People Can’t File Bankruptcy Alone
(Without Involving Your Husband or Wife)

This is another myth that scares a lot of people who need bankruptcy. Assuming you otherwise qualify for bankruptcy, you can ABSULUTELY file bankruptcy alone, even if you are married. The bankruptcy official might want to see evidence of your spouse’s income (just to make sure he or she is not a super-millionaire) but your bankruptcy will not have anything to do with your husband or wife. It will not impact your husband or wife’s credit. In New York and New Jersey it doesn’t even matter if your husband or wife has a lot of assets. The assets will be safe (so long as they REALLY belong to your spouse). Speak with a bankruptcy expert. Any of our bankruptcy lawyers can give you sound advice as to how you can file bankruptcy and leave your spouse out of it.

Where Do the Bankruptcy Myths and Lies Come From?
There are more myths about bankruptcy than I can list here. Most of the myths and lies and misinformation come from four sources:

1-people with good intentions who just don’t understand the facts (they rely on information they heard or read on a dishonest website). This is like the rumor mill. It might even be your friend or trusted family member. The person might be thinking about how the law used to be 20 years ago. Or the person might just have been misled by a website or someone he knows. It is really difficult when a father or mother or sister or brother tells you something that is wrong. Don’t blame them. It is not their fault. Hundreds of millions of dollars are spent every year trying to mislead them. Even good, smart people can fall victim to these multi-million-dollar campaigns of lies.

2-credit card companies that want to scare you away from bankruptcy because they want you to keep paying interest.

3-debt-negotiation/debt and credit card consolidation companies that mislead people. Debt negotiation and debt consolidation companies want your money. They can make more money if you go to them. Case for case, people make a LOT more money by selling debt-negotiation and debt consolidation than by selling bankruptcy. These companies have a financial incentive to scare you away from bankruptcy, even if bankruptcy is much better for you!

4- Yucky writers and financial advisors who want fame and fortune. They try to sound smart by saying ‘hard-sounding’ things. They want to build a fan base by saying controversial things. They don’t care about the truth, even though some of them have sites saying “The Truth” about this or that. Some of these writers are making money from big companies that pay them for their lies. They are evil and they hurt thousands of people with their confusing and dishonest information.

Finding The Best Bankruptcy Lawyer

Saturday, September 26th, 2009

This is not a short article, but it is important. The more you think through your decision, the more power you have to get it right. Getting this decision right is the way the best solution for conquering your debt and launching yourself into a better situation.

The first step to finding the best bankruptcy lawyer for you is to know what you are looking for. Finding a lawyer is like finding a doctor or a painter. Every case is different. However, generally speaking, all people want the following three things in their bankruptcy lawyer.

  1. Excellent Work
  2. Excellent Customer Service
  3. Excellent Price

Excellent Work

Excellent work means your attorney has attention to detail. He or she will really listen to you and personally handle data entry for your important paperwork. The difference between having an ‘average’ lawyer and an excellent lawyer is the difference between losing a car or home and keeping your valuable things protected. It is the difference between your case being a mess requiring extra cost and taking extra months, and having your case completed quickly and painlessly.

Most importantly, having an excellent lawyer means you will be advised. Good advice is not just important for preventing disaster; it is good for creating benefit.
I can not tell you how many times I see clients who hired ‘average’ or ‘cheap’ lawyers that rushed through their case analysis. When all is done, the clients THINK that their case was a success. However, what they don’t know is that they could have had many more benefits then they got. Benefits that the ‘average’ lawyer didn’t even know about. For instance, sometimes waiting to file a case can save you a lot of money. Sometimes, you can even eliminate debt without bankruptcy. Did you know that you can sometimes get rid of your second mortgage with bankruptcy? Did you know that you can get rid of tax debt and some government over-payments? There are dozens of things like this that most lawyers, even bankruptcy lawyers don’t understand. The old saying is true here; you get you pay for. You can not afford to hire anyone but the best bankruptcy lawyer possible. The few hundred dollars you save with the ‘cheap’ guy, can cost you many thousands of dollars in lost opportunity.

TEST ONE: Is the Lawyer Excellent?

How do you know if a lawyer does excellent work? Here are some questions to consider:

  1. how many questions does your lawyer ask you during the initial consultation? If he just gives you a sheet to fill out or has you talk with a non-lawyer, forget it.
  2. does the lawyer seem to care about your overall situation? Is the lawyer asking what you will do AFTER bankruptcy, or is he just giving you a quick quote and not really getting deeply into understanding your situation?
  3. does the lawyer have a strong public presence?
  4. You want someone who does a lot of cases, but is personally handling your case. Ask how many cases the lawyer files each year. Now, some firms will say “thousands of cases” because they are ‘factories’ and the lawyers don’t do the cases personally but instead push off this important legal work to paralegals and other non-lawyers. If your lawyer files a lot of cases, that is great! Just make sure he or she personally handles the cases. I am generally in New York and New Jersey, but I know one great attorney who works with me in my California office. He files thousands per year but he manages and personally does each of his cases. He is very rare. The more questions you ask, the better for you!
  5. Is the lawyer listed in public directories and Better Business Bureau?
  6. Does the lawyer use technology like email, phones and other electronic measures to make your life easier? You definitely want someone with experience but you also want someone who keeps up with the times. That kind of lawyer will be more likely to be ‘up to date’ on all the newest ways to help you.
  7. Does the lawyer give you a flat fee up front? Or, does he ‘add on’ for everything. Some ‘cheap’ firms try to lowball the initial quote just to get you in. Then, they charge for all kinds of stuff including getting your credit report, making copies. In the end, you don’t save money and you get a yucky lawyer.
  8. Is your lawyer responsive? Does he or she respond to emails, answer phones, really pay attention to you? Any good lawyer will be busy, but does your lawyer seem to really care?

The next test is whether your lawyer provides good customer service.

TEST TWO: Test The Lawyer’s Customer Service
(Will The Lawyer Respect Me and My case?)

Customer service is not just about being nice. If you are nervous or frustrated you are likely to make mistakes. If your bankruptcy lawyer doesn’t really engage with you, you will lose motivation and your case will be delayed. When my new jersey bankruptcy law office started a policy of taking ALL phone calls (never screening, and never putting clients to voice mail) we noticed that our clients were much more motivated to get there cases filed. This helped everybody!

So, here are some good customer service tests:

  1. how long does the lawyer take to reply to emails?
  2. can you always reach the lawyer when you call?
  3. does the lawyer ever yell at you or make you feel bad?
  4. does the lawyer try to be kind and make you feel like a dignified person?
  5. does the lawyer explain things in a way you understand, even if it takes more time?
  6. does the lawyer have payment plans?
  7. does the lawyer seem to be nice to his or her staff?
  8. does the lawyer speak well and politely?

TEST THREE: Test The Lawyers Fees
(Are the Excellent Fees, or Just Cheap Fees- understand the difference!)

People who have debt problems usually have one thing on their minds. That thing is saving money. They don’t have enough. Many folks can not even pay bills or rent. Credit card minimum payments are even too high. The calls are ringing off the hook. The last thing these people need is another thing to pay. This is the puzzle to be solved. On one hand you have no money and want to file bankruptcy. ON the other hand, you don’t want to ruin your life so you want to get an excellent attorney; excellent attorneys cost money.

To solve this puzzle you have to consider three things:

  1. what is the benefit. Even if you have to spend a couple thousand dollars, the benefit is that all the other headaches go away- permanently.
  2. what is the cost of not doing it right. You saw the discussion above about the dangers of not having an excellent attorney. The cost of not doing it right is that you lose more money, create problems for yourself and your family members and possibly even lose the bankruptcy.

    “But wait, my case is really simple, I don’t need to spend more to get an “excellent” attorney.”

    This is totally wrong! Here is why… Even the most simple case can be destroyed by an average attorney. Why? Because even if your case is simple, and you are totally honest, if the attorney is not excellent, he will make errors. Those errors will make you LOOK dishonest. Then the bankruptcy officials will pounce on you. Most of the messed up cases I have seen were simple cases. They were messed up becaue a sloppy lawyer or his assistant made a mistake that made a good honest person look inconsistent. You can not take chances with bankruptcy. The stakes are too high. You need to treat this almost like a medical emergency.

  3. Is The Lawyer Professional and Fair?

You now understand why you have to spend a little money for the best attorney possible. But that doesn’t mean you should get robbed. You have to be VERY careful out there. The very big and the very little are usually the most dangerous law firms. The very big ‘corporate’ firms might charge $800 per hour and might not understand your type of bankruptcy as much as a medium sized guy. The little “I will file your case for a peanut” type firms are also dangerous. They will give low fees but will not be excellent. You will lose big in the end. As an attorney practicing bankruptcy for many years in New York and New Jersey, I have seen that most Excellent Attorneys, who provide Excellent Customer Service are also fairly priced. Why? Because attorneys like that care about being good. They are probably successful, confident and understand the value of a dollar. They understand that money should be earned, not robbed. It is unlikely that you will be robbed and overcharged by an attorney who treats you well, and is well respected/established, and is careful and detail oriented.

It is hard to ‘fake’ caring about clients. You are smart. You know the difference between someone really cares and listens and someone who doesn’t really ask useful important questions. If the lawyer passes the other tests, you can pretty much trust the fee he or she gives you.

Remember, a case is like a painting job. Each house is different. Some houses have one room and others have 10. Some houses have complications like bad walls, leaks and complicated details that only a professional painter would understand. For this reason, it is really hard for a painter to know how much to charge until he really understands what he is painting. The good painter will investigate. He will do things methodically and sensibly. The ‘too good to be true’ painter is going to ruin your walls and you wont know until it is too late. Bankruptcy works the same way.

Yes, but what are some average prices?

Every case is different and there is even a difference according to region. You can imagine that it costs more to run an office in New York or New Jersey than it does in rural Michigan or Virginia. In the New York Metro Area, a good to excellent attorney will typically charge around $2,000 for a ‘typical’s case. In addition there are filing fees and credit counseling.

If you have nothing, no issues and a small amount of debt (like under $20,000) a fair attorney would do your case for around $1900 or less, even including filing fees. Call for a free consultation and see how the attorney makes you feel.

I typically the total cost of an average Chapter 7 Bankruptcy (average is $30,000+ of debt, maybe a car or another non-issue asset) would be between $2100 and $2500. If you have a lot of debt, a house or a business or a car with equity or any number of other things that require more preparation, the price will go up. Note: if such issues don’t increase your fees, make sure your attorney is really paying attention. Handling these things properly does take time. If an attorney doesn’t value his extra time, his time might not be valuable.

I am attorney David Waltzer, owner of Waltzer Law Group (Debt Solutions including Bankruptcy in New York and New Jersey). We do consumer bankruptcy, debt settlement and debt negotiation. I have handled thousands of cases in these areas. You can learn more about debt solutions and my firm at: WWW.WALTZERLAWGROUP.COM or

Why You are Not The Problem

Saturday, September 26th, 2009

Bankruptcy is BIG. According to some estimates more than one in every twelve eligible Americans living today has filed bankruptcy.  One in twenty eligible people filed bankruptcy just in the years between 2000 and 2006. During that period approximately 11,000,000 (eleven million) people filed bankruptcy. The population of people eligible to file bankruptcy was approximately 215,000,000.  These are staggering numbers.

The saddest part of it is that most of these people feel like filing bankruptcy was their fault, like they had some sort of personal failure.  That is a tragic misconception.  Even if you cold have done things better, you are a victim of a much larger problem that is hitting good honest people all across the nation; the combination of economic crisis and predatory lending.

The Economic crisis is hitting us all. The college degree we got isn’t doing what we were told it could do when we took our student loans. We did what we thought was right and what everyone told us was right and it didn’t work. Now we are stuck with low income and huge debts.  The job we worked at doesn’t pay us enough to make ends meet. Our husbands and wives are losing jobs and benefits every day.  We have no money for medical care. We get sued or fined or have some other mishap and we are ruined, with no cushion.  Our social security doesn’t cover the bills and we have to rely on credit cards. Our business income went down for some reason and we have been pouring our savings and labor into it, to keep it alive, but it is just dying and we can’t afford to keep it alive. Our kids need money for food and college and we feel like we have to provide the money, even if we have to use credit cards, because we don’t want our kids to be disadvantaged.

Do these scenarios sound familiar? These things are the products of Economic Crisis. Whatever you hear on the news, these scenarios are reality for many, possibly even most Americans. Now, combine the Economic Crisis with predatory lending. And it is the recipe for disaster.

Predatory lending is when a lender (like a credit card company or a mortgage broker) prays upon people’s weaknesses or lack of information.  They try to get teenagers to open credit cards. They offer credit to people they know are going to have a hard time paying the money back.  They get people to refinance into a plan they can not afford. Why do they do this?  The salespeople want a quick commission. The folks behind the scenes y want to hook consumers into paying a lot of interest. Credit Card companies don’t just want to be paid back.  They want people to pay back a LOT more than what was borrowed. They make it so hard for you to repay the loans, and they are so aggressive with collections, that you end up feeling abused by more than just sky-high interest rates. Then, all the hard earned money you send to your credit cards just goes to cover the inflated interest. They get you on a hook and keep you there as long as they can.  That is predatory.  To make matters worse, for the past decade, homeowners have turned their houses over to predatory mortgage brokers, so they could refinance to pay off predatory credit card companies. The hard working consumer has literally been thrown to the wolves.

It is unjust for people, who act in good faith, to have their lives ruined because of economic crisis or predatory lenders. That is why the United States Congress offers a way out for people who run out of options.

The way out is Bankruptcy. The smartest and richest people in the country understand that lenders just see them as numbers.  Wealthy and educated people use bankruptcy all the time without shame as a financial tool.  The hard working, regular people are left paying high interest and feeling guilty about trying to get out of the situation. The credit card companies want you on their hooks and they don’t want you to know how to get off the hook. It is a terrible mind-trick done by the creditors. That is why so much misinformation about bankruptcy is pumped out to the public.

The crisis is systemic, having economic hardship is not something you, the consumer, should feel bad about any more than you should feel bad about getting caught in a bad storm.  Until consumers are given access to clearer and better information, or until lenders are better regulated, millions of good people, like you, will continue to be caught in this perfectly terrible storm for debt, with bankruptcy as their only life-boat.

David S Waltzer JD, MPA

David S Waltzer is a bankruptcy lawyer practicing law in New York and New Jersey. He owns the Law Offices of David S Waltzer PC (Waltzer Law Group) a firm that specializes in bankruptcy and negotiation. He can be contacted at [email protected]

The Importance Of An Attorney Who Tells You Like It Is

Tuesday, September 22nd, 2009

It is simple. You need an attorney who will tell you like it is because it will save you time, save you money and give you peace and dignify your process. If you want advice on how to find the best bankruptcy lawyer click here. Otherwise, keep reading to learn about what makes different kinds of bankruptcy and debt solution lawyers tick.

All of us, even those in the “not-for-profit” organizations are out here to make money. We all have kids to feed, rent or mortgages to pay and daily expenses to cover. However there is a problem in that some attorneys feel the best way to make money is to tell you what you want to hear, and profit from what you don’t know. The right kind of attorney does the opposite. He wants you to empower you. With the attorney who tells you like it is, you can rest knowing that even if it is a hard truth, even if it means he will make less money, your attorney will tell you the way things stand. You see, the difference between an attorney who tells you like it is, and the ‘other’ type of attorney is the business model.

The attorney who tells you like it is has a unique business model. His business model is based on elevating the consumer, dignifying the client. His business model is as follows: The best way to make a lot of money is to do honest and excellent work. That way there is less stress and clients will like you more. Clients will recommend their friends; they will be your friends. This kind of attorney has clear and understandable information because he has nothing to hide.

The ‘other attorney’, who won’t tell you like it is, operates another way.
His business model is: the best way to make money is to take advantage of the uneducated consumer. He might charge you a low fee just to get your business, and then neglect or mess up your case after you pay. He might overcharge you because you are scared and desperate for relief. His way of doing things is to protect and preserve the myth of the “Smart Attorney” and “Clueless Client”. His retainer agreement is probably hard to understand and has small print. He might not take time to really see how you feel and treat you like a person. That all goes back to his business model; take advantage of the uneducated consumer.

Unfortunately, most businesses think “money first” and not “truth first”. That is why it is so confusing and there is so much misinformation out there. Debt Negotiation and Settlement Companies tell you their way is the best. Credit consolidation companies tell you their way is the best. You hear all kinds of crazy information about bankruptcy including the big 5 myths you can read here.

Waltzer Law Groups Business Model
We have three service goals for all clients.
If any one of the goals is not met, we consider it a failure.

  1. provide an efficient, errorless, low-stress bankruptcy
  2. do everything possible to dignify the client in his or her difficult time
  3. make the client love us as a firm. Satisfaction is not enough; we want love.

When you come into my office, I will only have one thing in mind: what is the best solution for you. I strongly believe that by prioritizing and elevating my client, I will elevate myself and make more money. It seems to work because I have helped thousands of people and I get referrals and wonderful testimonials every day.

In order to work for Waltzer Law Group, all staff must share this value. We do everything from Debt Negotiation to Counseling to Bankruptcy. But we don’t pick the solution that is best for us; we only pick the solution that is best for you.

Loan Modification and Reaffirming Debts After Bankruptcy

Tuesday, September 22nd, 2009

Loan Modification


Reaffirmation is when after filing bankruptcy, you sign a document putting yourself back on the hook for the debt. Though sometimes clients have to do it in order to keep a car, I generally discourage reaffirming debt for the following reason.

If you reaffirm, you give up your bargaining position AND your right to walk away from the house or car. If you reaffirm and a year from now cant afford the mortgages or car payments and lose the house or car, YOU WILL BE ON THE HOOK for the balance of the mortgages. Remember, you can not file bankruptcy again for 8 years. By reaffirming, you put yourself at risk of having creditor calls and all other forms of collection (law suits, bank freezes, garnishments) from your mortgage company in the event that you cant make the mortgage payments.

It is true that reaffirming can help your credit a little. Also, sometimes you just have to reaffirm or lose what you have. Speak with your bankruptcy attorney to see if reaffirmation is the best thing for you.

Loan Modification

Waltzer Law Group can handle your loan modification. However, what is most important is that we will not take your money or waste your time by telling you we can get you results if we cant. This doesn’t mean that all of our loan modifications get approved, but we will only take Loan Modification clients we think have a chance at success.

This information is taken from the HUD site. You can see the page directly by clicking on this link.

A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.

Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?

Answer: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work actually completed and applicable to the current default episode may be capitalized into the modified principal balance.

Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about property condition?

Answer: Yes, per Mortgagee Letter 2000-05, page 20, the mortgagee may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the mortgagor’s continued ability to support the modified mortgage payment.

Question 3: Can a mortgagee include late charges in the Loan Modification?

Answer: Mortgagee Letter 2008-21 states that accrued late charges should be waived by the mortgagee at the time of the Loan Modification.

Question 4: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for Homeowner’s Association fees?

Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.

Question 5: Is there a new basis interest rate which mortgagees may assess when completing a Loan Modification?

Answer: Yes, Mortgagee Letter 2008-21 states that the new basis interest rate is 200 points above the monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of 10 years.

Question 6: Will HUD subordinate a Partial Claim, should a mortgagor subsequently default and qualify for a Loan Modification?

Answer: If a mortgagor subsequently defaults and qualifies for a Loan Modification, HUD will subordinate the Partial Claim.

Question 7: Are mortgagees required to perform an escrow analysis when completing a Loan Modification?

Answer: Yes, mortgagees are to perform a retroactive escrow analysis at the time the Loan Modification to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.

Question 8: Is the mortgagor eligible for the upfront premium refund at payoff of a modified loan?

Answer: It depends upon when the closing date occurred. For assets closed:

After July 1, 1991 but before January 1, 2001, the 7-year unearned premium refund schedule shown in Mortgagee Letter 1994-1 remains in effect,

On or after January 1, 2001 that are subsequently refinanced, the 5-year refund schedule shown in the attachment of Mortgagee Letter 2000-46 applies, or

On or after December 8, 2004, refunds of upfront MIP are eliminated except, when the mortgagor refinances to another FHA insured mortgage. The refund schedule attached to Mortgagee Letter 2005-03 has been modified to a 3-year period.

Question 9: Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is unemployed, the spouse is employed, but the spouse name is not on the mortgage?

Answer: Based upon this scenario, the mortgagee should conduct a financial review of the household income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment, but insufficient to pay back the arrearage. Once this process has been completed the mortgagee should then consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage.

Important Considerations For Parents

Tuesday, September 22nd, 2009

I have been practicing bankruptcy law in New York and New Jersey for many years. There is nothing more painful than seeing parents worry about debt when they have children to feed, nothing except being that parent.

I do absolutely everything I can to help parents, particularly single parents to get a fresh start. If you are a parent in debt, I strongly encourage you to have a hard look at your finances with a trusted advisor or me or another debt solution expert. Every day that you delay is money that you could have saved for your children’s education and betterment. The other issue is the stress of debt. It is impossible to keep stress from impacting your parenting. You owe it to your family to take action now and do whatever you can to prepare for your child’s future.

Below is a variation of a chart that I used to illustrate how bankruptcy can help people achieve home ownership. The chart below however, relates to creating a college savings plan for your child.

Consider two friends: Each has $30,000 in credit card debt. Until today, both friends have been making minimum payments of $300 per month. Both friends get the money from their family and gifts and overtime that causes a lot of stress in their lives.

Friend One: files bankruptcy today and starts saving her gift money.
Friend Two: does not file bankruptcy and keeps making minimum payments of $300 per month.

Who is going to have a college savings plan for her child?
See the Easy Chart Below To Understand!

Red equals Debt
Green equals Savings

  Today Six Months One Year Two Years Three Years
Bankruptcy (Friend One) zero $1800 $3600 $7200 $10,800
Non-Bankruptcy (Friend Two) $30,000 $30,174 $30,360 $30,153 $29,200

Three years from today:
Friend One who filed bankruptcy has a nice $10,800 saved for her child’s future. More importantly, instead of dealing with debt and being stressed, Friend One had time and peace of mind that made her better able to bond with her child.

Friend Two who did not file bankruptcy still has almost the same debt she started with. Her credit score wont be much better (and possibly will be worse) than Friend One who filed bankruptcy. Her debt is so high that she can never pay it. She just wasted three years and over $10,000. She probably has no savings and the stress of the creditor calls, and payments probably made her less patient with her child.

How Bankruptcy Can IMPROVE your credit score

Tuesday, September 22nd, 2009

Contrary to the bankruptcy myths out there, particularly the total lie that you will have bad credit for 10 years, which is flat out false, for many people, bankruptcy improves your credit score.

In addition to this article there is an article in Wall Street Journal’s “Smart Money” that reaches the same conclusion. Click Here to read the article.

Bankruptcy will not prevent you from getting a really good credit score (even above 700) in less than two years after your discharge. Some clients even get it within 12 months! Can you pay off your debs and get even a 600 credit score in the next 12 months without bankruptcy? Probably not

Without bankruptcy, one or two or even five years from now you will be struggling along with your debt, missing payments and your credit will be terrible.

What most people don’t understand is that there credit score is already terrible.

Consider this chart comparing how the most common debt solutions will impact your credit score over a three year period.

Three Year Credit Score Comparison Chart (Who wins the race to excellent credit?)

  Month1 Month6 Month12 Month24 Month36
Debt Negotiation: good bad terrible terrible so so / good
Debt Consolidation: good bad bad bad so so
Bankruptcy: terrible so so decent good excellent
Doing Nothing: good so so terrible terrible terrible
Repaying on and off: so so so so so so so so so so

After filing bankruptcy you will have the opportunity to get good credit pretty quickly. You have to compare that to how long it would take you to restore good credit without bankruptcy.

Remember, the comparison is not:
‘your imaginary perfect credit score’ vs. ‘bankruptcy credit score’

The comparison is:
‘your CURRENT or PROBABLE credit score’ vs. ‘the post-bankruptcy credit score’

If you are reading this your credit is probably already almost as bad as with bankruptcy, or it soon will be. Bankruptcy will likely have almost no impact on your credit score if you have judgments and old unpaid debts.

If you are going to be late and miss payments, and you otherwise qualify for bankruptcy, there is no question about it. Bankruptcy is your best solution.

Buying A House And Car AFTER Bankruptcy

Tuesday, September 22nd, 2009

Any honest bankruptcy expert or bankruptcy attorney can tell you:
Bankruptcy will not prevent you from getting a house or a car. In fact, it might even be the fastest way for you to be able to buy a house or car!

Usually what people are worried about is a car-loan or a mortgage. To buy a house you need good credit and a down payment. Bankruptcy can get you good credit quickly. Click here to see why.

Consider two friends: Each has $30,000 in credit card debt.

Until today, both friends have been making minimum payments of $300 per month. Both friends get the money from their family and gifts and overtime that causes a lot of stress in their lives.

Friend One: files bankruptcy today and starts saving her gift money. Friend Two: does not file bankruptcy and keeps making minimum payments of $300 per month.

Who is going to afford a house more quickly? See the Easy Chart Below To Understand!

Red equals Debt
Green equals Savings

  Today Six Months One Year Two Years Three Years
Bankruptcy (Friend One) zero $1800 $3600 $7200 $10,800
Non-Bankruptcy (Friend Two) $30,000 $30,174 $30,360 $30,153 $29,200

Three years from today:
Friend One who filed bankruptcy has a nice $10,800 down payment for a house. She has had three years to restore her good credit and her debt to income ratio is great! (she has no debt and only income; this is really good)

Friend Two who did not file bankruptcy still has almost the same debt she started with. Her credit score wont be much better (and possibly will be worse) than Friend One who filed bankruptcy. Her debt is so high that she can never pay it. Getting a good mortgage will be impossible. She just wasted three years and over $10,000.

The same principals that apply to getting a mortgage apply to getting a car loan.
Any honest and knowledgeable bankruptcy expert will tell you that if you need bankruptcy, it is the best option.

A little New York Bankruptcy Lawyer Humor.

A man is at the doctors office and finds out he needs surgery on his hand.
The man looks at his doctor and asks, “doctor, after the surgery will I be able to play the violin?”
The doctor replies, “Sure, after the surgery you will be able to play the violin”
The man smiles and says, “Thanks doc, because I always wanted to be able to play the violin”

Sometimes I feel just like the doctor when people ask me if they can buy a house after bankruptcy. People come into my office, making $30,000 per year with two children. They have $20,000 of debt and are barely able to pay rent. I tell them that they need bankruptcy and they ask me “but will I be able to buy a house afterwards”?

So the first answer is that if you need bankruptcy, than bankruptcy is certainly the fastest path to home ownership. Click the blue links to read about credit scores and how bankruptcy will improve your credit score faster than not filing bankruptcy.

In order to buy a house, you need to have good credit. If you have a huge debt to income ratio, and you can not pay your monthly credit card payments, your credit score is terrible. Before you think about buying a house, you need to get rid of your debt and rebuild your credit. For most people reading this right now, unless they expect a very dramatic increase in income or have a lot of money coming from a settlement or family member, nothing will help restore your credit like bankruptcy. Nothing will help you to purchase a home and car like having good credit.

Saving Your Home With Chapter 13 Bankruptcy

Tuesday, September 22nd, 2009

Chapter 13 is famous for two things. Saving Homes and Being Complicated.

In the short term, chapter 13 can stop foreclosures and other creditor actions (much like a chapter 7). However, unlike a chapter 7 bankruptcy, chapter 13 bankruptcy involves a plan of getting caught up with your creditor, namely your mortgage. The automatic stay that stops foreclosure is great but temporary. What is special about chapter 13 is the long term plan that gives you the room you need to get back on track and keep your home.

Given the complication of chapter 13 bankruptcy, it is really vital that you have not just an ordinary bankruptcy lawyer, but a really good bankruptcy lawyer who is experienced with chapter 13 bankruptcy.

If you have had a hardship gotten behind on mortgage payments. Chapter 13 could be the solution for you. You want to keep your home but you need time to catch up with the unpaid back mortgage payments (called mortgage arrears). Sometimes the banks are so aggressive that they make it impossible for people who could otherwise afford their mortgage to stay. Chapter 13 bankruptcy is for these situations.

Helpful Example:
Lets say your monthly mortgage payment is $3,000 and you are six months behind on payments ($18,000). Your bank is giving you some impossible catch-up plan where you have to pay $5,000 per month for nine months. You can’t afford it. Chapter 13 is your solution. So long as you can afford the chapter 13 plan payments, you can pay your regular mortgage and pay the $18,000 arrears over a FIVE YEAR PERIOD. That means you pay your mortgage and you pay an extra $300 per month in a chapter 13 plan. You can get caught up and keep your home.

Now imagine you also have $30,000 in credit card debt, but you can only afford to pay $300 per month in your plan. You might ALSO be able to totally eliminate your credit card debt in addition to saving your home!

Get Rid Of Your Second Mortgage
Another way Chapter 13 bankruptcy is great is that it sometimes enables you to strip (remove) a second mortgage. This is very complicated and again requires a real expert. Many chapter 13 bankruptcy attorneys don’t even know how to do this! Any of my attorneys in New York or New Jersey will be happy to look at your situation and tell you if this is something that can be done for you.

When You Can Keep Your Car AND House In Bankruptcy

Tuesday, September 22nd, 2009

The answer to this question is really quite simple for any good bankruptcy lawyer. Where things get complicated is when you go see a New Jersey Bankruptcy Lawyer and your property is in New York. Luckily, Waltzer Law Group has New Jersey Bankruptcy Lawyers, New York Bankruptcy Lawyers, California Bankruptcy Lawyers and lawyers in many states. This way, we can always answer your questions.

Keeping Your Car:

Cars with no equity: you owe more on the car loan than the value of the car) Your car is safe long as you keep making car payments. There are a few exceptions that your bankruptcy lawyer will explain.

Cars with equity: if your car is worth more than what you owe on it, or you own the car free and clear, without loans. IMPORTANT: If your car has equity, you need a bankruptcy attorney to help you protect your car.

Your car might not be safe. Whether it is safe depends on the value of the car, the title of the car AND most importantly, the state where you file bankruptcy.

For instance in New York Bankruptcy Law, the Bankruptcy Exemptions only allow you to have $2400 of equity per debtor on title! The New Jersey Bankruptcy Law has exemptions that protect a lot more equity.

Keeping Your House:

Rule Number One
The number one rule for keeping your house has nothing to do with bankruptcy.

The number one rule is that you can only keep your house if you stay current with your mortgage or modified mortgage. Bankruptcy or no bankruptcy, if you don’t keep up with payments you will lose your house.

There are a lot of scams out there promising people that they can keep their homes without paying for them. Forget it.

Rule Number Two
Never Lie To Your Bankruptcy Attorney About Your House and Who Owns It and Any Transfers or Refinances You Have Done.

Rule Number Three Make sure you have a GREAT bankruptcy attorney who is very thorough. If you don’t have a really thorough bankruptcy attorney, you might lose your house in bankruptcy. If your attorney is great, he or she will NEVER gamble with your house and you he will not file your case unless he can save your house. A good bankruptcy lawyer will always identify and communicate the risks to you.

Bankruptcy Exemptions: If your house has equity, you will have to ask your attorney about exemptions in your state. It would be irresponsible of me to pretend that this could be explained on a website. For something this important, you must have a consultation with an attorney. Waltzer Law Group offers free consultations and we are knowledgeable about all the bankruptcy exemptions including the homestead exemptions in New York, homestead exemptions in New Jersey and Homestead Exemptions in California.