Bankruptcy 101-

Before some Attorney accuses me of the unlawful practice of law, let me say this...I am not an attorney and this information is available to anyone who is willing to invest their time to find it. Nothing in this brief outline should be considered legal advice or considered a suggestion on how to resolve your financial situation. If you are considering bankruptcy, by all means see a qualified and experienced attorney.

A Chapter 13 filing is going to let you pay back some or all of your debt over time. But know this going in, part of your paycheck is going to go to a court appointed Trustee who will take care of paying some of your creditors. This is called pre-petition (before filing) debt. Another part of your income will be used to pay your post petition debt (after filing). These "post petition" payments will usually be your responsibility to pay directly to some of your creditors and usually includes your house payment, car installment or other secured debt. Secured debt is a loan or financial agreement where there is something of collateral to secure the debt.

Successfully completing a Chapter 13 can be tough for several reasons. Here is where a  a qualified and experienced bankruptcy attorney will come in handy.

A Chapter 7 filing is usually referred to as a liquidation filing. Years ago, you could file a Chapter 7 and discharge some of your debt entirely without much of a problem. But now you need to qualify for a Chapter 7 fling. This means that if you have too much disposable income or do not meet certain financial criteria, , you may need to filing a Chapter 13. If you are able to fle a Ch 7, you will receive a discharge in a few months which may relieve you of some of your debt...maybe. 

The rule of equity is big in bankruptcy court. This means if you are trying to avoid paying your debt, some creditors may seek to avoid their debt from being discharged. 

Let me guess....there is some head scratching, eyes a little strained and some are reaching for the hard liquor. Do yourself a favor and call a lawyer. There are some good ones and some so-so ones.

President Lincoln once said..."a lawyers advice is his/her stock in trade". Don't be afraid to ask a lot of questions and how best you will benefit from filing bankruptcy or perhaps not filing one at all. 

Visit the internet for more information on bankruptcy. The more you know about the types you can file and how they may impact you, the better. It will make meeting with an Attorney a little less stressful.

Feedback to my post about creating a “get real budget”

Some friends called me this weekend about my recent post regarding budgets.

There was a distinct and clear tone in their voice…”Are you nuts? Give up my cable TV??"

OK, so they did not use the words “nuts” and there may have been the threat of physical violence if I did not stop making suggestions about their Smartphone or hanging out at McDonalds to use their WIFI instead of paying for it at home. I must admit that I may have let a couple of glasses of single malt scotch cloud my common sense a bit when i wrote that post but that is no reason to get uber mad at me.

Perhaps where I messed up the most was the fact that I don’t walk in your shoes. Perhaps you do need all these toys and technology. I always joke with my son about the countless hours he spends on his Xbox. I like to tell him that when I was growing up we did not have cell phones, video games (of course I am not counting Frogger or Paddle Tennis…those were the days!), no internet and no big screen TVs.

Somehow my 10 year old boy doesn't seem to believe that there was such a time. “Gee Dad; did ride on a dinosaur too?”- That one hurt a little.

You get my point though. One of my friends said that saving $20 here or $10 there would not make a big difference in creating a budget. Well regardless of where that $20 or $10 bucks come from, it sounds like $30 to me each month and $360.00 that you are saving a year.

One final thought on this topic. Let’s say you need a loan modification to save your house. You call your mortgage company and they ask you to go through your monthly debt…think I am kidding? Do not think for a minute that they will not run a credit report on you.

You start to list your monthly bills for them and they hear about cell phones, gym memberships, cable TV and your Sparkletts bill. Now put yourself in their shoes for a second.

Here is someone who is spending $100, $200 or even $300 per month on some things that might make that house payment a little easier to pay each month. Instead, they are working out at the gym. 

I mean no disrespect to anyone…honest. I just don’t get it, that’s all.

Loan Modification Assistance- Scams, Ripoffs...just plain sleaze!


You get home from work and go through the normal mountain of junk mail. Nothing really catches your eye except the one that claims to have a 99% customer satisfaction guarantee when it comes to helping distressed home owners get a loan modification from their mortgage company. 

A 99% satisfaction guarantee! Wow! Whats the number? I mean this company can get a loan modification from the same mortgage company that turned me down for a mod?

If it were that easy, everyone would own a loan modification company. In short, don't believe a word of it. You don't need to pay someone hundreds, perhaps thousands of dollars to do what you can do yourself. These loan mod companies don't have a magic wand, a secret hotline to an internal partner and they most certainly should not be collecting any up front fees if they feel 99% sure that they can help you. 

As I have said in previous post, you can do this! Remember, I don't offer legal advice and I certainly do not guarantee that my ideas will work for you. 

I just want you to fight for what you believe in...your home, your family and in yourself.

Stay away from loan modification company's! Nuff said. 

A "get real" budget

There is a line from a movie that I really like and think about often. It is from the great movie "Shawshank Redemption". Anyway, there is a line that Morgan Freeman says (I think it was him) and it goes something like this- "get busy living or get busy dying". 

I used to lie awake late at night thinking about how I would make that next paycheck stretch out. I realized that no one was going to help me, except me!

When you get a chance, take a look at the discussion boards on Craigslist. There are several listings asking for financial help. Some need rent money, some wanted a short term loan and others just could not find work and needed some money to feed the kids. I was both fascinated and shocked.

Most of these folks obviously owned a computer and an internet connection along with a land line or cell phone. 

Internet connection- $40-$60 per month
Cell phone bill- $75-$100 per month

Those two monthly bills could save you about $120 per month or over $1200 per year. 

If you are like me, I constantly am turning off lights in our home. The wife, the kids and yes, even me leave them on without thinking. I am known as the utility bill cop at our house. I can honestly say that it saves us $100 per month turning off lights, making sure the facets are not leaking water and that we are not leaving the heater or AC on during the day, when no one is home.

How about cable television? Back in the day, I really thought I needed access to over 200 channels. I wanted my family and friends to be impressed that I could view Cricket matches from India or watch classic reruns of "The Adams Family" over and over again! 

My wife and I realized that we were only watching shows (and yes, sporting events) on a handful of channels. My monthly bill went from over $200 per month to less than $100.00. Still way too much money but I really am starting to like Cricket!

Anyway, you get my point. Instead of a gardener, go buy a used grass mower. Car pool to work once in a while. Put away those credit cards for a while! If you don't have the cash, don't buy it! And if buying lunch every day is something you do, start bringing left overs! I was spending $50-$70 a week on lunch. That is $200 a month! 

Anyway, I know it sounds easy to do and I don't blame people for doing what they have to do to get by. And as for those folks asking for a helping hand on Craigslist, let's feel fortunate that we don't have to do that...right now!

H-

The Consumer Financial Protection Bureau- CFPB

Many homeowners, in fact anyone who has debt should be aware of this organization and its oversight abilities. I am going to guess that not many consumers have heard of the CFPB.

They are funded by the federal government and have only been around a few years. Most mortgage servicers and debt collectors are not big fans of the CFPB for many reasons.

In theory, the CFPB is here to protect you, the consumer from illegal or unethical collection practices. They also have appointed themselves the "people's watchdog" for how payments are applied, how notices and correspondence should be handled between the debt collector and the consumer as well as other issues related to protecting the consumer.

As to why debt collectors do not like the CFPB is simple. They are helping to keep debt collectors honest and ethical in their dealings with consumers. The CFPB has also put into place several guidelines and regulations that debt collectors must comply with. Some of those regulations cause compliance issues regarding collection issues and other practices which debt collectors have no choice but to abide by or get slapped with a hefty fine.

They are also available should you have a complaint regarding a debt collection practice or something that happened to you regarding a debt.

This is a link to their website. It has shows you how to file a complaint if you have one. 

http://www.consumerfinance.gov/

What are you waiting for?

Mortgage Daily is reporting today that loan modification volumes are down this year. There were only 36,000 approvals done in January 2015 and just over 35,000 completed in December 2014.

That means one of two things to me.

1.  You are current on your loan and life is good.

2.  You are past due on your mortgage and afraid to call your mortgage co.     

That is the purpose of this blog. For you to do something and take some control when dealing with the mortgage company.

Remember...if you don't ask, you will not get. Drop me a note if you have a non-legal question. 

Hank   

What is a GSE? How about a Loan Reset?

Some definitions, words, terms or organizations that you need to know about-

1.     GSE- Government Sponsored Enterprise. These are organizations that may or may not be supported, funded or attached to the federal government. The two most common include:

·         Freddie Mac- Federal Home Loan Mortgage Corporation

·         Fannie Mae- Federal National Mortgage Association

These organizations invest in MBS (Mortgage Backed Securities) pools. In other words, they buy or invest in mortgages in groups based on amounts, interest rates, locations and other criteria.

You may recall a few years ago when the housing industry was horrible, most of the issues were directly related to how bad these MBS pools were performing. When these loans defaulted, the GSEs had no way to pay their investors and were losing money…a lot of money. So much money that the federal government stepped in to bail them out.

2.    Loan Reset- If you were approved for a loan modification under the Home Affordable Modification (HAMP) program back in 2010 or so, most of those loans provided for an interest rate reset at the end of 5 years.

If you have one of these loans, look for your loan modification paperwork and look for language related to loan resets or rate adjustments.

You could be OK with the adjustment (either up down) assuming that the load mod did what it was supposed to…get you back on your feet. But if your situation is unchanged or no better that it was 5 years ago, it sounds like the GSE’s want your mortgage company to reach out to you now and see what they can do to have you go into default again.

Better you beat them to it! Call them and find out what is going on with your loon if it is subject to a loan reset.

3.   If your loan is not held by a GSE or other investor, these rules or guidelines may not apply to you. Let’s say your loan is with a local bank or a credit union, it is possible that these financial institutions will not abide by these guidelines since your loan is not held by Freddie Mac or Fannie Mae.