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Washington DC Bankruptcy Law Blog

Saving your home with Chapter 13 bankruptcy

Many people in Washington D.C. and across the nation continue to struggle to make ends meet. Staying on top of all of the medical expenses, mortgage payments, credit card bills and other types of debt can be extremely overwhelming. At Ammerman & Goldberg Bankruptcy Law Office, we understand that people may not be able to continue making their mortgage payments while dealing with all of the other debt that has accumulated in their lives. While people who file for Chapter 7 run the risk of losing their homes through liquidation bankruptcy, Chapter 13 enables people to stop foreclosure and keep their homes.

During a Chapter 13 bankruptcy, people are able to consolidate their debt into an affordable payment plan that allows them to pay off their debt in three to five years. Homeowners create a plan with the lender, which allows them to continue making their mortgage payments in exchange for keeping their house. Not only does this alleviate the stress of having to find a new place to live, but homeowners may find that bankruptcy has advantages over foreclosure.  A foreclosure indicates that the homeowner was unable to continue making payments on his or her home, while a bankruptcy shows that the borrower still made mortgage payments even after he or she filed for bankruptcy.

Washington D.C. worst place for student debt

When Washington D.C. residents wish to obtain a higher degree, they may apply for student loans in order to fund their educational endeavors. While some people are able to pay off their student loans in a reasonable amount of time, there are others who simply cannot make their loan payments. Soon the student loans turn to debt, and some graduates may find it difficult to pay off this large sum of money.

According to research conducted by WalletHub, university graduates in Washington D.C. may have the hardest time paying off their student debt and rebuilding credit when compared to students in other states across the country. Researchers found that while students in some states have a harder time paying off their student debt, other graduates are able to pay off their educational loans in a timelier manner. During the study, researchers looked at how many people in the state had student debt, their income and how much of their income goes to paying on student loans.

Reaffirmation agreements and Chapter 7 bankruptcy

When filing for Chapter 7 bankruptcy in Washington D.C., people are able to discharge a number of debts to help free them from their heavy financial burden. During the process, people may choose to relinquish the payments on certain loans, and as a result, risk losing the property that they are paying for. For example, people who file for Chapter 7 and fail to make their auto loan payments may have their car repossessed. However, they will no longer be responsible for their monthly car expense. In some cases, debtors may decide to reaffirm the auto loan, continue making payments and keep their automobile.  

According to the U.S. Department of Justice, a reaffirmation agreement is a contract that the debtor makes with the lender, promising to pay for a loan even though the debtor has filed for bankruptcy. Depending on the financial institution, the terms of the loan may change to reflect a lower percentage rate or more affordable monthly payment as an incentive to the debtor to keep making payments.

Can a short sale save you from foreclosure?

If you are caught in a situation where a foreclosure on your home seems inevitable, you may want to look at all of your options before making the decision to walk away from your home. There are alternatives when it comes to gaining freedom from your home and from the financial burden it can have on your life. Depending on the circumstances surrounding your case, you may be eligible for a short sale in Washington D.C., which could help both you and the bank recover quicker than traditional foreclosure.

You may be eligible for a short sale if you need to get out of your home quickly, but owe more money on the mortgage than your home is worth, according to Fannie Mae. If the mortgage company accepts your application for short sale, it agrees to let you sell your property for less than you owe on it. For example, if the value of your property is $150 K, but $175 K still remains on the mortgage loan, you may be approved for a short sale. The variance between the amount of money your home goes for and how much is owed to the bank may either be forgiven or you may be required to repay a portion of the difference.

How can an automatic stay stop harassing creditors?

If you are buried beneath excessive amounts of medical, credit card and other types of debt, you may find it hard to keep up with your monthly payments. After some time, even the minimum payment can become overwhelming. It may not be long before creditors start calling, prompting you to make your payments or face unsightly fees, increased interest rates and other consequences. You may find yourself dodging creditor calls, letters and other attempts at reaching you. One of the benefits of filing for bankruptcy in Washington DC is that it can stop harassing creditors from contacting you.

Whether you are filing for Chapter 7 or Chapter 13 bankruptcy, an automatic stay may be placed on your case once you have submitted all of the proper paperwork. Once the stay takes effect, creditors are no longer able to contact you regarding your debt, according to U.S. Courts. Instead, they must send all communications through your attorney. The automatic stay also stops wage garnishments, lawsuits and other forms of creditor harassment.

Debtor education and credit counseling 101

When people make the decision to file for bankruptcy in Washington D.C., they are required to take credit counseling and debtor education courses that have been approved by the United States Trustee Program. These mandatory classes help debtors understand the implications of filing for bankruptcy, as well as how people can manage their money in a way that will reduce their risk of falling into the same financial situation.

At least six months prior to filing for bankruptcy, debtors must enroll in a credit counseling course. According to the Federal Trade Commission, the certificate of completion must be submitted with the application to file for bankruptcy. During the course, the counselor will discuss possible alternatives to declaring bankruptcy. Participants will look at the factors that led them to their current financial situation and discover ways in which they can prevent becoming indebted in the future.

Protecting your family heirlooms from bankruptcy in D.C.

Bankruptcy presents a way for you to build a new financial base for yourself. Many people walk into our Ammerman & Goldberg Bankruptcy Law Office with the belief that they have to give up everything they own when they file for a Chapter 7 bankruptcy. However, in Washington, D.C., you can keep items that fall under the classification of family heirloom.

The definition of an heirloom is different, depending on who you ask. Most people agree that it is an object that is treasured and has either been handed down in the family, or that will be handed down to a younger generation. Refinery 29 news recently shared stories of what people hold most dear. For one person, the heirloom was a scarf purchased by her mother in Paris. It was acquired during a honeymoon and has been displayed in a frame.

Chapter 13 bankruptcy and income requirements

There are a couple of choices that people in Washington, D.C., have when it comes to filing for bankruptcy protection. One of these choices is to file Chapter 13, which is also referred to as reorganization, according to NerdWallet, but it does have some restrictions, especially concerning income.

It is reported that 29 percent of all bankruptcy filings are for Chapter 13. This bankruptcy process is more difficult than Chapter 7 because the debtor must prove to the court that he or she makes enough money to make payments on their debts and that the debt must not exceed certain amounts. For example, the debtor cannot have more than $1,149,525 in secured debt and $383,175 in unsecured debt. Secured debt would be something like a car loan or the mortgage on a property, while unsecured debt would be medical bills or credit cards.

What debts cannot be discharged in bankruptcy?

If you are thinking about filing for bankruptcy in Washington, D.C., it is important to gain a full understanding of what the process entails. Chapter 7 bankruptcy is often the most popular form due to the fact that you can discharge most of your debt. However, you should note that there is some debt bankruptcy cannot dissolve.

If you have gotten into trouble with the IRS, U.S. News & World Report states that filing for bankruptcy may or may not help you. It all hinges on whether you filed tax returns for the year(s) in question. If you did not file, your chances of getting your tax debt erased are pretty much nil. However, if you did file your returns, then you may be able to get the court to discharge them. If the court cannot discharge the debt, it may be able to lower the amount you owe, which could put you in a better position to settle things with the federal government.

Foreclosures generating more renters and higher housing costs

Home ownership is a dream that many people in Washington, D.C., have. Often the road to reaching that goal includes getting a good college education, finding a job that pays well, and renting a place at a price that lets them save money for a down payment. However, many people who achieved that dream lost their homes when the economic crisis occurred. This led to thousands of foreclosures.

Now those foreclosures have created another issue – more renters and higher housing costs. As people lost their homes, investment firms on Wall Street were able to buy the properties for a significantly cheap amount. Former home owners and young professionals have to pay rent and the demand in some areas is so high, that rent prices have skyrocketed, providing property owners with a nice profit.

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