“Top 10 Bankruptcy Myths Exposed” - Get the Free Report Today!
Is bankruptcy the right answer for you? Maybe, but you do not have the expertise to know that, which is where you need to understand what bankruptcy involves these days and know where to get the answers you need to make that decision.
In the present economic times many individuals are living with financial decisions causing them to hold assets, such as houses, automobiles and boats, whose values have plummeted. Individuals are living in properties whose values have dropped far below the mortgages or driving cars, which are valued at a third of the loans. Those individuals with financial difficulties are looking for assistance through the bankruptcy courts in an attempt to get out from underneath all of the debts and liens acquired, which now vastly exceed their current assets.There are two types of liens, which can be attached to an individual’s property or assets. The first is a voluntary lien, which is basically a situation where you have agreed to use the asset as collateral for a debt, i.e. mortgages and auto loans. A non-voluntary lien is one that a creditor imposes on you and that gives them the right to force you to sell the asset so that they can be paid, for example: judgments against you or tax liens. These liens are either secured or unsecured as to the asset they are attached to.
The most common issue for an individual nowadays is the situation where a homeowner who has a first and second mortgage on a primary residence is facing bankruptcy and wondering if they have the ability to save the family home. As real estate markets fall and the fair market values of the homes fall, homeowners are left with mortgages that far exceed the current fair market value of their homes. There is a process which could be of help to many in this situation and it is called “lien stripping”.
“Lien stripping” refers to the process of reducing a secured claim to the value of the underlying collateral. It uses the combined effect of 11 U.S.C.A. § 506(a) and 11 U.S.C.A. § 506(d) to bifurcate the lien into secured and unsecured. The secured lien is allowed in the amount up to the fair market value of the property at the time of the stripping. The balance of the lien, which exceeds the fair market value of the property, is now deemed unsecured.
Liens can be stripped off of the debtor’s assets in Chapter 11 or Chapter 13 when there is not enough equity in the assets. Section 506(a) and 506(d) of the Bankruptcy Code acknowledges that a lien is only a secured claim to the extent there is value in the asset to which it attaches. To the extent that the claim exceeds the value of the collateral, that portion of the lien is now unsecured. The most common application of lien stripping is the reduction of car loan liens to the present value of the vehicle however it is currently used more often with home mortgages in bankruptcy situations. Lien stripping with car loans has been limited to vehicles purchased over 910 days.
The Bankruptcy Code does permit a bankruptcy plan to “modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence”. Section 1322 (b)(2). This section provides protection to the holder of a claim secured only by a lien on the debtor’s principal residence by prohibiting any modification of the terms, however the issue arose as to if this section precluded “lien stripping” of undersecured residential mortgages in the face of Bankruptcy Code section 506 which appears to permit bifurcation of undersecured mortgages and voiding of unsecured portions of the mortgage lien. At least two bankruptcy court judges sitting in Massachusetts have permitted such bifurcations, see In re Brown, 175 B.R. 129 and In re Richards, 151 B.R. 8.
In any event, there is an exception as to the lien on a principal residence lien and that is if there is a second or third lien on the same property. In this instance those liens, lien stripping is available to render them totally unsecured if the first mortgage balance equals or exceeds the value of the personal residence. The exception is only if there are two distinct mortgages on the property, not a refinancing situation. It should also be noted that the limitation of lien stripping of first mortgages only apply to personal residences, it will be allowed for a mortgage on a building used for business or renting.
As always, all situations relative to a strategy for bankruptcy and lien stripping should be discussed in detail with a bankruptcy attorney to understand all your avenues open to you.
Can you take any legal action towards a trustee or an administrator for giving you misleading or wrong information at the outset of your proposal? Is there any recourse one can take?
Posted from: Ontario
If your spouse is co signed with you on a loan and you went into a consumer proposal, would the creditors come after your spouse? And if the trustee only talked to you on the phone instead of meeting with you physically at the start of your proposal? Is that a problem?
Posted from: Ontario
—Can an individual file an assignment on unpaid loan to CMHC
—-is CMHC a Federally owned and operated organization?
Posted from: Ontario
We begin with the creation of the automatic stay. The stay is automatically created at the time of bankruptcy filing. The automatic stay is actually a unique feature.
Need counsel from a north Chicago bankruptcy lawyer? There are many ways to find an attorney. A popular web service that started up a couple years ago is Avvo. This site rates lawyers and would be a great place to start looking for a bankruptcy attorney.
Bankruptcy is on the rise thanks to the credit crisis affecting the US, Britain and most of Europe. However, many people are filing for bankruptcy without knowing the full story. This article explodes some bankruptcy myths.
I let my consumer proposal get annulled after a year… One of my debts(Money Mart) didn`t respond at all to my proposal…and my Trustee told me because of that I no longer owe them money. Now sense my proposal is annuled…Money Mart are coming after me for the money i owed them. I can`t find any rules describing what happens to your debt from companies that refused to answer(show proof of debt) to the proposal. Can someone help me?
Posted from: Ontario
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If you’ve personally been touched by the pain and embarrassment of bankruptcy you may think that your life will never be the same again. You may also believe that real estate investing is a thing of the past because lenders will forever consider you to be damaged goods.
One of the most recommended but least desirable options to save a home from foreclosure is filing bankruptcy. It seems like a solid legal defense against eviction and a way to get more time to work out another solution, but few homeowners really want to damage their credit for nearly a decade just for another chance to save their home, especially when other options may require decent credit. But filing bankruptcy should be considered a last resort by most homeowners in case nothing else works out in time.
What happens if your mortgage payment and car leasing payment per month is way more than the alloted amount per month and these payments have never been behind ie mortgage is 1810 per month and car payment is 530 per month
Posted from: Alberta
There are two main types of bankruptcy cases. This article explores that information.
Is it possible to keep both my vehicles after bankrupcty? One vehicle is worth more than $10,000 and I`m making monthly payments on and the other is paid off but worth less tha $5000. My wife and I need both vehicles for work, and hoping that if we do file for bankruptcy we can keep both.
Posted from: Ontario
There are many great Queens bankruptcy attorneys available for hire. Take a look at Google search or open up a phone book and you can find many outstanding lawyers offering free bankruptcy consultations. If you can travel a bit, look up Brooklyn, Bronx, Manhattan or any of the other 4 boroughs - you might be able to find a great deal a short subway ride away.
My wife and I are looking at entering into a Consumer Proposal in the new year. We are wondering if it is a good idea to refinance our mortgage now to a 7yr term (get 8k in equity back) so that when a 4yr proposal is complete and a 2yr re-establish is done our mortgage is completely safe. Also what should we NOT be doing in the next 3-4 moths before if we decide to go into a CP? Thanks
Posted from: Ontario
If you are thinking about filing for bankruptcy, you should know the basic bankruptcy facts before you file. This article will give you an overview of what you should expect when you file for bankruptcy.
My husband receives a truck & travelling allowance from his employer because he is required to use his personal vehicle for work and must stay out of town. The employer supplies the lodging but we supply the food. This is why he is paid the travelling allowance. Do these amounts have to be declared as income?
Posted from: Ontario
We have 2 Ltd. companies and they both are a maxxed to the limit, we also have numerous credit cards and loans exceeding limits. We signed personal gaurantees on these businesses and LOC`s. My question is what happens to these broke companies? All taxes are paid but loc`s are maxxed, so I`m thinking about personal bankruptcy. Does this include my businesses as well or do I file them separetly? Do I still have to file yearly taxes for these companies?
Posted from: Alberta
Five bodies and the cremated remains of 22 people were evicted last week from a funeral home in suburban Detroit. The deceased remains were removed from the House of Burns Memorial Chapel in Pontiac and shipped to the county medical…
The Washington Post reports that Americans are increasingly unable to pay off their credit card debt, which forces banks to not only lend to fewer people, but to also stockpile cash to guard against future losses. Recent Federal Reserve data…
I did graduate from school in 02/97 …declared bankruptcy on 02/02 and was discharged 11/03. Is the new rule apply to my situatuion ?
Regards
Posted from: Quebec
How long is a Bankruptcy Trustee required to keep records of Statement of Assets, creditor disclosure and other original filing documents from the date of Bankruptcy application?
Posted from: Newfoundland and Labrador
With a world where money and credit is the life-blood that keeps everything going it is no mystery as to why bankruptcy filings continue to soar, especially here in the United States. Over 88,000 individuals in the US filed some form of bankruptcy in the month of September of 2008, an increase of over 28% from September 2007. It is no mystery that we continue to use this “bailout” program at an escalating rate when you understand that bankruptcy comes about because of one thing… scarcity consciousness.
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