The Northern District will be initiating a new mediation program for bankruptcy filers to have the Bankruptcy Court supervise their mortgage modification process. This program is designed to function as a forum for individual debtors to explore mortgage modification options with their lenders for real property in which they have an interest or are obligated on the promissory note or mortgage. The goal of the MMM Program is to facilitate communication and exchange of information in a confidential setting and encourage the parties to finalize a feasible and beneficial agreement under the supervision of the United States Bankruptcy Court for the Northern District of California. Options available under the MMM Program include modification of a mortgage or surrender of real property owned by an individual debtor.
Is your lender losing your documents and failing to return your calls about your mortgage modification? Thankfully, under the court program, available August 2015, the court will have information systems to facilitate communication between the lender and borrower (bankruptcy filer). In addition, the lender will be accountable to the bankruptcy court for its compliance and good faith in adhering the mediation system. Major mortgage lenders will be participating.
Law Office of Jason Honaker will offer advocacy in mortgage modification mediation as a service for new and existing clients beginning in August 2015, once the court program is in place.
If you are considering filing bankruptcy, as a general rule, you probably should be considering it. Most people do not contemplate it without good reason to at least consider it. It has been our experience that there are more people who need to think about filing bankruptcy who are not considering it than people who do not need to file bankruptcy who are wanting to file.
However, we understand why people get caught procrastinating. We think that there is a great deal of misinformation out there and that the costs of this misinformation are huge, so we want to try to set the record straight on some common misconceptions.
Here's one: "I'll just pay the interest for now. Bankruptcy seems major and not something I ever thought might happen...." - A lot of people delay filing bankruptcy, thinking "I'll just show the creditor I am trying my best a bit longer, and talk to some of my family and friends about what they think I should do."
This interest paid in the meantime is wasted money you probably need to live on or pay for your children's education. But what these people fail to consider is that very often during these months, the value of their assets and sometimes their income has gone up, making this delay far more expensive than the interest paid on their debts in the meantime. This has been particularly true for homeowners in the Bay Area recently. Over the November to April period last year, some neighborhoods saw price increases of 20% or more. This created a situation where a homeowner who could have filed a Chapter 7 case or Chapter 13 plan with a very low plan payment a few months back, but instead ends up having to file a Chapter 13 case that pays back a large percentage of debt - or sometimes, cannot file at all.
Example 1: It is November 2015. John and Mary, parents of two young children, own a home in San Mateo county and have about 100k of equity they could realize if they were to elect to sell their home. John and Mary started a business and lived off credit cards during that time, but most debt is related to business. Suppose the amount of their debt is 65,000. Houses in the neighborhood have been selling for approximately 700,000 the last time one sold. No houses nearby have sold for the last 2 1/2 months though. Assuming they have no other major assets, John and Mary could probably file bankruptcy Chapter 7, or bankruptcy Chapter 13. They would like pay back less than 10% of their debts in Chapter 13, or none in Chapter 7, if they take action. Chapter 7 would be the cheapest option, and Chapter 13 the safest option. Two affordable options are on the table for John and Mary. Things look great, as long as they take action they can move on with their lives and put their debt behind them.
Example 2: Same as above mostly, but it is now March 2016 - only four months later. John and Mary procrastinated on seeing a bankruptcy attorney and getting some advice. Suppose that the economy is good (as it has been since 2012) and two houses of similar size and condition in the neighborhood sell well over the asking price a block away in February and March. Due to the home values and seasonal selling patterns in the Bay Area, most of a "yearly" price increase in home values may actually occur over the "spring buying season." John and Mary get a modest raise at work. Due to this small percentage increase in home values and income, John and Mary may now have to pay back as much as 100% of their debts. Chapter 7 is not an option, and Chapter 13 is an expensive proposition. The problem? Their income has changed only very slightly. So not only is the remedy less affordable, it may not be available at all unless they want to sell their house.
Summary? By procrastinating talking to a bankruptcy attorney, depsite overwhelming debts, John and Mary have let a condition which was easily manageable and which would have allowed them to keep their home to escalate into a situation that bankruptcy can only mitigate, but not entirely resolve.
You will not read much about this problem I have described on national bankruptcy websites or publications. Why? The combination of high real estate prices and high volatility in those prices is relatively unique to the Bay Area and a few other parts of the country. Our prices, and the amounts those prices change, are both extremely high, and this can have a huge impact on homeowners with debt problems. Relative to home prices, California home exemptions are not particularly generous. In addition, incomes here can be very volatile here too, particularly for people in "boom and bust" industries like technology, real estate, construction, some sales and finance jobs, and jobs that may allow for more generous overtime when the economy is good.
How many times have we seen this in the last few years - with real people sitting in the office talking to us who have costs themselves tens of thousands or even hundreds of thousands by putting off debt resolution? Too many to count.... We have seen people who could have discharged all debt, including their second mortgage in 2012 who are not not eligible to completely discharge any debt now. (Sometimes it can be paid back with no or low interest, still saving enormous amounts of money). Still, this represents a "swing" of 100,000 of more. Procrastination has literally cost them hundreds of thousands of dollars. Sadly, many times "trying to do the right thing - paying back debt longer" also led to these unfortunate results. We have seen others who do not own a home who have had increases in stock holdings and salaries that have made any debt resolution considerably more expensive than it would have been when it was first clear there was a major problem. When it comes to bankruptcy, timing can be everything.
The good news? If you are reading this, you are probably considering bankruptcy and it is probably not too late. Home prices in the Bay Area are volatile over time - and so are incomes. You should plan in advance so you are ready to take action: now or whenever the market allows you to use the legal options that are on the table to help you manage your debt. We can tell you what your options are - without charge - at a free consultation. Give us a call. Don't procrastinate.
We receive a lot of calls about fees. This is understandable that people want this information. We want to provide people with information about our basic fees online so they can call us about their case. Accordingly we added a tab to our homepage.
We have made an important change. Beginning this month, in June, we are offering to build 100% of attorney fees into ordinary Chapter 13 plans.
Up to 100% of our fees will go in the plan as long as you can promptly provide your documents and make your first plan payment. If you are ready to get started, our fees won't get in the way.
If it is an emergency case or second time filing, or you need more time to start plan payments, a modest additional fee will be required. Please call us for more details or send us a contact form.
Our basic Chapter 7 case fee is still 1200.00. Note the Bankruptcy Court raised its filing fees June 1, 2014.
While our clients are rightly concerned with the cost of filing bankruptcy, we find that they often fail to vastly underestimate the cost of waiting too long to file a case, when the facts are clear that a case would be in their best interest. Credit card companies, medical bill collectors, and other creditors are experts at extracting every last dollar from people on the verge of insolvency. The creditors will call and ask for "just one more payment" for them to "forbear", when in fact, they actually have no immediate ability to collect on their debt anyway because they have not sued and obtain a judgment.
Potential bankruptcy filers need to be aware the San Francisco and Oakland Divisions of the U.S. Bankruptcy Court have developed a new, more complex Model Chapter 13 plan. Your bankruptcy attorney needs to be familiar with the new plan to avoid pitfalls and traps and prevent delays to confirmation of your bankruptcy plan. Simply put, the old plan and old techniques will not work! Law Office of Jason Honaker attended meetings at the Courthouse and the Chapter 13 trustee's office regarding the new plan so we are prepared to help you. We have already filed several new plans based on the model plan. Note: Santa Clara County residents will not use the new plan - we can assist them in preparing the same San Jose Division plan that was used there in years before.
We are ready to help clients from San Francisco, San Mateo, Alameda, and Contra Costa Counties file a new Chapter 13 plan to save their home, car and other property - and stop collections like levies and garnishments on taxes and other debts. Call 650-259-9200 or send us a message today to schedule a free consultation so we can explain how we can prepare a new Chapter 13 plan for you.
How Much Does It Cost to File Chapter 13 or Chapter 7 Bankruptcy in San Jose and San Francisco? And how long will it take to get my case filed?
How much does it cost to file a bankruptcy case with an experienced consumer bankruptcy attorney in San Jose or San Francisco? It is hard for people to obtain this information online, and they do not want to have to come in for an office appointment just to know bankruptcy attorney prices. While the total cost may vary depending on how complicated the case is, we will currently represent debtors in Chapter 13 proceedings for as little as $400 as an attorney fee retainer to get the case filed, and we represent people in basic Chapter 7 proceedings for as little as $1200.00 + out of pocket costs. Unless the court will grant a fee waiver, all Chapter 13 and Chapter 7 filers are responsible for the court's filing fee, which is approximately $281.00 to $306.00. When need can be demonstrated, the court may allow the filing fee to be paid in installments.
Our goal to provide the best possible service at a very reasonable and competitive cost. Please contact us at 650-259-9200 to schedule a free consultation in Burlingame, San Francisco, or Campbell - or submit a contact form online and we will set up an appointment with you to review your case and give you a more exact cost estimate for your particular case. Have an emergency? No problem. We can make an appointment to see you in one of our offices within one business day. If necessary and appropriate, we can file an emergency bankruptcy petition the same day.
There is a common misconception that the Bankruptcy Code only provides relief to those without valuable assets or those with low incomes. In fact, Chapter 13 of the Code provides flexible forms of relief for taxpayers with any amount of assets or income, and the only limitation is on their debts.
Unfortunately, many people believe that bankruptcy relief is not available to them because they have for example, home equity (an asset) or a high-paying job (high income). This is incorrect, and people are missing out on the help the law intends to provide them. Many of these people still have the option of either a) paying back a fraction of their debts, and b) paying back their debts without interest, or with only a small rate of interest.
For example, according to Bankrate, if someone owes $25,000 on an 18% interest-rate credit card, and attempts to pay $500 on this balance each month, it will take them 66 months to pay the balance down to zero.
Had this client filed Chapter 7 bankruptcy and had no un-exempt assets, this debt would have received zero repayment, saving them hundreds of dollars a month. In Chapter 13, even if this individual had a very high income and very high assets - this debt could have been zeroed out sooner.
In practice, the vast majority of clients, even with incomes normally considered "high" would pay only a fraction of the debt back in bankruptcy. But the important point to remember is that bankruptcy is helpful for people at all income and wealth levels, and can be a very useful tool for them to get their financial house back in order without creditor harassment.
Please call or contact us via our website for a free, no-obligation consultation about your options for filing Chapter 7, Chapter 13, or working out your debts without filing bankruptcy.
False. Non-priority IRS debts are dischargeable in bankruptcy. In Chapter 13 certain penalties, interest, and older taxes do not have to be accounted for in your plan. In Chapter 7, these non-priority debts may we wiped out entirely even though you do not have a repayment plan. It is a common misconception that all IRS debts need to be paid back.
File your returns in a timely and accurate fashion, and if you ultimately cannot pay those tax debts, you may have the option to discharge those taxes in bankruptcy. Unfortunately, many people who cannot pay their taxes make the serious error of not filing a timely tax return.
Call us today at 650.259.9200 or submit a consultation form online and we can meet with you for a free consultation to discuss how bankruptcy can resolve your tax problems.
The Wall Street Journal reported today that Sen. Durbin will introduce new legislation today that would make private student loans dis-chargeable in bankruptcy. As a general matter, student loans are not currently dis-chargeable. Under this legislation, public loans would still survive bankruptcy, but privately issued loans, which often carry higher interest rates and less terms, might be wiped out.
Relief from other debt in bankruptcy already makes student loans more affordable, and bankruptcy can put student loan creditors on hold even when the debts are not discharge-able. If intervening law changes, a Chapter 13 bankruptcy might potentially be dismissed and re-filed, or re-filed under another Chapter, to take advantage of more reasonable future laws. Contact us if you would like a free consultation to discuss how to manage debts that include student loan obligations.
One of the primary benefits of the bankruptcy process, in particular Chapters 11 and 13, are the ability to "strip-off" mortgages on a primary residence or second property. Chapter 13, when available, is simpler and usually more cost-effective. However, to strip-off a second lien in Chapter 13, it is an all-or nothing proposition. What may be an "all" proposition in 2012 and early 2013 may very well be a "nothing" proposition in late 2013.
Why? Rising home prices in the Bay Area.
Simply put, if it can be demonstrated that the house is worth less than the balance of the first mortgage, the second loan can be "stripped off" in a Chapter 13 bankruptcy proceeding. If, however, the house is a primary residence and its value can be demonstrated to be higher than the balance on the first mortgage, the lien strip is simply not available.
According to DataQuick, California real estate prices rose 17 to 18% in San Jose and San Francisco over the last year. Economists are predicting modest gains in housing prices next year across the U.S., and stronger gains in the Bay Area. Many home buyers whose homes were "underwater on the first mortgage" will become "underwater on the second mortgage only." Those underwater on the second only can't "strip off" liens - i.e. emerge from a Chapter 13 bankruptcy with only one mortgage.
Accordingly, if your house is arguably worth less than the balance on the first mortgage, and you have a second mortgage, you should act now and investigate your ability to strip the second mortgage in Chapter 13 before it is too late.
If you would like a free consultation about lien stripping in Chapter 13, please call us at 650.259.9200 in Burlingame or 408.520.9301 in Campbell.
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Law Office of Jason Honaker