Anthony Bucacci

The Three Biggest Bankruptcy Fears

Maybe you’ve been thinking about it. You know that your life might just get better if you do it. But, like most people, you’re downright scared of filing bankruptcy.

That’s not necessarily a bad thing. Bankruptcy doesn’t have to be a last resort, but it is a serious step, and it does carry consequences.

That said, most of the dire predictions people hear (on the Internet and elsewhere) about the “tragedy” of filing bankruptcy, or the inescapable complications they’ll face, just do not materialize. Let’s explore why. . . .

Never Qualifying for a Mortgage (or a Car Loan or a Credit Card) Again

Of course, you will be able to buy a house or a car or get a credit card again, and it will happen much sooner than you would probably think. Most people believe that they can’t get any credit for seven or 10 years, based on the length of time a bankruptcy will appear on their credit bureau report. In reality, you’ll be able to get credit very soon after your case is concluded and your debts are discharged.

How can that be? After all, didn’t you just wipe out a bunch of credit balances? Who would want to take a chance on you? As it turns out, plenty of lenders will. There is no law that would prevent a creditor from extending credit to you. In fact, there are creditors who market to people who recently completed bankruptcy cases. These creditors know that your future bankruptcy options are limited for 4 years, so their chances of losing money on you through bankruptcy are very, very small. Plus, these lenders can use your recent financial circumstances to justify charging you a higher interest rate. Add to that the fact that you’ve just freed up resources by getting rid of debt and suddenly you’re a person they want to extend credit to.

Companies offer secured and unsecured credit cards to recent bankruptcy filers. Many debtors also report that local car dealerships send them letters offering to help them re-establish credit with new and used car deals. In fact, many borrowers can qualify for an FHA or VA loan just one year after a Chapter 13 bankruptcy or two years after a Chapter 7 bankruptcy.

No doubt you’ll probably pay more for your credit immediately after a bankruptcy, but within about two years or so, with a clean record and good payment history, your credit score could rise to a very respectable level that will allow you to obtain good, if not excellent credit rates very quickly.

I Will Lose All My Property

In less than 10% of personal bankruptcy cases will individual debtors be required to turn over any property or assets to the bankruptcy trustee. For most filers, their personal property and the equity in their real estate will be exempt and protected. Each state either has its own exemption scheme or makes use of the scheme included in the federal bankruptcy laws. For the most part, these exemptions will be generous enough to cover your property.  In Massachusetts you have a choice of either federal or state exemptions and the exemptions are quite generous.

My Friends, Family or Coworkers Will Find Out I Filed For Bankruptcy!

What our friends and family think of us is a powerful motivator. The fear that our bankruptcy filing will become public knowledge can be paralyzing and overwhelming. For many, the stress of dealing with obnoxious bill collectors pales in comparison to the possibility that someone we know will find out about our bankruptcy case and that you have money troubles.

Bankruptcy cases are public court records, but generally, the information on an individual bankruptcy case is not published unless it is newsworthy. The filer’s creditors are notified by mail, along with certain government agencies, but the days of publishing a bankrupt’s name in a list in the legal notices of the local newspaper are long gone in Massachusetts. The chances of your acquaintances finding out are very low unless you tell them yourself or they go to the Massachusetts Bankruptcy Court’s clerk’s office to research your name.

It may ease your mind a little bit to know that about one in 10 adults will file bankruptcy sometime over the course of their lives. It is a lot more common than you believe. So, next time you’re in church or at a family gathering, think about how there’s a good chance someone sitting near you has or will file bankruptcy. You’re not alone at all.

Chapter 7 Bankruptcy vs. Debt Consolidation

Chapter 7 Bankruptcy vs. Debt Consolidation. When is Bankruptcy Better than Debt Consolidation

In this article, we’ll discuss some of the situations in which bankruptcy may be the best option as opposed to debt consolidation.

When is Bankruptcy Better than Debt Consolidation?

Debt consolidation doesn’t work for everyone and is usually very situation specific. If someone doesn’t have enough income to pay the loan payments in addition to their living expenses, then even if they qualify for a loan they’ll likely end up in the same situation in a short period of time afterwards. Many people need to get a fresh start and put the financial distress behind them. This can be achieved quickly through a Chapter 7 bankruptcy, which wipes all debts except a few non-dischargeable debts like taxes, child support or student loans. Debt consolidation is essentially getting a new larger loan to clear up all existing debt. This now requires you to make a larger payment to one lender. If you find yourself using your paycheck to pay the loan payment and now relying on the credit cards for living expenses such as gas and food you really did not solve the problem. In fact, you may make the problem worse by ending up with a lot more debt than when you started. A fresh start can also be achieved in a Chapter 13 bankruptcy after completion of a repayment plan that pays a smaller portion of un-secured debts and discharges most of the rest. In a Chapter 13 bankruptcy you no longer have interest and late fees so it really begins on a certain date and ends on a certain date.

If creditors are suing or threatening to sue a debtor to obtain a court judgment and begin garnishing wages or bank account funds, a debt consolidation loan will do nothing to stop those lawsuits or collection efforts until the loan goes through and those debts are paid. That can take several weeks or more. Depending on where things are in the process, the debtor may not have time to secure a consolidation loan before the judgment is entered or the garnishing begins. Often when you are at the point where you are being sued by your creditors your credit is not good enough to get a loan large enough to pay the creditors. However, a bankruptcy’s automatic stay requires all creditors to immediately stop collection efforts and court actions until the stay is lifted, the bankruptcy is discharged.

Bankruptcy has many other advantages. These options should be discussed with an experienced bankruptcy lawyer and debt management attorney before deciding on the proper course of action. Your attorney’s experience and familiarity with debt issues can save you a great deal of money, resources and valuable time.

In Massachusetts bankruptcy attorneys Robert Simonian and Anthony Bucacci can assist in identifying a workable and advantageous solution to your debt issues and help you take action towards the right resolution.

Debt Consolidation vs. Debt Management Programs

It is easy to confuse a debt consolidation loan with a debt management program. A debt management program does not eliminate your many debts. Instead, your single payment is divided among your creditors by the debt management agency, who also takes a portion of your payment. Some programs are ok, especially non-profit and government agency sponsored programs, but many private sector programs are nothing more than scams in which the management firm is the only one who gets paid and debtors often end up in worse shape than before. It is very important to consider what the proposed monthly payment is and if you can actually afford that amount. Be very careful of a company that does not ask that first because they probably do not have your best interest in mind. Many debt management companies are a little deceitful by leading you to believe they are somehow affiliated with a government agency. Often this is not true and people blindly send money to the company only to find out they are doing little or nothing for them except taking your money. Also a lot of debt settlement companies use high pressure sales tactics and do not tell you about the tax consequences of debt settlement and you will end up owing the IRS for the forgiven debts. In bankruptcy there are no tax consequences and you truly get a fresh start. With debt management you may end up not saving any money at all between their fees, the accumulating interest and the tax consequences. If you cannot meet with a person face to face it is probably not a good idea to do business with them.

When is it Time to File Personal Bankruptcy?

Most people don’t like the idea of filing for bankruptcy, even when debt issues are growing and growing, causing them to lose sleep, affecting their relationships with others and threatening their mental and physical wellbeing. It is common for people in debt to think they just aren’t trying hard enough or that if they can just get that better job or get a particular debt paid off they’ll be in better shape. Meanwhile, past due balances and high interest rates, penalties and fees continue to grow and grow and cause the problem to get worse and worse.

It’s often difficult for people to see that it’s time to file for bankruptcy. People in debt may think of filing bankruptcy as giving up (which is simply not true) or think it’s not bad enough to consider bankruptcy just yet. Often they may be afraid of losing important assets like their home or car which is almost always not true. Often people take advice from family and friends and search the internet for answers and get more and more confused. However, when bankruptcy is in order it’s important to get it done before the situation gets worse. Below is a list of indicators that strongly suggest that bankruptcy should be considered as an option and a consultation with a Massachusetts bankruptcy lawyer may be beneficial.

Indicators that it may be time to file for personal bankruptcy

Financial problems are like an illness or a disease. The more symptoms a debtor suffers the greater likelihood that filing for bankruptcy is in order. It is really no different than going to a doctor when your symptoms start becoming more and more serious. Most individuals and families who can benefit from filing for bankruptcy experience several of the following:

  • The financial hardship keeps getting worse and worse — interest rates and penalty fees and other factors exceed the payments you make and cause your debt load to increase in month rather than decrease
  • Can’t afford payments that will pay off debt within three years (36 months) — if payments are too low, interest rates and penalty fees can keep a debt going on forever so a debtor can’t get out from under it; debtors should be sure to include future interest when calculating how much it will take to pay a debt off in three years
  • Borrowing to make debt payments — this is like trying to put out a fire by throwing gasoline on it, yet many debtors resort to this just to get aggressive creditors to go away even if it’s just temporarily
  • Can’t afford to pay minimum payments on all credit cards, loans and other debts — sometimes it’s not the size of any one debt or the size of the required payment for a single debt but rather the impact of many debts piled together; failure of a debtor to make minimum payments on all his/her debts will cause penalty fees and interest to accrue until the debt load is out of control. Paying on some debts while ignoring others is a strong sign that bankruptcy might be an option
  • Paying debts with retirement funds — the closer a person is to retirement the worse of an idea this is, yet seniors, who can least afford to jeopardize their retirement income, are those most likely to do so to avoid bankruptcy because of the stigma this generation traditionally puts on bankruptcy. Retirement money is protected in bankruptcy for a good reason which is that you will need it someday. Using retirement funds usually on puts a Band-Aid on the situation and only provides temporary relief. The stigma of bankruptcy is all but gone. No one will really know that you filed unless you tell them
  • Others will suffer if situation continues — the more dependants a debtor must provide for, the less they can afford to make payments to credit cards and other unsecured debts rather than save money for emergencies or pay for health insurance; if any single symptom can indicate a need for bankruptcy, this one is it, yet trying to continue making those payments could result in foreclosure or eviction and everyone ends up without a home. When you feel as if you are one financial problem away from disaster you should consider a free consultation with an experienced bankruptcy lawyer
  • Creditor collection calls threaten employment — if a creditor calls to garnish wages for a judgment and upsets your employer, the debtor may be in jeopardy of losing his/her job, which will make it impossible to keep up with any of their debts. It is common for employers to get nervous about your employment at their company if you start receiving collection calls at work. Your employer could look to the person with financial trouble if money or property is missing
  • Other options are not available, practical or helpful — insufficient income, poor credit scores and other factors put options like debt settlement programs, consolidation loans, negotiating with creditors, loan modification, lifestyle changes, or gifts from relatives out of reach, but they should be considered before filing for bankruptcy. People in debt can only cut back so much. When a person in debt starts buying less food and having insufficient insurance on their vehicles to save money it is an indicator that bankruptcy may be an option.
  • Upside down on their home with a second mortgage and/or equity line of credit — many debts secured by real property will survive a foreclosure and the debtor will still owe any remaining balance after the property is sold and proceeds subtracted from the balance; bankruptcy, however, can completely discharge these debts

The Next Step Is To Call A Bankruptcy Attorney For A Free

Anyone who suffers any of the above symptoms, or a combination of 2 or more, should strongly consider filing for bankruptcy. The next step is to consult with an experienced bankruptcy attorney who can help the debtor confirm that bankruptcy is the best solution. If it is, the attorney will file the case in court and notify creditors, which will put a stop to all collection efforts until the bankruptcy process is complete or the bankruptcy court lifts the stay.

In Massachusetts, bankruptcy and debt solutions attorneys Robert Simonian and Anthony Bucacci can assist in identifying the best options and solutions for your situation and put a plan into action that will resolve your debt issues and get you back on your feet. Call our office at 508-673-9500 to schedule a free consultation today or visit us at www.massbklaw.com

Car Title Loans & Bankruptcy

A car title loan is when you borrow money and offer your car as collateral, and if you default, the lender can repossess your car. Exactly how much you may borrow and how quickly you need to repay the loan depends on your loan contract and the value and equity in your car. The lender may be able to take your car and sell it, keeping the difference between what you owed on the loan and the sale price. If the vehicle sells for less than what is owed you can still be in debt to the lender. If that were to happen you could discharge the debt in bankruptcy whether it is chapter 7 bankruptcy or chapter 13 bankruptcy. What the lender is permitted to do is dependent on state law and some states don’t allow vehicle title loans at all.

Note that you will most likely need to pay back a lot more than what you borrow. Hi interest rates and the cost of borrowing the money, means these are usually very expensive loans. The Federal Trade Commission says lenders often charge a title loan APR of 300%. Some states cap APRs for vehicle title loans, but the Consumer Financial Protection Bureau extended its deadline for putting new protections into place for borrowers who take on vehicle title and other high-cost installment loans. It has proposed rolling back requirements for lenders to determine upfront if borrowers could afford to repay the loans. Often people in desperate situations will try to obtain such a loan before filing bankruptcy.

What is a car title? A car title is an official, state-issued document that says who owns the vehicle. It will list the owner’s name and the car’s year, make, model and the vehicle identification number or “VIN Number.” Every time the car has a new owner and every time the owner moves to a new state, the title will change. Vehicle title loan lenders will often require a “clear” title, meaning you own your car outright and free and clear of other liens or loans against the vehicle.

What if you don’t own your car outright? It may be harder to get a vehicle title loan or you may not be able to borrow as much money as you may need, or you may not be able to get a car title loan at all if you already have a loan on your car, depending on your state’s laws. You technically don’t own the car, the lender does. Depending on your state’s law, you may not even have a title in-hand, the lender may have it. If you do have the title and still owe on your car, it will say there is a lien on your car. This makes in more difficult to obtain such a loan.

The Benefits of a Car Title Loan

Car title loans are loans of last resort. It’s possible that a bank or credit union will offer car title loans at lower rates than storefront lenders.

Easier to Qualify

Because the lender knows it has something of value to take (your car) if you don’t pay it back, it is likely to have more relaxed credit score and income requirements than those for other types of loans. However, your state might impose certain income or other requirements. Again, a title loan should be a last resort for an emergency situation. If you are considering such a loan you should consult with a bankruptcy attorney first to explore other options.

Greater Loan Amount

Depending on how much your car is worth, you may be able to borrow a greater amount than a payday loan, which is another type of installment loan that uses your paycheck as collateral instead of a car title. Most auto title loans are for 25% to 50% of the car’s value, usually between $100.00 and $5,500.00 though some lenders may offer as much as $10,000 or more.

• How do you know how much your car is worth? Lenders will use industry standards like NADA or Kelly Blue Book to look up how much your car is worth. Do not expect that they will use the high retail value but rather the wholesale or trade in value. They will usually offer you less than this amount so that if you don’t pay back the loan and they take your car, they can then sell it for a profit. You can use the same online industry guide for free to get an idea of the amount you could borrow.

The Drawbacks of a Car Title Loan

We can’t emphasize this enough that vehicle title loans are expensive, more expensive than nearly any other type of credit and potentially risky. If you live in Massachusetts and are considering such a loan it may be best to schedule a free consultation with a debt lawyer or bankruptcy attorney before you make a mistake.

A Cycle of Debt

Lenders for car title loans make more money if borrowers stay in debt. In addition to high APRs, title lenders often charge fees or costs. If you cannot repay the loan, a “rollover” loan would fold all of those costs into a new loan. What sounds like a plus really isn’t because the new loan would add more fees and interest, making it even more difficult to get out of debt. CFPB data suggest that’s exactly what happens as a significant number of vehicle title loan borrowers enter multiple rollover loans and the cycle of debt begins.

You Could Lose Your Car

Default on your car title loan and the lender could repossess and sell your car. To add insult to injury, you may even be charged a repossession fee and auction fees. Some lenders require borrowers to furnish them an extra set of keys or install a device that could impair your ability to start the engine if you do not make payments. These devices may be used for repossession or as a way to remind borrowers to pay their loans on time. When the CFPB studied vehicle title loan borrowers between 2010 and 2013, 1 in 5 or 20% had their vehicle seized or repossessed.

If you find yourself in a situation where you are in debt and desperate for money to keep up with your bills it may benefit you to speak with us. We are Massachusetts bankruptcy attorneys serving all of Bristol County Massachusetts and Plymouth County Massachusetts. Attorneys Anthony Bucacci and Robert Simonian are Massachusetts bankruptcy lawyers helping people file bankruptcy in all of Massachusetts and particularly Southeastern Massachusetts including Fall River, Seekonk, Swansea, Freetown, Westport, Somerset, New Bedford, Dartmouth, Assonet, Fairhaven, Assonet, Mattapoisett, Middleboro, Lakeville, Raynham, Attleboro. Call us today or visit our website today to schedule a free consultation.

Mortgage Relief and Foreclosure Prevention

There will be a great need for mortgage relief and foreclosure prevention in Massachusetts and the entire country.  The CFPB stated today “we are at really an unusual point in history”.  Nobody has ever before seen this many mortgages in forbearance at one time that are expected to exit forbearance all at one time.”

This may be the calm before the storm. If mortgage companies don’t get it right when all these forbearance periods end.

With stimulus money and no federal student loan payments, people have been able to firm up their finances. People are paying off car loans, clearing off credit card debts or other old debt. Many are actually establishing a savings account for the first time in a long while.

What Mortgage Relief and Foreclosure Prevention is Expected

The CFPB hopes to have a plan to prevent a sharp rise in foreclosures this fall.  The present proposal would:

  • Establish a pre-foreclosure review period once forbearance ends
  • Delay the start of any Covid-related foreclosure to 2022
  • Provide mortgage servicers with streamlined loan modification options
  • Revise mortgage servicer communication rules to keep borrowers better informed.

Here is what to know.

The deadline for borrowers affected by Covid-19 to request or extend a forbearance plan is June 30.  This is also the end of a foreclosure moratorium on federally backed mortgages.  For borrowers who are behind in mortgage payments now, it’s imperative to act before June 30 to ask for a 180 day forbearance, and if needed, a second 180 day forbearance.  This will get you a year.  If that isn’t done, then the new CFPB rules would at least block servicers from filing a foreclosure lawsuit until after December 31, 2021.

The new rules if they are approved, will apply to all mortgages, not just those that are federally backed.

Certain fees such as late fees and stop payment fees would be waived.  If a loan modification were to include any catch up payments, servicers will not be allowed to charge extra fees or interest on those payments.  The new rules would be in effect until August 31, 2022 but may not apply to smaller lenders with less than 5,000 loans.

If you have the threat of a foreclosure, you can call us anytime or visit our website for more information.