Foreclosure

Massachusetts Bankruptcy Lawyers Anthony Bucacci and Robert Simonian (508)673-9500


Should You File for Bankruptcy Before or After Foreclosure?

For most people, filing for Chapter 7 bankruptcy before foreclosure is better than the other way around.

If you know you’re going to lose your house in foreclosure, and you also plan on filing for bankruptcy, should you file for bankruptcy before or after foreclosure? Sometimes you have no choice. But if you do, you will most likely benefit more if you file for bankruptcy before your house is foreclosed. Read on to find out why.

(For the purpose of this article, we assume you will file for Chapter 7 bankruptcy rather than Chapter 13 bankruptcy. See How Chapter 13 Bankruptcy Affects Mortgages and Foreclosure for information on Chapter 13 bankruptcy and foreclosure.)

Deficiency After Foreclosure: When You Owe Money After the Foreclosure Sale

When a house is sold in foreclosure, the price at which the home is sold is often much less than the outstanding amount of the mortgage. This is especially true these days, when home prices are depressed throughout the U.S. The difference between the amount owed on the mortgage and the foreclosure sale price is called the “deficiency.” (Some states cap the amount of the deficiency to the difference between the property’s fair market value and the foreclosure sale price.)

Can the Lender Collect the Deficiency?

Whether your lender can come after you for the deficiency depends on the state you live in. Some states, including California, bar lenders from going after borrowers for a deficiency if the underlying mortgage was secured by the borrower’s principal residence. In most nonjudicial foreclosure states (states that allow lenders to pursue foreclosure without suing the borrower in court) and a few judicial foreclosure states (states that require lenders to sue borrowers in court before foreclosing), lenders have the right to recover a deficiency only if they file a separate lawsuit against the borrower. Because of the expense (and because borrowers who lose their homes in foreclosure often don’t have much in the way of income or assets), lenders frequently forego this right. (To find out what the law is in your state, see the Mortgage Deficiency Laws topic page and the article on Anti-Deficiency Laws.)

You May Owe Taxes if Your Lender Forgives the Deficiency

If your lender doesn’t pursue you for the deficiency and instead cancels the debt, in the eyes of the IRS you have just received taxable income. As far as the IRS is concerned, you once owed a certain amount of money (say, $20,000); you now no longer owe the $20,000; therefore, you’ve received a windfall of $20,000. You will have to pay income tax on that forgiven debt unless you qualify for one of two exceptions: the Mortgage Debt Relief Act of 2007 exception or the insolvency exception.

The Mortgage Debt Relief Act of 2007 is a federal law that excludes from taxable income forgiven debt that was (a) taken out to buy, build, or substantially improve the borrower’s principal residence (or to refinance a mortgage taken out to buy, build, or substantially improve the borrower’s principal residence), and (b) secured by the borrower’s principal residence. The maximum amount of forgiven debt that can be claimed under this exception is $2 million (or $1 million if you’re married but you file separately). This exclusion only applies to loans taken out during the calendar years of 2007 through 2013. (Congress is currently considering a bill which would extend that through 2015.) For more details and updates on this Act, see Nolo’s article Canceled Mortgage Debt: What Happens at Tax Time?

To qualify for the insolvency exception, you must show the IRS that you were insolvent when the debt was cancelled. You were insolvent if the total of all of your liabilities was greater than the total of all of your assets

To learn more about the Mortgage Debt Relief Act of 2007 and insolvency exceptions, visit the IRS website at www.irs.gov and search for “mortgage debt forgiveness” and “publication 4681.”

Will the Deficiency Be Discharged in Bankruptcy?

Filing for bankruptcy will eliminate some but not all of your debts. If your lender comes after you for the deficiency, and you file for bankruptcy afterwards, bankruptcy will wipe out the deficiency debt. On the other hand, if your lender forgives the deficiency before you file for bankruptcy, and you don’t qualify for any of the exceptions that would exclude the cancelled debt from your taxable income, filing for bankruptcy afterwards will most likely be of no help in eliminating your tax debt.

If you file for bankruptcy before foreclosure, your mortgage debt will be discharged. (Although the lien will remain, which means that if you default on payments, the lender can still foreclose.) Because there is no longer any mortgage debt, after the foreclosure sale there will be no deficiency and no tax liability for any cancelled deficiency debt.

Another Benefit of Filing for Bankruptcy Before Foreclosure

As soon as you file for bankruptcy, an order called an “automatic stay” is issued by the court. The automatic stay prohibits your creditors from pursuing any collection activities, including any action related to a pending foreclosure. While your bankruptcy winds its way through the court system, which could take three or four months, you have the opportunity to build up your savings by living in your home without paying any mortgage or rent.

Your lender has the right to ask the bankruptcy court to lift the automatic stay and allow them to go forward with the foreclosure. Nowadays, with the glut of foreclosed homes on the market, many lenders are foregoing this right and waiting for bankruptcy cases to conclude before continuing with foreclosures.

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Source : alllaw.com


12 Reasons For Filing a Chapter 13 Bankruptcy

Reasons For Filing a Chapter 13 Bankruptcy1. There is a lot more flexibility when you file a chapter 13 bankruptcy. You can dismiss the case voluntarily at any time or convert it to chapter 7 bankruptcy at any time. You can modify your plan if your income changes if income changes or you decide to give up a house or a car. You can refinance or sell a house during the plan.

2. A chapter 13 bankruptcy can stop or prevent a foreclosure when you are behind on mortgage payments. You will have to pay the past due payments and continue paying the regular monthly payments going forward.

3. You can strip off and remove a second mortgage, reduce the mortgage balance of an investment or multifamily home and you can reduce the loan balance of an automobile loan.

4. More debts can be discharged in a chapter 13 bankruptcy as opposed to a chapter 7 bankruptcy such as alimony and divorce payments and money owed for malicious and willful acts.

5. Attorney’s fees can be incorporated into the bankruptcy plan. You will not have to come up with a lot of money at first and usually the attorney’s fees only reduce what the creditors receive and do not increase your payment.

6. You do not have to reaffirm an automobile loan in order to keep a car.

7. You can solve a tax problem in a chapter 13 bankruptcy and pay back at a rate that you can afford and stop tax levies.

8. You can solve a child support arrears problem in a chapter 13 bankruptcy and pay the past due amount over time, usually 36 to 60 months.

9. You can protect property that is not exempt in a chapter 7 bankruptcy and keep everything you own.

10. If an automobile loan payment is too high, you can stretch out your loan balance over 36 to 60 months and lower your monthly payment.

11. If you have filed a chapter 7 bankruptcy within the last 8 years and are not eligible to file another one until 8 years have passed you can file a chapter 13 bankruptcy and make a small monthly payment and still receive a discharge from you new debts.

12. You can protect a co-debtor from collection activity while the chapter 13 bankruptcy is pending.

This is not an exhaustive list of reasons where a chapter 13 bankruptcy may be a better choice over a chapter 7 bankruptcy. You should consult with an experienced bankruptcy attorney for a full evaluation of your case.

Facing Foreclosure ???

Facing Foreclosure and Bankruptcy

If you are facing foreclosure and the loss of your property you may want to consider your options in bankruptcy. There are many options available to you. If you are losing your home and the house has not gone to foreclosure sale yet, you can file a chapter 13 bankruptcy. This would allow you to pay the past due mortgage payments over time and save the home.

If you do not want to save the home but are afraid of losing your equity, you can file a chapter 13 bankruptcy with a sales plan. If you home is foreclosed your will most likely lose a lot or all of your equity. Generally, banks do not care if you make a profit from the home sale and are only interested in getting their money back. If you file a chapter 13 bankruptcy with a sales plan you can stop the foreclosure and sell the home for full market value. This way the bank gets their money back and you can keep the equity or use the equity to pay off other debts.

In some situations it can be advantageous to file a chapter 7 bankruptcy and allow the Chapter 7 Bankruptcy Trustee to sell the property for you. By doing this you can get full market value and preserve or save your equity and pay off other debts. The Chapter 7 Bankruptcy Trustee, and not you, has the power to stop the sale and get the most reasonable price for the home. The property would temporarily belong to the trustee who, generally speaking, has a lot more authority and power over bankruptcy assets. Otherwise, if the house went to foreclosure, you may end up with a deficiency balance and now owe more money or you could end up with little or nothing at all. If there is equity in your home and there is a threat of you losing it bankruptcy may be in your best interest.

Whether you file a chapter 7 bankruptcy or a chapter 13 bankruptcy the Bankruptcy Court will immediately impose the automatic stay which is like a restraining order against all of your creditors. This will allow you time to make a rational decision and sell your property for the full value instead of losing the property to foreclosure sale or having to sell it fast at a greatly reduced price.

Social Media and Filing Bankruptcy in Massachusetts

Social Media And Filing Bankruptcy in Massachusetts

Many people share personal details of their lives on social media.  Social media and bankruptcy in Massachusetts may have consequences.  Post like vacations they take, places they shop, purchases they make, and even what they wear. This kind of sharing can sometimes have legal consequences. One example would be an angry post about a soon to be ex spouse could cause problems in a pending divorce.  Also, posts that exaggerate your financial situation could cause you problems in bankruptcy.  It is never wise to post information that exaggerates your lifestyle before, during or after filing bankruptcy.  Viewers of your post and creditors could misinterpret it and use it against you.  One example shows just how problematic things can be when you are not careful on social media.

Bankruptcy Filing and Social Media Problems

In 2015, the musician 50 Cent filed for Chapter 11 bankruptcy protection. During his bankruptcy he posted several photographs with a lot of money. He displayed a stack of money in his freezer.  50 Cent also posted a photograph of himself surrounded by piles of cash on a bed.  He claimed the bills were props, such as those used in music videos.  The creditors and the bankruptcy judge were not impressed and not amused by those pictures.

According to the New York Times, 50 Cent stated that the postings were important to maintaining his image and for promotion of his music. This made it difficult to determine whether he was hiding assets or money.  This made it difficult to see if he was telling the truth.   His creditors now asked to revalue his assets.  The bankruptcy judge asked him to reappear in court.

Fortunately he received a large settlement from a lawsuit and was able to pay off his creditors in a short period of time.  As you can see, it can be dangerous to post on social media if you are going through bankruptcy.

Be Careful What You Post and Share

Creditors do not know anything about you. People who do not know you can easily misinterpret your social media posts. Pictures of a business trip could be seen or interpreted as a vacation when posted on social media.   Visiting a relative out of state for an emergency can look like a vacation.  Eating at a fancy restaurant for a family event could look extravagant.  Be careful of what you post on social media before and after filing bankruptcy.

If you are considering filing bankruptcy in Massachusetts you should consult with an experienced bankruptcy attorney.  It is not wise to take advice from friends and family.  Also, trying to sort through the information on the internet could get you in trouble.  A lot of the information on the internet about bankruptcy is very general and can easily be misinterpreted.  It is always advisable to consult with an experienced bankruptcy attorney.  Call us anytime to discuss your options.  You can also visit our website to schedule an appointment.  The consultation is always free.

 

Rebuilding Your Credit After Bankruptcy

REBUILDING YOUR CREDIT AFTER BANKRUPTCY

Rebuilding Your Credit After BankruptcyThe most frequently ask question from our clients is “rebuilding my credit after bankruptcy?”

Chances are, that if you have made the decision to file a bankruptcy, you are at a point where some or all of your debts are behind, you receive collection notices or even law suits. At that point you probably have been making ends meet somehow without using your cards.

When you can’t obtain new credit with high debts you have to do something.  This will prevent a creditor from granting you a new card or a loan unless you take action.  Rebuilding your credit becomes necessary in order to move forward in life.

You have now made the decision to obtain debt relief by hiring an attorney to file a bankruptcy.  After you can begin rebuilding your credit with a bankruptcy discharge in hand.

Your attorney takes you through the process of filing bankruptcy and then, afterwards, the weight of those collection letters, collection call and law suits is gone.

After bankruptcy, there are many avenues to obtain new credit. First and foremost, when a bankruptcy is filed the person that filed can decide to keep a car with automobile loan or a house and a mortgage.  Secondly, reaffirmation of those debts allows a bankruptcy filer to get on track immediately. Thirdly, the banks will record your mortgage payments to the credit bureaus. Once the attorney discusses reaffirmation of debts advice can be given accordingly.  Attorneys will explain the process.

What if you do not have a car loan or mortgage to reestablish yourself?

Without any debt many credit card companies are willing to grant you a fresh start. Credit card companies offer decent credit limits.  Favorable credit reporting usually increases credit limits and credit offers.  Offers of new credit from credit card companies listed in the bankruptcy often surprise clients and then clients receive new credit.

Open a secured credit card.  As a result, this will help to improve your credit. Deposit money in a bank account that issues you a secured card based upon the amount of your deposit. Lenders report timely payments and payment history to the credit bureaus.

In a short amount of time credit scores will improve.  Lenders and credit card companies will extend credit.

It is not unusual for clients to obtain automobile loan months after bankruptcy.  A mortgage is the most difficult type of credit to obtain after bankruptcy.  Usually one to two years after a bankruptcy you can obtain a mortgage.

These are some techniques to obtain the fresh start you deserve and there are many resources available.

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.

Massachusetts Bankruptcy Hearing

You most likely will be asked the following questions by the Bankruptcy Trustee at your Massachusetts Bankruptcy Hearing creditors’ meeting:

  1. State your name
  2. Address where you reside
  3. If you own or rent the property where you reside
  4. You will be shown a document you have signed and you will be asked whether the signature is yours.
  5. You will be asked for a photo ID such as a driver’s license or passport or any government identification and another with your name and social security number on it, such as a medicare card, social security card or W-2 form. You may not use a tax return to prove your social security number.
  6. Have you read the bankruptcy petition and schedules and is everything contained in it true and accurate?
  7. Have you owned any real estate in the past 4 years?
  8. Why did you file bankruptcy? You may be asked why or how you accumulated the debt. The must usual answers are medical issues, loss of a job, loss of income, birth of a child, divorce, or simply an accumulation of debt that you simply can not pay anymore.
  9. Do you presently own any real estate? Has anybody put your name on their home like a parent or child or relative?
  10. You will be shown Schedule B of your petition and asked if the items listed represent all your assets, and if you have any other assets you forgot to list or would like to add.
  11. Does anyone owe you money?
  12. Do you have any personal injury claims or other claims that you could bring against anyone?
  13. Have you injured yourself in an accident in the past 3 years or have you consulted an attorney for any other reason other than bankruptcy in the last 3 years?
  14. Where do you work and do you have income from other sources?
  15. How much do you take home from your job every pay period?
  16. You will be asked about your income whether you receive Disability, Social Security, Workman’s’ compensation and how much.
  17. Will you receive and inheritance from a will or trust in the next 6 months or have you inherited anything in the recent past?
  18. If you have listed any secured debt such as a car loan or a mortgage you may be asked if you are going to keep the car or house.
  19. Did you receive an income tax refund? How much did you receive or will you receive?
  20. Have you given away anything worth $1,000.00 or more to anyone in the past 2 years?
  21. Have you given any money to family members or friends in the last year or repaid any loans to family or friends?

The above is a list of the most common but not necessarily all the questions that will be asked at Massachusetts Bankruptcy Hearing. The most important advice is to answer all questions truthfully, honestly and briefly.

The hearing will be conducted by a lawyer acting as a Trustee on behalf of your creditors.  As your bankruptcy attorney, I will be in sitting with you and you will not be alone as it is usually the most important step in the process.  There are some very informative videos about the entire bankruptcy process.

There almost always are no creditors present and the entire matter will take no longer than 5 minutes or so.  We try to send any and all information that would be needed ahead of time so that your hearing goes quickly and smoothly.

Here is a video of a typical bankruptcy hearing:

Considering Bankruptcy Undecided or Unsure What To Do ?

Talk To Us About Your Options When Considering Bankruptcy :

Are You Considering Bankruptcy Undecided or Unsure What To Do ? We always tell potential clients to talk to us first to see if bankruptcy is in their best interest. The consultation is always free. Talk with Attorney Robert Simonian or Attorney Anthony Bucacci in private and in total confidentiality for expert bankruptcy advice and to see if filing bankruptcy in Massachusetts is right for you.

We can almost always come up with a solution to your financial problem. We have filed over 10,000 cases in the past 26 years and there are very few scenarios that we have not seen. The law firm Bucacci & Simonian is well known for their hard work, diligence, creativity and problem solving abilities. The law firm Bucacci & Simonian are the bankruptcy attorneys other attorneys come to with difficult cases. Call today to see what we can do for you and what options are available. Many are embarrassed about their financial problems and the situation regarding  bankruptcy. This is simply not true and many famous people have had to file for bankruptcy to get a fresh start.

Why Call Bucacci & Simonian When Considering Bankruptcy Filing :

We are known as one of the best bankruptcy attorneys in Southeastern Massachusetts serving the Bristol County and Plymouth County areas. Please inquire with anyone as to our reputation. Reputation is everything and we are very proud of ours. We have received numerous awards from various agencies and courts including the Bankruptcy Court in Boston, Massachusetts.

Using our knowledge and skill we have had several clients complete their five year Chapter 13 bankruptcy plans where they own their home FREE & CLEAR OF MORTGAGES. We understand how important it is to save clients’ homes from foreclosure, keep their cars from being repossessed and stop creditors from suing them and attaching their wages or attempting to seize their assets. This can be stopped almost instantly and we make every effort to be very available to your clients and can accommodate emergency situations. One of our important cases involved saving a client’s multi-family home.

What to Avoid When Filing Bankruptcy :

Do not attempt to file for bankruptcy on your own. You can make your situation much, much worse. If the bankruptcy petition is not correct you could lose your home, your car or possessions or you could be asked to file a different kind of bankruptcy where you have to make monthly payments when it could have been avoided. If you are not properly represented a bankruptcy trustee may foreclose on your house, allow your car to be repossessed, seize a tax refund or other assets. You could file under the wrong chapter, apply the wrong exemptions, fail to file all of the necessary forms or not understand the significance of important forms.

Protect Yourself:

Considering Bankruptcy Undecided or Unsure What To Do ? Call us today for a free and complete bankruptcy consultation. We can protect you from your creditors and protect your home, cars, jewelry and other assets. Creditors and collection lawyers have a job to do and it may seem that they are heartless and will take anything they can from you. They are represented and you should be too. Call us today. The Federal Bankruptcy Court suggests that seeking the advice of a qualified bankruptcy attorney is strongly recommended.

Common Myths About Filing Bankruptcy In Massachusetts

There are a lot of misunderstandings about filing for bankruptcy.  Credit consolidation companies can mislead people and credit card companies can mislead you so you continue paying high interest.  Many people rely on information that was true 25 years ago or from friends who have heard something from someone.  A lot of the information available on the internet is often very, very general and vague that it does not apply to over 95% of the cases and distorts the truth.

The following is a list of beliefs people have about filing bankruptcy that are SIMPLY NOT TRUE:

  • My Credit will be destroyed forever and I will never get credit again.
  • I will lose my house, my car and everything I own.
  • You can only have one automobile if you file bankruptcy.
  • If I have a car loan or a home mortgage I have to give up my car and home.
  • The whole world will know I filed for bankruptcy.
  • If you are married both husband and wife must file for bankruptcy.
  • Only bad people file for bankruptcy.
  • Filing for bankruptcy is too expensive and I can not afford a lawyer.
  • Even if I file bankruptcy I heard you have to pay everything back.
  • It is difficult to file for bankruptcy and they changed the laws to make it difficult.
  • I will never be able to own anything or have money in the bank after filing bankruptcy.
  • You can only file bankruptcy once in your lifetime.
  • You have to have some minimum amount of debt to file bankruptcy.
  • You can not discharge IRS taxes or State taxes in bankruptcy.
  • I will lose all of my future tax refunds.
  • I can be fired or lose my job if I file bankruptcy.

All of the above are common beliefs that people think are true about filing bankruptcy.  They are simply NOT TRUE.  It is important to speak to an experienced bankruptcy attorney for real answers to your questions.  It becomes very difficult to make a decision when you hear all kinds of information from unreliable sources.  We are available to accurately answer your questions and concerns anytime.

 

Bankruptcy Lawyers, Trust, Wills and Divorces

BANKRUPTCY COURT OPEN & WE ARE OPEN. FREE IN PERSON OFFICE CONSULTATION, TELEPHONE OR VIDEO CONSULTATION. Most People Are Afraid Of Bankruptcy. Hearing different information from friends and the internet? Considering “Debt Consolidation?” Call Us First For Real Answers To Your Financial Problems 508-673-9500