How do I file for bankruptcy? What is the process?

Filing for bankruptcy is easier than you might think.  If you are hiring a bankruptcy attorney to file it for you then he or she should be very familiar with the process.

You will be asked about income, expenses, and assets.  You will need to list all of  your personal and real property.  Most people have a car, a bank account, furniture, clothes and maybe some jewelry.  Others have a house. All of this will be listed along with any loans you have on any property.  Your income will be determined by 6 months of pay stubs of with a profit and loss statement if you have a business.  Your expenses you can list also.

Next comes your debts.   Your attorney will list your debts in the bankruptcy and most can download them from you credit report.  There will be a few questions about when the debt was incurred if they considered high but for the most part your unsecured debts are dischargeable.  If you have student loans, some taxes, or spousal/child support debts then those would not be dischargeable.

The attorney will get more information from you and fill out the rest of the schedules like the statement of financial affairs and he or she will complete the bankruptcy schedules.  You then will sign the documents and most attorneys will file electronically after that.  Most attorneys will take the necessary time to do this but in an emergency the whole process can be done rather quickly.

You will then get a meeting of creditors 30 days after the bankruptcy filing.  There a trustee will ask a few simple questions unless there are more serious issues.  Your attorney will attend this hearing so if you get stuck they are there to help you.  Creditors rarely attend this meeting and if they do then there are only a few questions they can ask.

Sixty days after the hearing you get your discharge if there are no holdups or problems with the case.  You are now debt free and able to move on with your life and a fresh start.   There that wasn’t so bad was it?

I am a bankruptcy attorney in San Diego.  Please visit my website for more help at www.farquharlaw.com.

What do the election results mean for bankruptcy and foreclosure?

The reality of our political situation is that no matter what you think of any political party, the democrats are in general friendlier to debtors.  I am not a democrat or a liberal but I say this because it is just the way it is.

So if you are in debt the democrats will probably pass more laws that will help you (years ago Hillary Clinton put forth legislation to make student loans dischargeable in bankruptcy).  With the Republican takeover therefore there will probably not be as much relief  for debtors as there would be if democrats stayed in power.

For instance the writing down of mortgages to the value of the homes is being proposed by a democrat.  This is being sponsored by the democratic senator from Rhode Island and it will probably not happen now because the dems lost the house.  Neither will a foreclosure moratorium.  A halting to all foreclosures has been called for but it is unlikely top pass with republicans controlling the house of representatives.  Republicans are more likely to want to see the foreclosures happen.

But that does not mean that republicans are more in bed with big banks.  They just believe in personal responsibility and that if you can’t afford a mortgage then you should go out of your house.  For many of my clients this is my advice and I point out to them how it’s probably cheaper to rent than to make their high payments for an upside down house.  But for others I advise them to try to get a modification and stay in the home because they are attached to the home or they have made major improvements to it.

The republicans will be faced with the emergency of an increasing number of these foreclosures and they may be forced to take more drastic action than they would otherwise take due to seriousness of the problem.

Remember too that bankruptcy is still going to be always available and it is unlikely to change.  The law was majorly overhauled in 2005 and will probably be only tweaked now.  That 2005 bankruptcy law and the means test that it created is considered unfriendly to debtors.  If your income is too high then you are forced into a chapter 13.

Vice president Biden voted for that 2005 change to the bankruptcy law along with many other democrats so it was not just republicans who supported it.  But bankruptcy is still available and its often the most sensible solution for people who do not have too much income but they do have a lot of debts they cannot pay.

So there is unlikely to be a foreclosure freeze now or a mortgage write down but there may be some other relief coming for debtors if both parties can work together.

I am a bankruptcy lawyer in San Diego.  If you need more help please visit my website at www.farquharlaw.com.

Pilot program-In Rhode Island bankruptcy judges could be allowed to modify mortgages in bankruptcy court.

According to Fox business there is a pilot program in Rhode Island that will allow judges to write down mortgages in bankruptcy presumably for to the current value of the home.  Senator Whitehouse of Rhode Island has been active in the mortgage and foreclosure crisis for some time and he is apparently asking for this to be passed in the lame duck session of Congress.

Mortgage reductions in bankruptcy court have been asked for some time but the have never been passed.  Bankruptcy judges currently can “strip” a second mortgage in chapter 13 bankruptcies if they are totally unsecured but first mortgages can not be written down to the value of the home as of yet.  Many say that this should not happen as it is unfair to some and because it would put a great burden on the banks.

I can find no confirmation of this other than Fox Business but apparently there is a pilot program active in Rhode Island to write down these first mortgages.  This would mean a huge reduction in both the principal and the mortgage payment for many people.  If this was to be put in place nationally it would solve the foreclosure crisis.  If people could write down their loans to the value of their houses many people could probably stay in them.

I know it would help many of my clients tremendously.  Most people who are in foreclosure are upside down in their mortgages meaning that the homes are worth far less than what they owe on them.  If we could correct this imbalance then it would allow a large number of homeowners to stay on their homes.

It seems that with the continuing mortgage crisis and the robo-signing bank scandals the idea of allowing mortgage write downs is becoming more popular.  In addition foreclosures are rising rapidly.  According to Fox (as reported by Realtytrac) foreclosures are up 76% in Seattle, 35% in Chicago, 26% in Houston and 23% in Detroit.

With all of these foreclosures there is increasing political pressure to do something to call a halt to it.  A foreclosure moratorium has been called for but a mortgage write down in a bankruptcy would be a better and more permanent solution.  I believe that the banks are now in public disfavor and they can do less and less top stop this from happening.

If you need any help with your bankruptcy or foreclosure please visit my website at www.farquharlaw.com.  I am a bankruptcy attorney practicing bankruptcy law in San Diego.