Losing benefits from Chapter 13 Bankruptcy with Loan Mods
No one can predict what would happen at the end of 2007 and 2008. Shortly after the Congress has changed the bankruptcy code to reduce the amount of the people who deposit bankruptcy by eliminating the persons whom they felt […]
No one can predict what would happen at the end of 2007 and 2008. Shortly after the Congress has changed the bankruptcy code to reduce the amount of the people who deposit bankruptcy by eliminating the persons whom they felt that they have abused system. Included in changes to the Bankruptcy Code has been a way to test to qualify people who deposit bankruptcies with a credit counseling course before bankruptcy and a post-bankruptcy financial management course. Initially, it seemed to work well and the number of bankruptcy decreased. And although all this happened, credit markets warmed with bad paper stacks. Then the real estate bubble bursts and went down the American economy. Millions of Americans have been upside down on their home, buried under a credit card debt mountain and made too much money to drop bankruptcy. It was at that time that bankruptcy lawyers began to become creative on how to use the real benefits of the bankruptcy of Chapter 13.
After everything exploded, the government has proposed loan modification plans to help Americans have been sealed with a bad mortgage. Only problem with it was, it did not work and only about 5% of these people who applied a loan modification. Many of these people ended up losing their homes for foreclosure because they have risen so far to comply with the new lending mod rules. Now people were upside down on their home and / or may have lost the loss of forcing and buried under a mountain of credit card debt. After trying to do it as they thought they were right, they had no other option but to file a bankruptcy. It was at this moment that the Prosecutor of Bankruptcy received the call as last resort. For those who are not eligible to file a bankruptcy in Chapter 7, the Prosecutor of Bankruptcy would offer Chapter 13 as an alternative.
What most people did not know that Chapter 13, the bankruptcy was almost adjusted for this situation. What happened, many bankruptcy lawyers realized that the second and third acts of trust were technically obtained by nothing and should be evacuated at the end of the bankruptcy of Chapter 13. In a bankruptcy of Chapter 13. The debtor and their bankruptcy lawyer are required to submit a feasible repayment plan that will last 3 to 5 years at the bankruptcy court. In this plan, the debts are paid by the priority, with debts guaranteed in the first place and unsecured debts that left the following. The Prosecutor of Bankruptcy would file a motion with the Court to make the debt that was no longer secured by the property due to the devaluation of an unsecured debt. As it is unsecured, it would get all the crumbs throughout the payment plan and the rest would be released at the end of the bankruptcy of Chapter 13. For the few people who have received a loan modification, there was a problem. If the first trusted action has been lowered under the value of the property, the second could not be released in the deposit of bankruptcy and should be paid in full. Even if there was a value of value, the loan is still secured by this property. All this can be confusing and everyone in this situation should seek advice from a bankruptcy lawyer to determine what works best for them.