Bankruptcy is an option for consumer debtors who have fallen behind on their mortgage payments. If your lender has initiated a foreclosure action or has requested that you short-sell your property or execute a deed-in-lieu of foreclosure, you may wish to consider other options that will permit you to remain in your home.
Most lenders offer loss mitigation or modification options. Borrowers who qualify for mortgage modification may see their interest rates lowered, principal balances reduced or mortgage term extended so that the monthly payments become more manageable. In some instances, lenders may be willing to recapitalize mortgage arrearages, rather than requiring the borrower to make a lump sum, cure payment. Mortgage modification applications are highly structured and lenders typically will not render any decision without a package that is 100% complete with current versions of all documents requested. While many borrowers attempt to modify their mortgage without the assistance of a lawyer, an attorney who practices in the area can be very effective.
Many courts, including the United States Bankruptcy Court for the Western District of Pennsylvania, sponsor their own loss mitigation programs. Court sponsored programs have the advantage of a judge with the power to compel mortgagees to designate a single point of contact and to come to a timely decision when the modification application is completed.
A chapter 13 bankruptcy case is also a highly effective way to preserve an at-risk interest in real property. Unlike chapter 7 bankruptcy, bankruptcy under chapter 13 of the United States Bankruptcy Code allows debtors with a regular source of income to repay their creditors some or all of what they are owed over a period of three to five years. For debtors who have reasonable mortgage terms but who have fallen behind on their mortgage obligation and just need some time and space to catch up, a chapter 13 filing may be the answer. When a debtor needs both time and better mortgage terms, a chapter 13 case, together with participation in a loss mitigation program might represent that debtor’s best opportunity to save their home and get a fresh start.
Behind on a mortgage obligation? Don’t wait until your lender forecloses on you—get a free consultation with an experienced bankruptcy lawyer today.
Robleto Law, PLLC
© 2014 Robleto Law, PLLC | Pittsburgh Bankruptcy Lawyers
Bankruptcy Law Practice Moves into Three Gateway Center.
On February 1, 2013, Robleto Law, PLLC moved into its new home at Three Gateway Center. After almost three years in an older, less prestigious space, the lawyers and professionals at Robleto Law are very pleased to be settling into our new offices. Three Gateway Center stands only footsteps from the Point State Park, market square, a “T” stop (Pittsburgh’s well-run light rail car system) and the numerous attractions of the cultural district. The grounds of Gateway Center are also home to the Three Rivers Art Festival.
Most importantly, the new law offices are designed to more fittingly service our growing bankruptcy and commercial law practice. Our clients appreciate our commitment to downtown Pittsburgh–both because of our proximity to Pennsylvania’s State and Federal Courts and because of our connection to one of America’s most livable cities. In addition to larger reception and conference areas, we now have the flexibility to have meetings at a traditional conference table or with less formal, couch seating. Our designers have strived to maintain the integrity and stately nature of a Pittsburgh bankruptcy law firm while allowing for greater comfort and flexibility. We recognize that our clients are diverse–from youthful software and design companies to corporate executives.
Our move is a product of our growth and, for that, we thank our outstanding clients. We are delighted to have outgrown our former space but we fully intend to maintain the professional connections with the many fine co-tenants of that building. We also look forward to developing new relationships with the many law firms and professionals with offices in and around Gateway Center.
The professionals at Robleto Law remain committed to providing the high quality legal services our clients have come to expect. We very much hope that our existing and past clients will drop in for a visit.
Robleto Law, PLLC | Three Gateway Center | 401 Liberty Avenue, Suite 1306 | Pittsburgh, Pennsylvania 15222
Pittsburgh Bankruptcy Attorneys.
How Applying Your Tax Return to a Bankruptcy Case Could be a Prudent Financial Planning Stragey
For many trapped in the cycle of credit card use and minimum payments, the question of how to use a tax refund is not a simple one. Having access to cash is appealing. For a short time at least, you will have ready cash on hand and you will be able to make the minimum payments on your credit cards. On the other hand, you could also apply your tax returns to your credit cards and begin to chip away at your credit card debt. The first path is almost never a sound one. A tax refund is a once per year occurrence–the money will soon be gone but your credit card debt will remain. Applying your tax refund to your credit card debt could make sense but it might not. Let’s consider a couple of hypothetical situations.
First, let’s assume that you owe $5,000 in credit card debt with no other significant unsecured debt and you are current on all of your debt obligations. If you receive a tax refund of $3,000 and you exercise the discipline required to plunk all of that down on your credit card obligations. The result here could be good. Your debt to income ratio will improve and you will be better situated to pay down the credit card debt over the coming months.
Second, let’s assume that you owe $15,000 in credit card debt and another $10,000 in unpaid medical bills. You are consistently behind on your credit card bills and are routinely penalized with late fees and interest charges. The same $3,000 refund will not put you in a better position to address your debts–rather it is something like dropping a teaspoon of water upon a raging fire. Your financial position and credit score were poor prior to your receiving your tax return and will not be substantially improved by handing your tax return to your creditors. Moreover, just as in the prior example, spending your refund on day to day living expenses offers no hope of long term improvement in your financial position.
Thus, in the first hypothetical, paying down debt with your tax refund is sensible. In the second, it is not.
Tax Return and Bankruptcy – A Viable Solution
The debtor in our second hypothetical, with $25,000 of unsecured debt and a $3,000 tax return could be better served by filing a chapter 7 bankruptcy case. A case under chapter 7 of the United States Bankruptcy Code would allow that debtor to get a fresh start. Most consumer chapter 7 bankruptcy cases last a few months and debtors never see the inside of a court room (rather, they simply meet with a trustee at a meeting of creditors that lasts only minutes). While certain types of debt are not dischargeable (e.g., student loans, domestic support obligations and some tax obligations and criminal fines), most common unsecured debt (like credit card debt and medical debt) is dischargeable.
By using part of the $3,000 tax return to file a chapter 7 bankruptcy case, the debtor in our second hypothetical has a drastically improved debt to income ratio and more available cash from month to month. That newly available cash flow can serve to improve quality of life and enable the debtor to begin to accumulate savings and prepare for retirement. While the filing of a bankruptcy case does adversely affect one’s credit score, if your credit is already poor, filing a bankruptcy case can put you on the quickest path to rebuilding your credit by responsibly paying down your debts as they become due. Contact a Pittsburgh Bankruptcy Lawyer today to find out whether a bankruptcy case could improve your financial future.
© 2014 ROBLETO LAW, PLLC
We are a debt relief agency, we help people file for relief under the United States Bankruptcy Code.
Who May File a Plan in a Chapter 11 Bankruptcy Case
The debtor in a chapter 11 case always has standing to file a plan of reorganization. In fact, during the “exclusivity period,” only the debtor has right to file a plan. The exclusivity period starts out as the first 120 days after the filing of the chapter 11 bankruptcy case or, in a small business case, the first 180 days following the filing of a bankruptcy petition. Often, debtors seek extensions of their exclusivity periods. While the requirements and timing for such motions vary between small business cases and chapter 11 bankruptcy cases that are not designated small business cases, extensions are routinely granted when debtors are diligently working toward resolving matters in order to file a confirmable chapter 11 plan of reorganization.
Filing a Chapter 11 Bankruptcy Plan After Exclusivity Has Lapsed
When the debtor’s exclusive right to file a plan of reorganization lapses or is terminated, any “party-in-interest” can file a plan of reorganization. The term “party-in-interest” is not defined in the Bankruptcy Code but so many courts have taken up the question that bankruptcy attorneys have a good concept of its boundaries. As mentioned, the debtor is always a party-in-interest with standing to propose a chapter 11 plan of reorganization. The Bankruptcy Code also confers standing upon creditors of the debtor thus, outside of the exclusivity period, creditors have standing to file chapter 11 plans of reorganization. Interestingly, the term creditor is so broadly defined in the Bankruptcy Code that any party with a claim against a debtor is considered a creditor. A claim includes rights to payment and equitable remedies that have not been filed or reduced to judgment. In fact, a party remains a “creditor” of a debtor even if the debtor vigorously disputes any liability to that creditor.
But party-in-interest standing goes extends beyond the debtor and its creditors and extends to any party whose interest could conceivably be affected by the confirmation of a chapter 11 plan. Many courts have noted that the intent of Congress was to encourage greater participation in chapter 11 cases. Effectively, party-in-interest standing is not a limit at all but, rather, an invitation to participate–the only real limit is the bare limit imposed by Article III of the United States Constitution.
To begin with, the debtor has the right to file a plan. If exclusivity terminates, then any party-in-interest may file a plan of reorganization in a chapter 11 bankruptcy case. To determine whether you may propose a plan of reorganization in a chapter 11 bankruptcy case and whether becoming a plan proponent makes sense, you should consult an experienced Pittsburgh Bankruptcy Lawyer.
Many individuals who were debtors in a prior bankruptcy case and who fall upon hard times a few years later want to know whether they can file another bankruptcy case. The answer to that question very much depends on several factors including (i) the timing of the prior bankruptcy case; (ii) the chapter under which the prior bankruptcy case was filed; (iii) whether the debtor received a discharge in that prior bankruptcy case; (iv) the chapter under which the debtor wishes to file a subsequent bankruptcy case; and (v) whether or not the debtor needs or expects a discharge.
If your prior bankruptcy case was dismissed with prejudice, generally, you will be unable to file another bankruptcy petition for a period of 180 days. There are many reasons why a bankruptcy court could dismiss a case with prejudice but, generally speaking, when a debtor has acted in good faith but a bankruptcy court must still dismiss a bankruptcy case, the order dismissing the case will be without prejudice to refile.
Past Bankruptcy Filing Eligibility for a Discharge Under Chapter 7 of the Bankruptcy Code
If you have a received a prior discharge in a case under chapter 7 or a case under chapter 11 of the Bankruptcy Code, you are not eligible to receive another discharge unless 8 years have elapsed between the date upon which you filed the prior case and the date of filing of a subsequent bankruptcy petition. If your prior discharge occurred in a case under chapter 12 or chapter 13 of the Bankruptcy Code, the waiting period is 6 years in most cases. However, if in your prior chapter 12 or chapter 13 bankruptcy case you paid your unsecured creditors 100% of their allowed claims, you would be eligible for a discharge under chapter 7 without any waiting period. Also, if in your prior chapter 12 or chapter 13 bankruptcy case, you paid your unsecured creditors 70% of their allowed claims, proposed that prior chapter 13 bankruptcy plan in good faith and it was your best effort, you will also not be held to the 6 year bar for a discharge in a chapter 7 bankruptcy case.
Past Bankruptcy Filing Eligibility for a Discharge Under Chapter 13 of the Bankruptcy Code
You are not entitled to receive a discharge in a case under chapter 13 of the Bankruptcy Code within 4 years of having received a discharge in a case under chapter 7, chapter 11, or chapter 12 of the Bankruptcy Code. Once again, the waiting period is less for a prior case under chapter 13 of the Bankruptcy Code. In that instance, you are barred from receiving a discharge in a chapter 13 case within 2 years of having received a discharge in a prior chapter 13 case.
As you can see, determining eligibility for a discharge when you’ve filed a prior bankruptcy requires careful attention to the facts of your case. Additionally, even if you are not eligible to receive a discharge, you may still wish to file a bankruptcy case for other reasons. For example, a person who has fallen behind on their mortgage payments may wish to file a chapter 13 bankruptcy case for the benefit of the automatic stay and to have the ability to repay the arrearages through a chapter 13 plan over a period of 3 to 5 years. As with most bankruptcy questions, it is best to discuss them with an experienced bankruptcy lawyer during a free initial consultation.
Robleto Law, PLLC