How do I save my house from foreclosure and bankruptcy? Well, in order to do so, you’ve got to do a chapter 13, not a chapter seven. Obviously you’re not going to liquidate when you’re trying to hold on to the property. So let’s say, for example, you are $10,000 behind. Well, you know what, for argument’s sake, let’s say you’re 60,000 behind. That’ll make it a little easier. In your normal chapter 13, which, actually, due to COVID, can be extended a little bit longer to make it easier, up to 72 months, normally you have a 60-month maximum time to pay off all of your secured debt for property that you want to keep, if you follow me. Your unsecured debt, doesn’t matter how much you pay.
It seems pretty clear that COVID-19 is spiking again. So we may be probably will be extending the telephone hearings. Your income may drop again. So I just want to reiterate the points. If one silver lining, if you’ve been wanting to file bankruptcy, particularly chapter seven, or even need a lower payment than chapter 13, when you looked at, if you looked at it before and it was just too much. If your income has dropped through this COVID, most people aren’t getting overtime unless they’re in certain essential positions. And the future is uncertain.
It doesn’t require much effort on your part other than taking your credit counseling classes before and after filing, giving me the information that I need, showing up at your creditor meeting, or in this case now calling into your creditor meeting and signing any reaffirmations that you need to get.
As soon as you file, nobody can garnish you. Nobody can proceed in court against you. Nobody can even call you. So you get that breathing room and you get them off your back. So garnishment is typically the big thing with a Chapter 7 person that enables them to now succeed.
There’s income requirements for Chapter 7. If you make too much money, you can’t do it. For example, in Oklahoma now, it’s in the forties. It’s not a hard line, if you have expenses. If you make too much, but you have expenses valid that pull you down, you can still make it.
It looks like COVID-19 might be going away, but if your experience or perception is anything like mine, this may be coming and going in waves. Of course, I don’t want to say anything I don’t know to be true. Not entirely sure there’s been a spike or not a spike. But a few places have decided not to open so soon or to close back up, or at least that’s the rumor I hear. So this thing may be going on a little longer than we expected. May not. But if it does, remember, this is probably for many people the best time to file a Chapter 7 they’re going to find. Income’s down, you could do it all by telephone and get it done quick.
If you file now, this may be really helpful to you. Because of the stimulus, maybe a second round or the SBA loans or Paycheck Protection Program, if your income has gone down or if you’re below the cutoffs for Chapter 7, which again, you’re in the 40s for one person, you just figure, add about 9,000 on top for each other member of your household, the gross income, you fit in there now, and you’ve got a car note and you owe a lot more than what it’s worth. There’s a power in a Chapter 7 that isn’t used a lot, but it’s quite something, and it’s called a redemption.
To have a successful Chapter 11 it’s going to come down to the realism of the assessment in the beginning. Can this business be turned around? The questions there are, do we have any assets? Do we have any demand for our product or service? Do we have creditors who will still work with us? Do we have the human resources that we need to be successful?
A chapter 11 has the most participation by your creditors by far, and also by the trustee. You are what’s called a debtor in possession. So you are running the day to day operations of your business under the authority and supervision of not only the trustee, but essentially your creditors who get to have a recognized creditor committee and work with you and have to approve eventually your chapter 11 plan.
This is meant for a business, that’s the purpose of a chapter 11, and it’s meant for a business that has a chance for success. So, unfortunately if you have a business that simply isn’t going to see any daylight, you are going to go to tremendous expense and trouble for a chapter 11 that probably ultimately won’t succeed.
The dynamic here is basically the committee of creditors, and as I said sometimes creditors can involuntarily force a company into a chapter 11 if they are in effect ignoring their insolvency. But the dynamic is basically, can the company conduct its operations in such a way that a partial or total discharge of some of its debts will benefit enough of the creditors who can get more of a return on their outstanding debt than they would get if the company simply dissolved and the assets were subject to attachment for judgments.
So in order for a business to file, and it doesn’t necessarily file all this at once, it will file its petition for Chapter 11 relief and the documents that will need to be filed at some point to support that are going to be assets and liabilities, list of all contracts and leases, income and expenditures, the basic financial documents.
Chapter 11’s are much more complicated than your other Chapters, basically what it boils down to is a business that, facing debt, wants to reorganize itself. In certain cases an individuaol can file as well, although that’s much more rare. This can be filed by the business itself voluntarily, or this can be filed involuntarily against a business by its creditors.
Why this may be a once in a lifetime opportunity for you to qualify for a seven or have a manageable chapter 13 payment, so the silver lining of this frightening Coronavirus epidemic. So, finishing up the series, just going to do an overview. We talked about four amazing reasons why this could be the best time for you to file.
You can do a bankruptcy without leaving your home. In fact, with only one original, well, batch of original signatures that you would need to mail in. Everyone understands you’re not supposed to leave your house. So for example, if you hire me, I can get you the packet either by email or fax, if you have that capacity. You can get everything back to me that way.
Secured loans are things you’re going to keep, your home mortgage, your car payment, certain other loans with collateral or even some unsecured loans that you may be wanting to keep for whatever reason. Most of them, if not all of them, are offering forbearance, letting you skip the next two or three months’ payments, put it on the back end of the loan or foregoing any kind of credit reporting or penalties for not paying for a month.
Lets discuss how your lowered income or loss of a job may help you qualify to do a chapter seven when you wouldn’t normally or give you a much lower payment in a chapter 13 then you would have had before this crisis.
This may be the best time you will ever have, to file your chapter seven or chapter 13 bankruptcy. So I’m going to go over one reason every day, the first four days in this particular series. This is day one and then at the end, we’ll do an overview of all the reasons. So number one, why is now a good time to do your bankruptcy? Your stimulus. So almost all of you would qualify for and have received or will receive a $1,200 stimulus check. And if you have any kids, you get 500 a piece for your kids. So, that’s just about what you need to do a bankruptcy.
I’m just going to reiterate this may be the best time you will find in the foreseeable future and in recent memory to file either a chapter seven or chapter 13 consumer bankruptcy. If you have been wanting to file a seven but your income’s been a little high, making you have to do a 13 and make a payment for five years, my guess is that recent developments will allow you to do that seven.
Anyway, in the midst of the pandemic, I’m just reiterating again, file now. Got your stimulus check. You can pay a bankruptcy, a chapter seven will get rid of all your unsecured debt, and put you in a position to start over fresh without anything hanging over your head.