DON’T GO BANKRUPT, BUT IF YOU DO Trained Professional Has A Figurative Ladder To Help You Climb Out Of The Hole
Credit Cards, Mortgages, Bankruptcy & the time of the year.....
Somerset, NJ (PRWEB) December 3, 2005 -- he new personal bankruptcy procedures now make filing for personal bankruptcy a more daunting task. The do’s and don’t now require a trained professional to navigate the murky waters. What is now allowable, under what statutes a person can now file under, what is protected and it is dependent on where you live and what your possessions are, it’s enough to confound the proverbial Philadelphia lawyer.
“We see people pay their credit cards first and then pay the mortgage. If a person is having problems paying their debt it’s more important for them to pay their mortgage first then the credit cards and if they keep their mortgage as current as possible, we can do something,” says Bruno Viscariello, President, First Hallmark Mortgage Corporation. He adds, If a person keeps their mortgage current, it allows us to lend them more of the value of their home, regardless of the credit card repayment and we can help them structure a plan to stay out of or get out of bankruptcy.”
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Bankruptcy Reform Act) is now in place. The new law puts restrictions on how high Chapter 7 bankruptcy filers' incomes can be and includes a longer processing time, which significantly raises the average cost of filing. The changes increased filing costs and requirements, making it tougher for many individuals to have their debts excused.
Analysts estimate that there were more than 500,000 U.S. bankruptcy filings in the week prior to this past October 17, when the bankruptcy law changed and
1.58 million personal bankruptcies in all of 2004, according to the Administrative Office of the U.S. Courts.
According to Viscariello, “The new law will reduce the number of people able to file for Chapter 7 bankruptcy and force more people to file for Chapter 13.”
Chapter 7 is the more popular of the two forms of personal bankruptcy. According to the American Bankruptcy Institute, about 70 percent of the personal bankruptcies filed were Chapter 7.
Chapter 7 bankruptcy is the preferred choice because it dissolves certain debts. It eliminates credit card debt and some medical expenses, the two most common reasons people file for bankruptcy.
“But even after someone files for Chapter 7 bankruptcy, many debts remain such as mortgages, student loans, certain medical bills, child support, any personal loans they may have taken from friends or family, and often legal fees. Therefore, it is inaccurate to state that people who file for Chapter 7 escape from their debt. Filing for Chapter 7 merely gives people the opportunity to cut some of their debt and get their finances back under control,” says Viscariello.
The other form of personal bankruptcy, Chapter 13, does not dissolve debt, but rather shrinks it so debtors pay back their debts over a three- to five-year period. The terms and conditions are dictated by the court. Typically, people will pay off a smaller portion of their debts by filing for Chapter 13.
Viscariello asks the question, “Would you like to pay-off your chapter 13 bankruptcy early?” He gives advice on how his company tackles this issue:
| | - The first step is for First Hallmark to obtain your current credit score and to study your payment history. Your credit score is used in 75% of all mortgage decisions. Even though you are in Chapter 13, your scores are probably not as bad as you think. As long as your median score is over a 500, you will meet the minimum score requirement for the plan. Your pay history to the trustee and mortgage payments outside of your plan will also determine your eligibility.
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| | - Next, we obtain payoff information from your bankruptcy trustee as well as balances for your current mortgage(s). After we have a total for all of your liabilities, we research your current home value to determine whether or not there is enough equity in your property to pay off your secured debt. If we determine there is enough equity to support the refinance transaction, an appraisal of your property must be completed. The appraisal usually costs between $275.00 and $350.00-this represents the only out of pocket expense that you will incur. Any other costs will be paid by the proceeds of your loan.
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| | - Upon satisfactory appraisal, you are placed in First Hallmarks Credit Rehabilitation Program. This program usually saves you an average of $250.00-$450.00 a month and will begin to re-establish your credit immediately! In addition to saving you money and repairing your credit, this program has a bigger benefit. Bankruptcies usually consist of secured debt (mortgages or car loans) and unsecured debt (credit cards etc.). The secured debts are the ones that get paid--the unsecured debts usually don't. The unsecured debts are still considered your debt until your bankruptcy has been closed and completed. By paying off your bankruptcy early you are protecting yourself from any unsecured debt that was included in your bankruptcy from reattaching to you if for any reason you should fail to make your trustee payments. Don’t leave yourself exposed to this potential risk.”
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Filing for personal bankruptcy, regardless of which type, will take more time and expense. Under the new law, 180 days before filing for bankruptcy, people must go through a complete analysis of their budget and options available to them for restructuring their debts. Evidence that the bankruptcy filer has undergone credit counseling is now necessary.
A "means test" has been added that states if a household's income is less than the state's median level of income for households of the same size, they can file for Chapter 7 bankruptcy; otherwise they must file for Chapter 13. This test will require considerable attorney time, thus significantly increasing the overall cost of filing for bankruptcy. Even if you meet the means test requirements, the court can still decide that you have recklessly gone into debt and dismiss your Chapter 7
First Hallmark’s most notable program, which accounts for 50% of their business, is the Bankruptcy Bailout Program. It allows clients who have filed Chapter 13 bankruptcy to avoid foreclosure on their homes. While some other mortgage companies participate in these programs, typically it only accounts for 10% of their business, while other major companies do not offer them at all.
filing.
Even if someone can file for Chapter 7, it will no longer be the least expensive option, consequently hurting those who can least afford it. Viscariello concludes, “It is our mission to provide high quality financial programs at the most competitive rates, tailored to unique situations. First Hallmark has a program for borrowers with all types of credit histories.”
About First Hallmark Mortgage Corporation:
First Hallmark Mortgage Corporation is a mortgage lending institution which prides itself in providing high quality financial services to the public; licensed to make loans in all areas of Delaware, Connecticut, New York, New Jersey, Pennsylvania, Maryland and Florida.
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