Q. I have received letters and solicitations from individuals and companies telling me that I can save my home and avoid filing Bankruptcy. Are their claims true?
A. The short answer is NO. These are predators, preying on your assumed lack of knowledge about how bankruptcy works, how your credit scores work and on your fear of losing your home. These people want to “steal” your home from you and they do this for a living. You owe it to yourself and to your family to speak to a knowledgeable bankruptcy attorney before you even consider such a drastic step as responding to one of these solicitors. A free consultation with Capone and Keefe can explain how the foreclosure process works, how the bankruptcy process works and how your credit scores are affected. Capone and Keefe can lay out all your options for you so that you have the information necessary to make an informed, knowledgeable decision about the course of action you should take. At the very least, you owe that to your family and yourself.

Q. I am presently out of work or disabled and have limited income. Is it still possible to file a Chapter 13 and save my home from foreclosure?
A. Absolutely. While a Chapter 13 does require that an individual to have regular income, that income can come from any number of sources, including unemployment, Social Security, family contributions, rent, etc. Additionally, there are numerous creative plans of reorganization that can be filed with the Bankruptcy Court, all of which will result in your saving your home from foreclosure. Capone and Keefe takes special pride in its ability to craft a Chapter 13 Plan that fits your specific needs.

Q. If I file a Bankruptcy will my credit be ruined forever?
A. Absolutely NOT. What you need to understand is that if you are presently in the position of considering filing a bankruptcy, your credit is most likely damaged. By filing a Chapter 13 and stopping the downward spiral, you will actually begin to rebuild your credit. It will depend on what you do post-filing. If you make all of your post-filing mortgage payments in a timely fashion, you will begin to rebuild your credit. If you make all of your Trustee payments in a timely fashion, you will begin to rebuild your credit. Capone and Keefe work closely with various mortgage companies that have very good “bankruptcy bailout” programs. We have had very good success refinancing clients out of their Chapter 13 case once they have re-established credit worthiness. Capone and Keefe can place you in touch with these mortgage companies prior to filing your case so that you can see what you will need to accomplish within your Chapter 13 case to re-establish your credit.

Q. Are there alternatives to filing bankruptcy?
A. Sure, if your financial problems are only temporary, it is sometimes possible to negotiate with each individual creditor and request that each creditor accept lower payments or grant an extended payment schedule. If you are in foreclosure, most mortgage companies have a Loss Mitigation Department, whose purpose is to attempt to help its customers who have defaulted on their mortgage loans. These departments will generally request a significant amount of financial information from you, similar to when you originally applied for the mortgage, and then will normally takes months before they inform you of whether or not they can help you. Be very wary of counting on this route being the solution to your problem. For starters, the mortgage company will proceed with its foreclosure action the entire time you are dealing with the Loss Mitigation Department. Secondly, more often than not, the best deal the mortgage company will offer you is to pay half of your arrears immediately, with the other half paid out over 6 months, in conjunction with the resumption of your regular monthly mortgage payments. However, by the time the Loss Mitigation department makes this type of offer, the arrears are so significant that most people can’t come up with that type of lump sum payment.

Q. What is the difference between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy?
A. Primarily the difference is that a Chapter 7 is liquidation and Chapter 13 is reorganization.

In a Chapter 7, a Trustee is appointed to administer the assets of your estate. The Chapter 7 Trustee’s function is to determine if there is any value in your personal and/or real property above and beyond what the Bankruptcy Code allows you to exempt. The Chapter 7 Trustee will liquidate any non-exempt property and use those proceeds to pay your creditors. Upon completion of the liquidation process or upon the Trustee’s determination that there are no assets to be liquidated, you will be discharged from your remaining unsecured, dischargeable debt.

In a Chapter 13, a Trustee is appointed, however, you remain in possession of all of your assets. In return, you file a plan with the Bankruptcy Court outlining how you will reorganize. Certain debts have to be paid back, like mortgage arrears, real estate tax arrears, and certain income tax debts, etc. While others like credit card debt, medical bills and certain income tax obligations may be paid back in full, partially or not at all, depending on factors specific to your particular situation. Upon completion of your plan, which can range in time period from 36 to 60 months, you will receive your discharge.