Your credit report, get it while it’s hot!

As you already know, your credit report is everything these days and you can’t do much without it. Once you file for bankruptcy, your credit rating goes out the window. This of course makes it very difficult for you to get credit again, apply for loans, rent property etc. One thing you can do prior to filing your bankruptcy petition is to get a copy of your credit report from the three credit bureaus while it’s still in good standing.

You’ll find quickly that after bankruptcy things get more complicated, but there will be times when you might encounter a company or someone who may be willing to work with you despite your current credit score. When someone is considering approving you but needs some convincing, your previous credit history could be the key to closing the deal. Of course this is not going to apply to everyone, since some people have bad credit all their lives and most creditors will simply not care how good your credit was before you filed. So these are special circumstances in which it’s important that you actually had good credit with a good score prior to filing bankruptcy, it can give you some leverage in certain negotiations.

With the current state of the mortgage market and the number of foreclosures and bankruptcy cases around the country, many people are losing their homes and in some cases voluntarily surrendering their homes to their lenders after filing bankruptcy chapter 7. Whether you willingly surrender your property or it is foreclosed by your lender, you’re going to need to live somewhere, and having a copy of your credit report prior to filing could make a difference.

Another thing to keep in mind when you go looking for a place after you leave your home is to try and stick to places that are being rented by individual owners. Apartment complexes are going to have management companies who often require the typical procedures for renting, which are a credit check, references, rent history and a long application and normally frown when they see consumer bankruptcy entries on credit reports.

Renting from a property owner who manages their own property could be a better option since they’re usually more motivated to keep their places rented. Just be honest about your bad credit and bankruptcy case when you approach them. You may find that they can be more understanding and sympathetic than a management company. Often these real estate investors will hire management companies to do this for them. These are usually smaller companies that work hard to keep a high level of occupancy and can be very flexible, you just need to ask.

If you don’t have much choice when you start looking for a place, and decide to stick to the apartment complex settings, look for places that show move-in specials like 1st month free, or 1/2 month rent for 2 months etc. These incentives are a sign that these properties have more vacancies than they’d like, so when you apply they may be willing to overlook your bad credit and bankruptcy record, and once again if you can prove to them that prior to filing bankruptcy or your foreclosure your credit was good, it’ll give them more confidence in renting to you.

Obviously once you get approved you don’t want to mess it all up by being late or missing payments. This will work against you in so many ways, since now you’re in fact working towards rebuilding your credit, so getting positive entries and good referrals are the things that you should be striving for. The last tip for making your new landlord happy is to offer to pay them rent via direct deposit, this can really increase your chances of getting approved and of course you’re creating a great referral.

Assuming you have exhausted every option and found no clear alternative for bankruptcy, we’ll proceed with walking you through the process of how to file bankruptcy by addressing the two most common ways to do this. First by filing with a bankruptcy attorney and then filing bankruptcy alone.

How to file bankruptcy with an attorney

One way to do this and the most common, is by simply contacting a bankruptcy attorney to prepare your bankruptcy petition and file your case. Your attorney will explain the process of bankruptcy and the terms of his/her representation of you. Some consultations are free and some you have to pay for. It really all depends on the firm’s policies, I would suggest you stick to saving as much as possible so try not to pay for a consultation and make appointments only with firms that don’t charge for this. Bankruptcy consultations should really be free.

Your lawyer will determine which bankruptcy chapter is best for you, based on your financial situation and by completing the BAPCPA’s bankruptcy means test, which helps him determine your eligibility. Write down all your doubts, concerns and questions about the process and when you get the answers write them down also. I would also suggest you seek consultations from at least three firms, shop around because not all bankruptcy attorneys charge the same fees. You’re looking for somebody who’s modest in pricing and who’s also honest and a little sympathetic to your case. To some lawyers you’re just another case number, while others will treat you with a little more respect and dignity.

Once you have got all your information from your attorney, take some time to study it all, and read over the notes you made when you asked questions. Discuss everything with your spouse if you’re married, let it soak, do some more online research on your own and read other people’s posts on bankruptcy blogs and forums.

The fees will vary per law office. Some are as high as $2000, while you may find others that only charge $700. It all depends on where you are in the country. Remember also that just because a lawyer charges a high fee, doesn’t mean that they’ll have the best service. You’ll also need to pay the court’s $299 filing fee if you’re filing bankruptcy chapter 7 or $235 if you’re filing bankruptcy chapter 13. These are fees that the court charges to process your case.

Your attorney will most likely give you a list of things he/she expects you to bring back with you when you’re ready to file bankruptcy. Here’s a quick list:

• Income Tax forms for the last two years
• Income information – current employer, two to three weeks of pay stubs
• Debts spreadsheet – a list of all your current debts including utilities and such.
• Valid identification – Driver’s license, social security card etc.
• Your credit report

Once you’ve provided all this information, your attorney will prepare the bankruptcy petition for you. When that is completed you’ll get a call back to sign your paperwork and then that petition gets submitted to the local bankruptcy court. Prior to your paperwork being submitted you must complete the first part of the credit counseling course required by the court. The second part can be taken after your meeting in court and before your discharge. The credit counseling portion of the process are new implementation of the bankruptcy law changes from Oct of 2005.

One your petition is filed, you’ll be sent an appointment letter for you to show up to court for your hearing, about 30 days from the day of your petition and you’ll be notified in writing with plenty of time about this as well.

During your hearing in court, you’ll meet the bankruptcy trustee assigned to your case. The trustee will examine your case and get a good idea for the reality of your situation. The trustee’s role is to make sure that your file is in order and that all expense reports are accurate and you’re not hiding anything, he also needs to find additional assets that can be liquidated so that your creditors can be paid before you can get a bankruptcy discharge.

You’ll be asked questions by the trustee during this meeting, but don’t get nervous and don’t sweat it, he’s only going over your paperwork and making sure everything you submitted is accurate. It’s not a court room scene from “law and order” it’s just a normal proceeding. Answer honestly and don’t bother providing any additional information outside of what’s being asked. Simply answer the question and wait for the next one.

Unless there is more information the trustee wants to see from you, you won’t need to go back to court again. At that point you can assume that your case is good to go and that it will be discharged. For this to occur another 2 to 3 months may go by if you’re filing bankruptcy chapter 7, otherwise if you’re filing chapter 13 your case can last longer since your repayment plan still needs to be submitted by you and approved. Don’t worry about the time it takes just use this time to save all the money you can and work out a plan of action for what you need to do after your discharge.

Filing Bankruptcy Alone

The procedure will be the same, though filing bankruptcy alone is harder and not recommended. When you file alone the court and the trustee will make the assumption that you have the knowledge to handle the proceedings on your own. If there are inaccuracies in your paperwork it will be your responsibility.

The first thing to do for your process is to download the bankruptcy forms from The US Courts website, these forms come with instructions and you must read these carefully since they also have detailed information on how to file bankruptcy for yourself.

Once you’ve filled out your forms, take the time to sign up for the credit counseling course and take the first part immediately, then you need to gather all your required documentation in the list above and head to court to file your case.

The same thing will happen here where you wait for your appointment letter then head back to court to meet with the bankruptcy trustee about your case. You’ll answer questions in the same fashion. Even when accompanied by a attorney, the questions will only be directed to you and your attorney will participate very little during this time, unless something specific is needed.

Often times when filing bankruptcy alone, you’ll end up returning to court because of something that’s missing from your file, and these are usually important pieces that most people will neglect. The instructions are there to guide you but often people forget or overlook certain things that can cost them to have to return to court or sometimes resubmit their bankruptcy petition again.

Another disadvantage of filing bankruptcy alone is that usually individuals think they can outsmart the bankruptcy trustee, and this is often where things go very wrong. People think they can hide assets or liquidate before filing without anybody knowing about it. This is very risky especially if these are paper assets or registered high valued items like a car or real estate property. That’s why hiring an experienced bankruptcy attorney is the best option, you’ll get all these instructions ahead of time an be advised about what to do and what not to do.

Once you get past the court hearing without any problems, then you should expect to get discharged within the next 2 to 3 months, in which case you should complete the second part of the credit counseling and be done with it.

You’ll receive your bankruptcy discharge via mail, when that arrives keep it somewhere safe and make sure you make copies to submit to any creditor that tries to collect afterwards, they may try, so keep your bankruptcy records in order and your discharge papers ready to present in case that happens to you.

Typically for pro-se filers (self filers) it is most adequate to file bankruptcy alone when there are no assets to liquidate and the filer is mostly burdened by unsecured debt like credit cards. In cases like this you would mostly likely file for bankruptcy chapter 7 and even if you don’t know much about how to file bankruptcy, you can, in most cases, handle your own file if you take the time to read the bankruptcy laws that apply to you. If you’re filing chapter 13 or a restructuring of your debts, this process will be awfully complicated and you should consult a bankruptcy attorney to handle your case.

The only other thing to do now is start all over, by monitoring yourself constantly and making the commitment that this will not happen to you again, many times people hear that this is not their fault and they take that to heart making them selves feel as the victims of debt. Unless you suffered unforeseen incidents such as identity theft, divorce or a death in the family, you have to realize that you were driving all along so take account of your previous actions and make sure you make a positive change.

Foreclosure is the process in which a lender takes possession of the financed property for lack of payment, with the intention of selling the property to satisfy the defaulted loan. The foreclosure process is ugly and it will leave a mark. By law all lenders must provide sufficient written notices to home owners before starting the process, and what’s considered sufficient will vary per state as well. When the bank’s notices of non-payment go unanswered is when foreclosure comes knocking on your door.

What options do you have?
You could qualify for special forbearance if you have lost your job or your cost of living has changed significantly or you’re experiencing any other financial situation that puts pressure on your ability to pay your mortgage. This is something you’ll have to approach your lender about and you must provide proof of your hardship to qualify.

There is something called a loan modification, which means that the original terms of the loan can be renegotiated and adjusted to fit your new financial situation. Again this will be up to your lender to approve. Lenders are not always sympathetic or understanding so you may need help getting through to them on this option and for that you should check out the free foreclosure help post where I discuss a really good source where you may be able to find the help you need.

The short sale foreclosure is when you try selling the property at a severely discounted price in order to make the sale transaction as quick as possible. If you have equity built up on your home you most likely will lose most if not all of it. You’ll need to hire a good Realtor who’s experienced in these types of sales to help you accomplish this. Most importantly however is that you get your lender to agree to this since it will in most cases mean that the loan balance on the property will also have to be discounted for you to proceed with the sale, meaning the lender loses money as well. Both parties must be in agreement before this can take place.

Another option, is a Deed-in-lieu-of foreclosure, where you voluntarily surrender the property to the lender. This obviously does not help you keep your house, it’s an option you can use when you know you can’t fight it anymore and must give up your home. For the lender to accept this option, you must have tried to sell the house and have attempted other options as well without success. This option can sometimes be beneficial to both lender and borrower, since it immediately releases the borrower from all responsibilities of the defaulted loan and for the lender it can avoid the timely and often costly procedure of foreclosing.

Things to beware about:
Once the lender files a foreclosure notice, this becomes public record. A lot of people access these records often with the purpose of contacting home owners to buy their homes and help them save it.

You must understand that there are people and businesses who make a living off of foreclosures. You’ll probably be approached and contacted by people who say they can help and some of these calls are legitimate but you need to be aware that they’re in for a profit that will most likely leave you short changed.

Since you may be in a desperate situation and you know you can’t save your home, you may be trying hard to save your credit, and often people agree to a deal that may be a temporary fix but are not necessarily good for them in the long run. Some of the most common scams out there are “equity skimming” and entities that post as “counseling agencies”.

Equity skimming consists of you doing a deed transfer of your property to someone who promises to help by selling the property quickly, the often will have you vacate as soon as possible and then they will rent the property to collect payments from that while they process a line of credit on your home then never being heard from again. Unfortunately signing the deed over to someone else will not release you from the responsibility of the loan.

Counseling agencies can sometimes help, but some will do nothing more than collect payments from you. Often times the services they offer are things you can do yourself. You should always deal with your lender directly and when that proves difficult then do research for a legitimate company that can negotiate for you.

It’s difficult to think clearly when foreclosure comes knocking so take some time to think clearly and realize first whether fighting to keep your home is worth the effort. If you feel it is and you want to convince your lender to give you a chance and require professional help, then start by researching companies at the Better Business Bureau and search for “foreclosure consultants”. You’ll get results for agencies who are registered with the BBB and many others who are not. So you want to start with the ones that have a record you can look over.

Last resort
When all else fails, which can happen if your lender is completely unwilling to work with you, you can always go for the last resort, bankruptcy. This is also going to require significant effort on your part to get ready and prepare your documents and contact the right attorney to represent you. Bankruptcy has a more severe effect so it’s important that you take the time to understand what it is, what it does, how to prepare and what to expect. Take some time to read about chapter 7 and chapter 13 since these are going to be the most relevant to someone in a position where they could lose their home.

I guess a lot of people would say that this is nothing more than someone being very negative about what the future has in store for our great state. However, I have seen the effects of the real estate collapse right here in Southern California, and I don’t know why anyone would call it anything else, I think some people are trying to remain optimistic about this especially those who could lose big.

Those who ventured in real estate for investment starting in 2002 to 2003, should have sold their investments prior to 2006 when the market peaked and began its decline. Obviously they would have sold these properties to people who probably could not afford conventional loans on these properties that during that time would have had an average cost of $520,000, so the problem was transferred from one owner to another and any family that bought a home at this price has now suffered a huge decline in value, what’s worse is if these families bought their homes at 100% financing under ARM loans or any other adjustable rate loan they’re going to end up surrendering their homes or in foreclosure.

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It’s really tough to argue with this message and carry on the same way we have been for the last 5 years. If anyone reading and watching this feels optimistic about the current state of the market, please explain why.

When the United States Comptroller General speaks about the state of the economy, you might want to listen. Who is the comptroller general? Well he happens to be the guy that keeps tabs on the many expenditures the country has and runs all internal audits on the financial proceeds of our government. America is going bankrupt and no one seems to care.

This is very serious, it’s down right scary and I think you’ll agree. What’s most disturbing about this report is what is said about government officials who already know about this looming event and are not even willing to talk about it. I find it hard to deny that this is not only possible, but it could already be in progress. America going bankrupt would simply mean another great depression that could last for many years, and if the spending habits do not change, how can it not go to this?

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When we look to the fed for an answer to this, it is often the same solution, which is to print billions of dollars more and force feed it to the economy. The idea is that we can pay for it later or it’ll pay for itself one way or another. This has been going on for decades and it has debased the value of the dollar to shameful lows and it really doesn’t seem possible that it can bounce back.