Our economy is built upon consuming goods and services. We are often encouraged to purchase with credit that for which we cannot afford to pay for with cash. If, because of sickness, a job layoff, or just poor economic and estate planning, you no longer can afford to pay off your consumer debt, you might consider hiring an attorney in order to file for Chapter 7 Bankruptcy in order to obtain a fresh start for your personal finances. In a time when billion-dollar financial bailouts are being extended to prominent banking institutions, giant insurance carriers and well established automobile makers, you deserve to obtain your own personal financial relief.

In order to qualify for a Chapter 7 Bankruptcy, a debtor must meet certain eligibility requirements. First, a debtor may file for Chapter 7 Bankruptcy only once every eight years. Second, the debtor must pass the “Means Test” prior to qualifying for a Chapter 7 filing. As a general rule, the debtor’s average monthly income during the six months period preceding the filing should not be higher than California’s median income. If the debtor’s average income is more than the median, he may not be able to file for Chapter 7 Bankruptcy if his disposable income would allow him to pay off his creditors a certain sum of money over a fixed period of time.

Chapter 7 Bankruptcy takes about three months to complete. Prior to petitioning for Bankruptcy, many candidates will consult an attorney and most filers will be required to consult a nonprofit credit counseling agency. The reasoning behind credit counseling is to figure out whether you can utilize other options for debt management. Once credit counseling is complete, your attorney will file the Voluntary Petition with the court requesting a discharge of debts. After this Petition is filed with the court, the court enters an Order for Relief, commonly known as, the Automatic Stay, which obligates all creditors and collection agencies to stop all collection efforts. This means that most creditors must immediately stop any forms of harassment, terminate their demands for repayment of debt, and halt their threats of pursuing legal action against the debtor.

Filing for chapter 7 bankruptcy also means that the debtor is placing all his debts and assets, including those assets held in living trust, in the hands of the bankruptcy estate. The bankruptcy court controls these debts and assets by assigning a trustee to manage each chapter 7 bankruptcy case. The trustee’s role is to obtain money from the debtor’s Bankruptcy estate for the benefit of unsecured creditors. However, in most cases, the trustee cannot touch the property which is considered exempt. Exempt property is the property a debtor can retain during and subsequent to Bankruptcy. Your attorney will be able to determine in advance what assets are likely to be exempt.

California has created its own individual exemption system. There are two different sets of state exemptions which California uses in the Bankruptcy process. These are the standard California exemptions and the alternative California exemptions. The later, with a few important deviations, are quite similar to the federal exemptions, which for the most part are not available for use in California. A debtor filing for Bankruptcy in California must satisfy the two year residency requirement in order to use California’s exemption system. Generally speaking, a debtor can exempt both real and personal property owned by him, although most exemptions have a cap amount which is continuously updated by the California Judicial Council. One of the most important exemptions offered is the homestead exemption which allows a debtor to retain the equity he amassed in his home. Preparation of a California homestead exemption by a qualified estate planning attorney allows a debtor to retain between $50,000.00 and $150,000.00 worth of equity in his primary residence when declaring a chapter 7 Bankruptcy. In today’s California real estate market, property values are fast declining. This means that many debtors who were effectively precluded from filing for Chapter 7 Bankruptcy during the housing bubble, due to significant equity in their homes, are now free to discharge their debts in Chapter 7 Bankruptcy, and retain their homes.

When filing for Chapter 7 Bankruptcy, a debtor must choose either the standard or the alternative set of the California’s State exemptions, and cannot pick and choose between exemptions contained in both systems. Your bankruptcy attorney will point out that in many cases even if the debtor has property that is worth more than the exemption amount allows, the bankruptcy trustee may still not want to deal with that property, if the trustee sees that little money can be recovered from taking the asset. In such a case, the trustee is likely to abandon the property, and the debtor will be able to retain it. For the most part, such abandoned nonexempt property can be retained by the debtor through redemption, which simply means offering the creditor a lump sum payment equal to the property’s current replacement value. Redemption eliminates all liens on the property. Another alternative available to the debtor is to reaffirm the debt and keep paying for the property. When a debtor reaffirms a debt, both the creditor’s lien on the property and the debtor’s personal liability under the reaffirmation agreement survive Bankruptcy.

Finally, it is important to note that in some instances a debtor may be able to eliminate or reduce certain liens attached to his exempt property. This procedure is known as lien avoidance. How much of a lien can be eliminated depends on the value of the property and the amount of the available exemption. However, not all liens can be wiped out. For instance, the remedy of lien avoidance cannot be used for home equity loans or second mortgages if a debtor files for Chapter 7 Bankruptcy, but might be available if he files for Chapter 13 Bankruptcy, and strips off his second mortgage, treating it as an unsecured debt in the Chapter 13 plan. It is always best to consult with an experienced Bankruptcy attorney prior to filing for Bankruptcy, so that you can get a better understanding of your legal rights and options.

For more information please visit: http://www.floridalawattorney.com

A foreclosure on your credit record will probably lower your score around 260 points. That number is not definitive, however it is an approximate. Even if you have phenomenal credit it will lower your score to a negative number. There are very few situations where a foreclosure would be the best option.

There was a young couple who lived and owned a home in Minnesota. They bought their home at the end of the housing boom so they paid top dollar for it. Then they were transferred to California at the beginning of the housing crisis and could not afford to sell their home as they would have to sell it for much less than what they owed.

They decided to rent the house, but again because of the housing crisis they were only able to rent it for $1000 less than their monthly mortgage payments. The husband, who was the bread winner, worked in the banking industry and was laid off a year later because the housing crisis infiltrated the banking industry. At this point the couple had to choose between paying a mortgage on a house they no longer live in, or pay rent so they have a roof over their head. They ran through all of their options with the mortgage company but their lender was not willing to let them do a short sale or loan modification and they had no choice but to foreclose on their home.

The above scenario is a very unique case of someone who has gone through all of the options and foreclosure was the best choice. However it will do the most damage to your credit score. If you are in this situation you should consider all of your options.

Contact your mortgage company and see if they will allow you to do a short sale. There is some debate as to whether a short sale will adversely affect your credit. Some say that as long as you stay current with your mortgage payments during the course of the sale you it will not show up on your credit record. However if you are in a situation where you have to put the house up for a short sale you may not have the funds to pay full mortgage payments. Mortgage companies also will not grant you a short sale if you cannot provide proof that a short sale is necessary.

Continued late payments will also adversely affect your credit report dramatically. Your best course of action would be to talk to your Mortgage Company As Soon As Possible and try to work out a solution before you are deficient on your loan. Ask them about doing a loan modification to lower payments.

For more information please visit: http://www.floridalawattorney.com

There are many reasons why you might find yourself facing a foreclosure. After a job loss or a major problem in the family, it can be easy to fall behind in your mortgage payments. Once you are faced with foreclosure you have to start making decisions and working fast to stop foreclosure.

It can be simple to look back and say what you should have done to stop foreclosure. It can actually be helpful to do this because you can then see how you got where you are so you can avoid it happening again. Many times a foreclosure results form a snowballing of events that leads to financial problems that then turns into a missed mortgage payment or falling behind.

You can better deal with foreclosure after you understand how you can stop it and how to prevent it from happening again. Facing foreclosure after a job loss, for example, is common. It is something that happens to many people. It is also something that can be avoided with careful planning.

Foreclosure after a job loss should not be something you expect to happen. Many people are aware that their job may be at risk before they lose it. Everyone should have a plan as to what they would do if they were to lose their job. Having a savings helps, but you should also decide what steps you will take if you know you will miss a mortgage payment.

You should always stay in contact with your lender. You cannot avoid making a payment forever. Eventually the lender will give up and start the process of foreclosure. After that process has begun it can make it more challenging to stop.

You should try to make arrangements for payments and explain your situation. It is important that you know lenders do not want to take your home. They actually would prefer that you keep it. They will be very willing to work with you to keep your home out of foreclosure.

For more information please visit: http://www.floridalawattorney.com