LEGAL WRITING SAMPLES
Writing Sample #1
How to Stop Foreclosure Using Chapter 13 Bankruptcy
Filing Chapter 13 Bankruptcy can stop foreclosure. In this article, we’ll take a look at this strategic move to help you assess if it’s a viable option that can help you save your home.
The Foreclosure Crisis and the Plight of the “Average Joe”
When the foreclosure crisis hit in 2007, many Americans had to face the fact that foreclosure might be on their horizon. The government came up with solutions like the Home Affordable Modification Program (HAMP), but for many homeowners, it never really panned out. Millions went on to lose their homes. Sadly, what they may not have realized is that filing bankruptcy could have been their ace in the ole.
If you're currently facing foreclosure, here's how filing bankruptcy may help you get a fresh financial start, and hang onto your home while doing it.
A Brief Look at Filing Chapter 7 Bankruptcy to Stop Foreclosure
This type of bankruptcy filing usually will stop foreclosure temporarily. In some situations, you might be able to free up enough cash -- by eliminating all of your unsecured debts -- to make your mortgage affordable. This all depends, of course, on how far in the hole you are.
When Chapter 7 bankruptcy is filed, a lender might require you to make all back payments in order to avoid foreclosure. This can get complicated -- and expensive -- quick, which is why a bankruptcy attorney should be consulted.
The Benefits of Filing Chapter 13 Bankruptcy
This type of bankruptcy which was created for those who can afford to pay back some of their debts over a period of time. One of the main benefits is the ability to keep all of your property using the power of an “automatic stay” granted by the U.S. legal system.
In 2005, this law was amended to stop people who were abusing the bankruptcy system. To explain, Congress felt that many individuals who had the ability to pay their creditors at least something on the debt owed weren't doing so. Hence, Chapter 7 bankruptcy was changed to include a "bankruptcy means test."
What is a Bankruptcy “Means Test?”
This is simply a test that determines your financial ability to repay debts. It will help you determine which kind of bankruptcy you're qualified to file (Chapter 7 or Chapter 13). It consists of two parts and takes a formulaic look at your income and expenses. FYI, If you fail the means test and don’t qualify to file Chapter 7 (where all of your debts are dismissed), you can still file for financial protection under Chapter 13 (where you will be put on a debt repayment plan).
Fast forward to 2008 and the collapse of the real estate market ... many individuals who previously only considered filing Chapter 7 all of a sudden saw the benefits of filing Chapter 13. It was as if Chapter 13 was created just for the crashing real estate market. How?
As the housing market went bust, many Americans who had purchased their homes at the peak of the real estate market were all of a sudden upside down (underwater) drastically. For those who didn’t lose their jobs and still had a good income, Chapter 13 presented an opportunity to renegotiate debts.
What Happens When You File Chapter 13 Bankruptcy
The debtor and their bankruptcy attorney are required to come up with a feasible repayment plan that lasts anywhere from three to five years. Debts are paid by priority, with secured debts (eg, car loans, home loans, etc.) at the top of the list. Unsecured debits, eg, credit cards, are at the bottom. Why is it structured like this?
Structuring debt repayments in this manner allows debtors to prioritize their financial obligations and pay the most important ones (eg, mortgage, car loans, etc.) first. Then, if there are any leftover funds, “unimportant,” unsecured debts get nominal amounts. Both forms of filing -- Ch 7 and Ch 13 -- share the power of the automatic stay, which means all collection and legal activities levied by creditors stop.
As the discussion here illustrates, filing Chapter 13 bankruptcy (or Ch 7 for that matter) is fraught with life-changing decisions every step of the way. That's why consulting a qualified bankruptcy attorney -- one familiar with the bankruptcy laws in your state/jurisdiction -- is highly advised.
Writing Sample #2
Can My Wages Be Garnered If My Home Is In Foreclosure?
A common fear for homeowners facing foreclosure is that their wages will be garnished. This can cause added stress because these are already difficult financial times. Following is some information that may allay your fears as you go through this trying process.
When Your Wages are Protected from Garnishment
As you go through the home foreclosure process, your wages cannot be garnished. The legalities behind this is that the home itself is pledged as collateral for the loan (mortgage) -- NOT your wages or any other property. So while you’re in foreclosure, your wages are safe from garnishment.
But, you’re not out of the woods yet.
What will happen moving forward if you are not able to become current with your mortgage is that your home will be sold. You have several options here. One of the most common is the deed in lieu of foreclosure.
A Deed in Lieu of Foreclosure
When the you (the homeowner) sign over all rights to the home back to the lender -- in lieu of allowing them to foreclose on the property -- it's known as a "deed in lieu of foreclosure." You can do a deed in lieu with recourse, or without recourse. What's the difference?
You could be held responsible for the balance when you do a deed in lieu "with recourse" -- but you can work out a deal with your lender. What you want from them is an agreement for a deed in lieu "without recourse." This means the lender can’t pursue you for any balance due.
Yes, your credit will suffer if you proceed with a deed in lieu of foreclosure (with or without recourse). But at this point, it's probably a moot point as your credit is pretty bruised anyway. But, this is something you can recover from, so it needn't worry you right now.
Wage Garnishment & Home Foreclosure: Your Rights When Dealing with Creditors
Some unscrupulous lenders will use the threat of wage garnishment to try to bully you into continuing to make mortgage payments –- even when you can’t afford it. Don’t fall for it. And by the way, this tactic is patently illegal.
Bone up on your consumer rights when it comes to debt repayment. They vary from state to state, but across the board, creditors can’t bully you, lie to you or threaten you on any level. Remember this when dealing with them -- whether you’re discussing wage garnishment during the foreclosure process, credit card or any other kind of debt.
Consult with a qualified bankruptcy attorney in your state to learn what your options -- and rights -- are. This way, you can make sound decisions based on facts, not fear.
Writing Sample #3
Should You Reaffirm Your Mortgage in a Chapter 7 Bankruptcy?
If you’re underwater on your home and you’re filing Chapter 7 bankruptcy, you should seriously look at the pros and cons of reaffirming your mortgage. Here we examine some of the pros and cons of doing so.
Exposure to Future Financial Risk
If you reaffirm the debt with your mortgage holder, you run the risk of being not being to walk away with a clean slate if your finances should change in the future. For example, while you may be able to afford your mortgage payments now, what happens if you or a spouse lose a job or your health suffers?
The whole point of filing Chapter 7 is to be able to walk away free and clear of all debt; to start with a clean slate so to speak.
You can stay in your home without reaffirming your mortgage. While your mortgage holder (your bank) can ostensibly foreclose on you, many will take their sweet time doing so if you remain current with your payments. As laws vary from state to state, be sure to check with a bankruptcy attorney in your jurisdiction before making any decisions.
The Credit Conundrum
Many people worry about their credit being hurt if they don’t reaffirm their mortgage debt. The reason is, when you don’t reaffirm, mortgage companies are not required to report your payment history to the credit bureaus. And, they’re not required to provide you with monthly (or any kind of) statements.
So if you’ve made on-time payments, your credit report will most likely not reflect this. When you weigh what reaffirming offers against what it strips you of though, even this may not enough of a reason to reaffirm, depending on your circumstances.
Benefits of Reaffirmation of a Mortgage in Chapter 7 Bankruptcy
Basically, reaffirmation reinstates the debt, which means that your lender can’t foreclose on you (if you remain current) and all of your payments (on-time or late) will be reported to credit bureaus. If you keep a good track record, of course, your credit score will reflect this.
On the flip side, just as on-time payments are reported, so are late payments. And if you miss a beat, your lender can still foreclose. So the two protections that reaffirmation offers can easily be lost if you find yourself in a financial bind down the road.
As far as reporting on-time payments to major credit bureaus, you can do this yourself by adding updates like on-time payments to mortgage companies to your credit report.
In short, if your home is underwater and you’re filing Chapter 7 bankruptcy, you may want to seriously consider not reaffirming. If you want to keep your home, simply stay in it and keep sending on-time mortgage payments to your lender. It’s highly unlikely they’ll foreclose on you.
Nothing said here is to be construed as legal advice. Laws vary from state to state, as do individual financial (and other) circumstances, so consult a qualified bankruptcy attorney in your jurisdiction for legal, binding advice.
Writing Sample #4
What You Can Legally Take from a Home After You've Been Foreclosed On
If you tried to avoid foreclosure but weren't successful, here are a few tips you should follow when leaving your home.
As a homeowner (and even as a renter), you have rights. If you are going through a foreclosure, there is no need to panic or leave the property immediately when you get the foreclosure notice. You are entitled to leave in a dignified manner. Following are some tips to help you do just that.
Are they Offering Cash for Keys?
Check with the bank or lending company to see if they are offering a financial incentive, know as "cash for keys," for leaving the house in order. Many homeowners are angry when leaving their home after being foreclosed on and may decide to destroy the property, selling and/or taking appliances, or leaving huge messes for the bank to clean up.
This is why banks offer "cash for keys" money. The house has to be left in good order to receive this money. According to one CNBC Financial Times article, the amounts range from $1,000-$20,000, which can be put to good use when you're trying to get a fresh start.
Pack ahead of time. From the time you receive the notice until you actually have to be out can vary by state and bank (foreclosure timeline). You can choose to be prepared by organizing and cleaning out your belongings ahead of time, allowing you to move in a calm and rational manner.
If you wait until you have a tight deadline, you may feel overwhelmed and unable to pack efficiently. This can lead to poor packing, broken items, including things you could very well sell or give away. In a study done by MSN real estate, most people could purge by as much as 30 percent and not notice a difference.
Who Can Rightly Tell You to Leave after a Foreclosure
Only the bank (your lender) can tell you when to vacate. You are able to stay until an actual eviction is filed. This basically means that you could have several weeks, or even months, before the bank will take possession of the property. If you are out before that day, you can move in a dignified manner, just as you would had you sold the house via a normal sales process.
While there is no need to leave in a dramatic rush, you also shouldn't wait until the day of eviction as law enforcement may pay a visit to the property. The best plan of action is to take the foreclosure notice seriously when you get it. Consult an attorney to learn what your rights are. You don't want to be foreclosed on, then wait until the sheriff shows up with the eviction notice to vacate (if it gets to that).
What You Can Legally Take from the Home after Foreclosure
Homeowners can take certain items from the house, and certain items they CANNOT take.
Before you decide to take an item, ask yourself if removing it will render the room or accessory unusable. For example, you cannot remove the sink from the kitchen because that would mean the kitchen would not be a functioning kitchen. You can, however, remove the shelving you had installed in the office that was not present when you first purchased the house.
Regarding appliances, a simple rule to follow is if it's an "affixed" item (eg, dishwasher), it can't be taken. If it's not affixed (eg, a refrigerator), it can be taken.
The idea of foreclosure is not one most want to deal with, but in reality, it can happen to almost anyone -- given the right circumstances. When it does, you don't have to leave your home in a frenzy or wait for the sheriff to come and start throwing out your belongings. Take the time to plan and be proactive about it so you leave in a dignified manner.
Don't take home foreclosure lightly. It can have damaging effects on your credit and your future. Consult a qualified bankruptcy attorney to learn how you can possibly save your home, and get on the road to repairing your credit -- and possibly own a home again -- without debt holding you back.
Note: The info here is for general knowledge only. It is not to be construed as legal advice in any manner. Consult a qualified bankruptcy attorney in your area for specifics as they relate to your case.
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