The Judicial Conference of the United States decided at their meeting in March that bankruptcy filing fees would increase in June. The Judicial Conference was formed to make policy with regard to the administration of the US Courts. The Bankruptcy Court filing fees are increasing June 1, 2014. The filing fees will increase $29, which is a huge increase from the last installment. Normally, the filing fees are only increased by $6. The new Chapter 7 filing fees are $335, up from $306 and the new Chapter 13 filing fees are $310, up from $281.00. With prices increasing in June, right now is the best time to file your consumer bankruptcy chapter 7 or chapter 13. If you are thinking of filing bankruptcy, then you need to contact an attorney as soon as possible.
One of the biggest concerns for clients is if they filed bankruptcy, then will they be able to get credit after the case is done?
Written by Columbia SC Bankruptcy Attorney Colleen Brunson.
The answer is YES!
Some creditors like the fact that the bankruptcy has cleared most or all of the debtor’s debt. Creditors will look at many factors to consider whether they will lend to the debtor. Usually, the creditors will look to a debtor’s income and job stability. If the debtor has a long job history with the same employer, then it will help that debtor to get credit. Don’t be discouraged if you don’t have a long job history because creditors look at other factors as well. The debtor’s income and assets are a factor in whether the creditor will lend to a debtor.
Will you be able to buy a house?
The answer is YES!
Most mortgage creditors rely on Fannie Mae underwriting guidelines. See Fannie Mae Selling Guide for Single Families.
For a chapter 7, a four year waiting period is required from the date of discharge or dismissal. Obviously, a discharge will be better than a dismissal of the case. There is an exception to the four year rule: two years from the discharge or dismissal if extenuating circumstances can be documented.
For a chapter 13, the waiting period is two years from the date of discharge or four years from the dismissal date. Again, debtors are rewarded for completing their bankruptcy plan. If the case was dismissed, there is an exception to the four year waiting period. There is a two year waiting period if extenuating circumstances can be documented. There are no exceptions permitted to the two year waiting period after the chapter 13 discharge.
If there are multiple bankruptcy filings in the past seven years, then a five year waiting period is required. A three year waiting period is permitted if extenuating circumstances can be documented and the most recent bankruptcy filing must have been the result of extenuating circumstances.
If there is a foreclosure, then a seven year waiting period is required and a three year waiting period for extenuating circumstances can be documented. The purchase of second homes or investment properties are not permitted until the seven year waiting period has elapsed. If it is the principal residence, the waiting period may be shorter.
If there is a deed-in-lieu of foreclosure or short sale, then the waiting periods are two, four, or seven years based on the loan-to-value (LTV) ratio. The LTV ratio is the ratio of a loan to the value of an asset purchased. So if the house is worth $200,000 and the loan is $175,000, then the LTV ratio is 88%. The lower the LTV ratio, then the shorter to the waiting period.
So it appears that debtors will be able to buy a house within two to four years of the bankruptcy discharge. A bit longer if the case is dismissed. I tell my clients to worry about their credit after they make it through the bankruptcy. It is important to focus on completing their bankruptcy case first.
The Bankruptcy Filing Process.
There are a lot of people in South Carolina that have questions about the bankruptcy filing process. While it can vary depending on several factors, this post should provide some basic insights into what to expect in a typical case. Bankruptcy can be a scary and intimidating situation but working with the right bankruptcy attorney can make the whole experience smoother and less stressful.
Choosing an Attorney.
The first and most important step is to find an attorney that you feel comfortable with and who can answer your questions fully. Sometimes, clients will shop around for looking for the best deal or the biggest name. The cheapest attorneys may not be the best fit for you. Just remember the old saying: you get what you pay for!
The Initial Consultation.
When you meet with the attorney, make sure you bring with you a list of ALL your debt and the values of your assets. This will help the attorney determine the best chapter for you. After you meet with the attorney, there will be documentation needed to complete the process and you will have to complete your attorney’s questionnaire. You will also need to complete a credit counseling session and provide that certificate to your attorney. The credit counseling must be completed within 180 days of the filing of the bankruptcy. If you wait too long, then you will have to do it again. It is best to do it right before you meet with your attorney to sign your prepared paperwork.
Filing your Bankruptcy.
After you have completed the paperwork requirements and paid your attorneys fees, then you will have a signing appointment. At this signing appointment, the attorney will explain in detail all the paperwork that will be filed with the court. This is the best time to add creditors that you forgot or tell the attorney if the paperwork is incorrect. Once the paperwork has been signed, then the attorney will file the case with the Bankruptcy Court. Everything is done electronically and Bankruptcy is public knowledge. Your attorney will inform you of your case number and what will be expected of you for the remainder of the case.
After the Case is Filed.
Once your case is filed, then you will have a court hearing called the “Meeting of Creditors” or the 341 hearing. This is a very simple hearing in which you answer questions by the trustee (and sometimes creditors) about the schedules that you filed with the court. This is a relatively quick hearing.
If you filed a chapter 13, then your trustee payment is due 30 days from the date of filing. The 30 days from the date of filing may be before the 341 hearing. The trustee will usually request the plan payment be deducted directly from your pay check. After the 341 hearing, you will have a confirmation hearing that confirms your plan for you and your creditors. You usually do not need to attend this hearing unless you are not current on your trustee payment or more documentation or testimony is needed. Then, once the plan is confirmed, you just need to keep making the trustee and mortgage (if applicable) payments. A chapter 13 plan is typically 60 months (5 years). Towards the end of the case, you will receive a request for discharge that will need to be filled out and returned to your attorney. This document will have to be filed in order to receive a discharge of your debt. You will need to complete a second credit counseling called a financial management course. This course will take about two hours to complete and is supposed to educate you about making smarter choices regarding your finances. You will not receive a discharge if you do not file the request for discharge and financial management course. So even if you have paid the trustee payment over FIVE years, if these documents aren’t filed, then you don’t discharge your debt. That is why it is very important to keep your attorney’s office updated with current addresses and phone numbers. If you move or get a new phone number, make sure you inform your attorney right away.
If you filed a chapter 7, then after the 341 hearing, you need to complete a second credit counseling called a debtor education or financial management course. This course will take about two hours to complete. It may be done prior to the 341 hearing but it must be done in order to receive a discharge. Typically, a no asset chapter 7 will take about four to six months to complete. An asset chapter 7 will take longer to complete based how long it takes to sell the assets. Usually, an asset chapter 7 can take a year or longer.
The moral of the story is to pick the right attorney! If you would like to learn more about bankruptcy filing process in detail, please contact my office to schedule a free initial consultation. I am located right in downtown Columbia and offer after hours or Saturday appointments.
Are you caught in the credit trap?
Credit card debt can accumulate for a number of reasons: loss of income, death in the family, medical bills, or divorce. A lot of credit card debt can be very stressful and create a financial strain on your family. It seems like you can keep paying the minimum payment and it only pays the interest and not the principal. Bankruptcy may be an option to consider when seeking credit card debt relief.
Do you have a high interest credit card?
Credit card interest can really make a difference in the amount owed. If you owe $10,000 on a credit card with an interest rate of 15%, and the minimum payment is $200 a month. It would take you 32 years to pay off that one card! You would end up paying over $15,580 just in interest. (Check out the Federal Reserve’s Credit Card Repayment Calculator at http://www.federalreserve.gov/creditcardcalculator/ to find out how long it would take you to pay off your credit cards. It is a great tool to help with a budget and to get out of debt.) If you have multiple credit cards, then it could take more than a lifetime if you only paid the minimum payments.
How can Bankruptcy help?
Filing of a bankruptcy stops all the late fees, interest, and penalties that your credit card company is charging you. The credit card company must file a proof of claim that lists the amount owed on the date of filing your case. If you do decide to file bankruptcy, it is a good idea to stop using your credit cards. Payments to your credit cards ninety (90) prior to your filing of your bankruptcy could be considered preferences. Plus certain charges made on your credit card prior to filing a bankruptcy could be considered nondischargeable. That means you could still owe for those charges. It is very important to discuss all this with your attorney prior to filing bankruptcy. If you would like to learn more about bankruptcy as an option for credit card debt relief, contact Brunson Law and schedule your free consultation today.