We work with borrowers to find solutions to avoid foreclosures. These options include loan modifications, short sales, temporary restraining orders, chapter 7 bankruptcy, chapter 13 bankruptcy, and finding investors willing to purchase your home for cash.
It should be noted that our sole focus is helping you to retain your home, and we are not a debt counseling agency. As such, we only work with individuals who own a home that they are in danger of losing because of financial or other difficulties. If you are looking for general assistance with formulating a plan to pay off credit card or other debts, we would recommend you reach out to a credit counseling service, such as Consumer Credit Counseling Service (CCCS), which is a non-profit credit counseling service.
When is Bankruptcy the Right Option?
Bankruptcy is rarely the right option if all you are trying to do is save your home. While it is true that bankruptcy might help you with this, there are other options available that are often more advantageous. With that being said, if you have significant other debts, such as credit cards, installment loans, or medical debt, Bankruptcy might be the right option for you.
Will a Bankruptcy Stop the Foreclosure of My Home?
Yes. Once a bankruptcy petition is filed, the “automatic stay” goes into place. An automatic stay is an order of the court that prevents creditors (which includes the lender on your home loan) from attempting to collect debts you owe.
With this being said, the lender may request relief from the stay or permission to foreclose your home after the bankruptcy filing. Therefore, the mere filing is just a temporary stop and not a permanent solution.
How a bankruptcy can further prevent a bankruptcy is by eliminating or restructuring other debts. For example, if your other debts are forgiven in the bankruptcy, this might open up other money you can use to pay the mortgage. Similarly, if your debts are reorganized, the plan may be structured in a way that you can make your mortgage payments.
What is the difference between a Chapter 7 and Chapter 13 Bankruptcy?
For the most part, a Chapter 7 bankruptcy is a complete release of all of your debt obligations (except taxes and student loans). In comparison, a Chapter 13 bankruptcy is a reorganization of your debts wherein you will make payments to the bankruptcy trustee over a period of three to five years. A portion of your debts may be forgiven at the end of the payments; however, each of the payments must be made for this to occur.
In most cases, a chapter 7 is the more desirable option; however, the court places limits on who can file a chapter 7 bankruptcy. These limits are based upon your income and assets that you have available to pay creditors. When you complete your intake form, we will make a rough determination of if Chapter 7 might be an option and will conduct the more detailed “means test” as we prepare to file your bankruptcy petition.
How do I Know If a Bankruptcy is the Right Option for Me?
We don’t you to know the right foreclosure avoidance strategy for your situation. There is a lot of misinformation on the internet and it can be hard to get straight and understandable answers from your lender. Therefore, before we embark on any foreclosure avoidance strategy for our clients, we will walk you through a process that helps evaluate your situation, your goals, and what the best option is for you. Below is an overview of this on-boarding process.
As we walk through this process, you will have access to an iPhone, Android, and web app that tells you exactly where we are in the process and what the next steps look like. You can learn more about this app by going to the Case Status page on our website.
Introductory Phone Call
This is a short introductory phone call to briefly discuss your situation, the options available and what the process looks like when trying to avoid foreclosure. Because it requires a deeper dive into your finances and circumstances, this conversation will not be for the purpose of determining what option to pursue, but rather is for a general overview and determining if we would like to move forward with the next steps.
At this point in the process, we ask that you take the time to complete our foreclosure avoidance intake form. This form will take about an hour or so to complete and will require you to upload relevant documents, such as paystubs, bank statements, and other relevant documents. Therefore, it is recommended that you complete this form when you have some time and are in front of a computer. You can save and return to the form if you need to obtain additional information or just want a break.
In order to determine the right options for you, we will have to do an in-depth review of your loan, finances, and circumstances. Therefore, we ask that before we proceed to the next step that you make a deposit of $250. This deposit will be placed in the firm’s trust account. If you elect not to proceed following the strategy session, the deposit will be paid to the firm as compensation for the time spent reviewing your information and options. If you elect to proceed with a foreclosure avoidance option, the deposit will be applied to the amounts owed for additional services.
During this phase we will review the information that you provide through the intake form and will help to determine the best option or options for you to avoid foreclosure. Because this is an in-depth review, this stage may take up to a week. With that being said, if a Missouri trustee sale is imminent, we will expediate this review as is appropriate.
Foreclosure Avoidance Strategy Session
At this point in the process, we will schedule a time to talk with you about the results of the review and the various options available to you. We will discuss the pros and cons of each option, including the effects on your credit, likelihood of success, and costs involved. At the conclusion of this discussion, we will have a plan in place for moving forward with your custom foreclosure avoidance plan.
Sign Representation Documents
Once we have a plan in place, we will send you the appropriate representation documents, which depending on the plan agreed upon may include a lawyer retainer agreement, broker listing agreement, and other third-party authorizations.
What Does The Chapter 13 Bankruptcy Process Look Like?
Although the process may vary slightly for each case, the basic overview of the Chapter 13 bankruptcy process is as follows.
Before you can file for bankruptcy, you are required to meet with a government-approved credit counselor to discuss the possibility of filing for bankruptcy within the next six months. We will send you a link to complete the class through DebtorCC, which is an online credit counseling program.
Preparing the Bankruptcy Petition
The bankruptcy petition itself is the most complicated part of this process. The petition is an intricate document that describes and categorizes all of your outstanding debts using a strict format. You will be asked to provide information about your financial situation and copies of certain documents such as prior tax returns, pay stubs, a copy of your driver’s license and Social Security card.
Some of the information will seem duplicative of the information you submitted on the initial intake form; however, this form will be significantly more detailed and will request additional information. You will be able to submit this information using another online form and there will be a paralegal assigned that will help you through this process.
It will take 7 to 14 days to prepare the first pass of your Chapter 7 petition. The Bankruptcy Trustee will need to see a photo ID and your Social Security card. If you do not have your Social Security card, you can get one here.
Everything in the Bankruptcy Court is filed electronically. We still need to retain your actual signatures and the original signed bankruptcy petition. As soon as we have the petition prepared and you have reviewed it and provided your feedback, we will schedule an appointment for you to sign the petition. Once it is signed, we will file your bankruptcy petition electronically with the court. The court will issue an automatic stay and notify all the creditors included in the petition immediately upon acceptance by the court. The automatic stay is a court order that prohibits your creditors from contacting you to collect on your debts. To do this, the bankruptcy court will send out a Notice of Filing and a Notice of Stay to the creditors. This makes it illegal for your creditors to continue trying to collect on your debts and stops any collection proceedings, such as lawsuits or other processes. At this point, the creditors should only be allowed to contact our firm, and all collection calls should stop. If you do receive communication from a creditor, you can refer them to us. From here, a creditor’s meeting will be set up, usually in 30 to 45 days of filing. We will let you know the date of the meeting as soon as it is received.
Generally, this meeting lasts less than an hour (usually only about five minutes!); however, you may have to wait longer at the courthouse while other Creditor’s Meetings are completed. Creditors are allowed to attend to ask you questions about your debts and assets, but they almost never appear. Because there are only a very few limited ways that creditors can contest a bankruptcy discharge (such as fraud or other illegal activity), you are unlikely to have to deal with creditors directly. Most of the time the trustee will simply ask a few standard questions (see below) and then deal with our firm later to finalize any questions or concerns.
Likely questions from the trustee:
- Did you review your bankruptcy schedules prior to signing?
- Are your bankruptcy schedules true and accurate?
- Do you have any changes to your schedules?
- Did you list all of your assets?
- Did you list all of your debts?
- Do you expect a tax refund(depending on the time of year)?
Additional questions that may be asked:
- How did you value your home?
- How did you value your car?
- Do you have any claims against anyone?
- Are you expecting an inheritance?
- Have you transferred any assets?
We will be present with you during the Creditor’s Meeting and will help guide you through the process.
You will begin making your plan payments within thirty days after the initial paperwork is filed with the court. With that being said, the plan is not finalized until it is approved by the court. It is common for changes to be made to a bankruptcy plan either because of changes in your circumstances or objections for creditors. We will discuss each of these with you before the change is made.
The confirmation hearing is the hearing where the court approves or disapproves the plan. In post instances, the hearing is a formality because we have already negotiated changes with any party that objects. Moreover, you are not required to attend this hearing.
Post Filing Course/Plan Payments
Once the meeting of creditors is completed, you will be asked to do another online course on debt management. Once again, we will send you a link to complete the class through DebtorCC, which is an online credit counseling program. This course must be completed before you can obtain a discharge of your debts so it is requested that you do this as soon as possible.
Moreover, following confirmation of the plan, you will continue to make the monthly payments until the plan is completed. This generally lasts from three to five years. The plan may be modified if your situation changes
Notice of Discharge
After you have finished all of this, the only thing left is for the trustee to formally approve the bankruptcy discharge. You will receive a Notice of Discharge, which means that any included debt is cleared from your record and that you can never be bothered about them again.
After your debts are discharged by the courts, you have a fresh start. Bankruptcy offers you the chance to get your financial health back in place and begin again.
What are the Costs for Filing a Chapter 13 Bankruptcy?
In order to determine the right options for you, we will have to do an in-depth review of your loan, finances, and circumstances. Therefore, we require an initial deposit of $250 prior to the review of your documents an information submitted through our intake form. This deposit will be placed in the firm’s trust account. If you elect not to proceed following the strategy session, the deposit will be paid to the firm as compensation for the time spent reviewing your information and options. If you elect to proceed with a foreclosure avoidance option, the deposit will be applied to the amounts owed for additional services.
If you engage Rick Davis Real Estate Law to file a Chapter 13 bankruptcy for you, you will be charged an additional $3,000. These fees include the require fees for a credit report, the educational course, and the court filing fees. A minimum of $750 must be paid upfront, but the remainder can be paid over time as part of the bankruptcy plan.