There are two types of bankruptcy available to consumers, Chapter 7 and Chapter 13. Chapter 7 is the most common bankruptcy available, but Chapter 13 offers many solutions that consumers might not realize. Please contact us to schedule a consultation and determine which chapter is right for you.
The “Means Test” — How Does it Affect Me?
Most people learn after some research that the bankruptcy laws changed in 2005. One of the biggest changes to come from this was the means test, a formula that was theoretically designed to make bankruptcy filing more equal. Whether or not it achieved this goal is outside the scope here. However, whether you can file under the means test is not as simple as looking at your average income for the last six months.
Even if you have taken a so-called “means test” online, it is highly unlikely that the result was accurate. The average income number is not what you earn, but your earnings after a series of deductions. We can help you make the determination whether Chapter 7 or Chapter 13 is the best choice for your specific circumstances.
What About Reaffirmation Agreements?
One of the biggest areas of confusion in bankruptcy is reaffirmation agreements. The reason for this confusion is that these contracts and the rules around them can be, well, confusing! Basically, once you file for bankruptcy, the contract you had with your creditor to repay them was cancelled, eliminating your contractual liability. However, if you were paying for a secured item under that contract and you want to keep that item, you may need to sign a new contract, a reaffirmation agreement, to continue making these payments.
Sometimes though, this is not in your best interest. At Columbia River Law Group, you will work with a qualified attorney to determine whether a reaffirmation agreement is in your best interest.
What is an “Underwater” Mortgage?
Underwater mortgages are mortgages where the value of the property is less than what is owed on the property. This condition has become more common in the last few years because of the housing bubble, where real property values were significantly inflated, and banks were lending based on this excess.
In Oregon and Washington, on first mortgages only, most consumers are protected by laws called anti-deficiency statutes. These laws prohibit lenders from suing borrowers for deficiencies on the first mortgages of their primary residence if they cannot pay the balance. However, except in limited circumstances in Oregon, there are no such protections for second or third mortgages. This leaves consumers vulnerable if they short-sell or foreclose on their real property.
In some cases, it is possible to strip off second and third mortgages through the Chapter 13 bankruptcy process. Contact us for a free initial consultation to discuss whether this option may be available to you.
Could I Use HAMP?
In an effort to continue to provide meaningful solutions to the housing crisis, effective June 1, 2012, the Obama Administration expanded the population of homeowners that may be eligible for the Home Affordable Modification Program to include:
Homeowners who fall into any of these criteria, may be eligible for a modification under the expanded criteria. Please check with your mortgage servicer to see if you are eligible to begin the HAMP evaluation process.
To arrange a free in-office consultation to learn how bankruptcy can protect you now and help you rebuild your financial future, contact us today!