James R. Balmforth: Bankruptcy Lawyer Lindon Utah

If you are behind on your mortgage payments, drowning in debt, or need some financial help, speak to an experienced Lindon Utah bankruptcy lawyer. You can save your home from foreclosure.

All bankruptcy cases are heard in federal courts. Congress has ruled that they cannot be addressed in state courts. These cases involve individuals or businesses seeking a legal relief from their debts (i.e., discharge of debt). A case is initiated by the filing of a bankruptcy petition. While many benefits exist for filing bankruptcy (as outlined below), there are also negative consequences. The main drawback is a negative impact on a filer’s credit report. Bankruptcy filings remain on a filer’s credit report for ten years.

Before filing for bankruptcy, consult an experienced Lindon Utah bankruptcy lawyer to know which bankruptcy chapter is best suited for you. There are different types of bankruptcy cases allowed by Title 11 of the United States Code, also called the U.S. Bankruptcy Code.
• Chapter 7 (Liquidation): Individuals, companies, or corporations may file Chapter 7.
Their assets (i.e., property) are taken over by a trustee and liquidated or sold, and the
proceeds are distributed to their creditors. The filer is then relieved by the court from
paying any further payments. The filer is allowed to keep some assets, as determined
by the type of asset and bankruptcy law.

You may want to file a chapter 13 case. You really should speak with us for your free consultation. we can help you.

• Chapter 9 (Adjustment of Debts of a Municipality): Relief under Chapter 9 is only
granted to a municipality such as a village, town, city, school district, county, or municipal utility. The municipality must reorganize and develop a plan to repay its
debts.

• Chapter 11 (Reorganization): Chapter 11 allows businesses to continue their operations
while paying off creditors under a court-approved plan. The business reorganizes its
operations; it may repay a portion of its debts and have others discharged by the
court, and also have the court terminate contracts and leases. The goal of a Chapter
11 filing is for the business to emerge from bankruptcy better organized and more
profitable.

Homeownership is heralded for its financial benefits, and indeed, homes are the largest asset of most Americans. But homeownership also comes with burdens. For almost a century, government and private entities have measured the burden of homeownership by relying on ratios of households’ housing costs to their incomes. Government entities have used housing cost ratios for many purposes, including most recently as guideposts for loan modifications aimed at preventing foreclosure. Private sector institutions, including the mortgage industry, have used such ratios to determine whether households are qualified for home mortgage loans and to determine loan amounts.

Housing cost burdens are crucial measures of the financial well-being of Americans. For most families, the cost of housing is their single largest expenditure. If households spend a disproportionate share of their incomes on housing, then they may not have enough money for other expenses, such as health care, child care, or transportation, that are essential for a decent standard of living. Homeowners who spend a high fraction of their incomes on mortgage payments and related housing costs also are at a higher risk for default and foreclosure. Because housing consumes a disproportionate share of their incomes, these families have limited budget flexibility to respond to increases in expenses and may be at heightened risk of financial distress. If you are in financial distress and you want to save your home from foreclosure, seek an appointment with an experienced Lindon Utah bankruptcy attorney.

Many debtors who file for bankruptcy, however, are behind on their mortgage payments. By the time they file, some are a few months late and others are on the eve of a foreclosure sale. Homeowners desperate to save their homes often seek refuge in bankruptcy court, but they find only limited relief there. Bankruptcy does not reduce the principal or interest on a home mortgage, absent the unusual situation of a lender consenting to a modification of the loan. If homeowners simply cannot make the ongoing payments after the interest rates on their mortgage loans have risen, bankruptcy law does not rewrite those loans to lower the interest rates or to subsidize mortgage payments. Homeowners who are and remain current on house payments through a bankruptcy case will not lose the home to their mortgage lender during the case. An experienced Lindon Utah bankruptcy lawyer can help you save your home from foreclosure.

Bankruptcy does, however, offer some specific provisions to help homeowners who are behind on their mortgages and want to catch up on missed payments. Chapter 7, the most common type of consumer bankruptcy, usually delays a creditor from foreclosing for a few months and permits a debtor to discharge credit card and some other debts, freeing up income that can then be used for house payments. When the debtor is in default, the lender usually will wait three to six months for the bankruptcy case to end and foreclose at that point. The lender’s more expensive option is to ask the court to permit foreclosure before the bankruptcy case ends, which sometimes will be granted. Chapter 7 also protects the debtor from having to pay a deficiency. Foreclosure sales often net far less than the amount due on the mortgage, and in most states, the debtor owes the lender the difference, called a deficiency. Chapter 7’s debt forgiveness would cover that deficiency. Thus, Chapter 7 debtors may lose their homes in bankruptcy, but mortgage lenders normally cannot take other assets or garnish wages to collect a deficiency because bankruptcy discharges that obligation.

Chapter 13, the other common type of consumer bankruptcy, was designed to help debtors keep their homes, but as in Chapter 7, the home mortgage loan cannot be modified. Absent unusual circumstances, the principal of the debt is still owed and interest rates normally cannot be modified. However, Chapter 13 allows debtors to stop a foreclosure and cure a default due to missed payments by repaying the amount in arrears over the next three to five years. Debtors can catch up on these missed payments without creditor consent, but they must get bankruptcy court approval of their repayment plan. To do so, debtors must first persuade the court that they will be able to make each future house payment as it falls due, plus have enough income to cover payments previously missed. Then debtors must make those payments as promised. However, much can go wrong over the three to five years of a Chapter 13 repayment plan. Only one-third of debtors succeed in making all the payments due; most Chapter 13 cases fail within a year or two. For homeowners in default, foreclosure likely will soon follow their missed payments and the dismissal of their bankruptcy case. Thus, although bankruptcy has a home-saving purpose, the outcome can sometimes be home loss. Before you file a bankruptcy petition, talk to an experienced Lindon Utah bankruptcy lawyer to know if you can save your home by filing for bankruptcy protection.

Few of the bankruptcy debtors who lost their homes are likely to become homeowners again soon. Their homeownership, now ended by financial failure, most likely will be followed by long-term renting or sharing space with relatives. Some debtors had owned their homes for many years, long enough for their children to have grown up and moved away. These debtors saw their houses as the main link to those children. For others, the home is a link to loved ones who have died. A desire to save their homes from foreclosure is a major reason why millions of families file for bankruptcy each year. Yet bankruptcy is only partially effective at helping them in this regard. People in bankruptcy are required to disclose extraordinary details about their financial lives, including all information needed for calculating housing cost burden ratios.

Bankrupt debtors who lose their homes suffer immediate hard consequences: they must find somewhere else to live, perhaps persuading someone to take them in despite their recent or ongoing bankruptcy; they must pack up belongings and transport what they can afford to take or sell or abandon items too expensive to move or too large for their new residences; and they must leave friends and neighbors behind and move children away from familiar schools. At each of these turns, they face out-of-pocket expenses and the embarrassment of failure in the eyes of their neighbors, children, families, and others. Losing a home is nearly always a step down the social and economic ladder, and it may even be a tumble into serious hardship, such as renting in a high-crime area or having to endure unfit living conditions. The consequences of home loss may be suffered for years. Some of the pain is financial, as families may lose current equity in their homes. More likely, however, the family who has lost a home has lost financial hopes for the future from expected price appreciation and the forced savings effect of making mortgage payments. There are also painful psychological losses, for “homeownership is about status, about participation in a community, about school districts and opportunities for children, about family memories and continuity, about emotional as well as financial security.

Some children of bankrupt families were forced to change schools more than once for financial reasons. Among households that owned their homes at the time of bankruptcy, 11 percent had children who had already quit or changed schools because of money pressures at least once in the two years before their parents’ bankruptcy. The fifty families with school-age children who lost their homes in the first year after bankruptcy included at least four families whose children had also suffered a prebankruptcy school change forced by financial problems. For example, an initial reaction to threatened home loss may be to move children from private into public schools, then later—when foreclosure forces the family into an entirely new community— to a different public school. A federal statute, the McKinney-Vento Homeless Assistance Act, requires public school districts to permit children who become homeless to continue to attend their former school and to provide transportation in many cases. The broad definition of a homeless child under that act extends to those “sharing the housing of other persons due to loss of housing, economic hardship, or a similar reason”—in other words, the common situation of moving in with family or friends after a foreclosure. Even if such a child and his or her family later find more permanent housing in another school district, the child may be entitled to finish out the school year in and have transportation to the original school. However, few parents would know of these rights, and tight school budgets during a recession may make compliance difficult.

A family’s financial burdens are shaped by the needs, desires, and opportunities of its members—and the extent to which their earnings can support their expenses. Demographic factors such as income, race, age, marital status, wealth, and education may affect housing cost ratios. Families with some characteristics may be more likely to arrive in bankruptcy struggling with very high housing costs relative to their incomes.

Marital status had a statistically significant relationship to housing cost burden, with homeownership seeming to be particularly expensive for people who are not married. Households headed by a widow or widower were twice as likely as married households to be housing-cost-burdened. Similarly, households headed by a divorced or separated adult were more likely to be housing-cost-burdened as married households. Perhaps married couples make more informed or wiser choices about the homes they can afford on their incomes; two decision makers may be better than one in resisting urges to choose housing beyond what a household’s income can support. In summary, lower income households are more burdened by unaffordable housing costs than moderate income and higher income households; younger households are more burdened than older households; and households that are headed by single people who are divorced or separated or widowed are more likely to be stressed by housing expenses than households headed by married couples.

If you are behind on your mortgage payments and you are unable to meet you monthly expenses, you need to consult an experienced Lindon Utah bankruptcy lawyer. Otherwise you may end up losing your home although you could have saved it by filing for bankruptcy.