Tag Archives: Ltd

Mortgage loan options after bankruptcy

There are several types of mortgages available in to home buyers after a bankruptcy discharge. After a bankruptcy discharge under Chapter 7 or Chapter 13 you may be able to qualify for a mortgage sooner than you think. When your debt to income ratio is better after discharging some or all debts, you may be a better lending risk when you have more disposable income to save money and pay bills. After your bankruptcy discharge you have some time to work on re-establishing your credit and saving money for down payments and closing costs. When you are ready to start shopping for a mortgage there are several options to consider depending on your personal situation and home ownership goals.

How long will I have to wait?

There are two types of bankruptcy, Chapter 7 (full discharge) and Chapter 13 (partial discharge and reorganization). Many people with Chapter 13 bankruptcies are approved for government-backed mortgages after one year or they could be approved for a conventional mortgage loan after two years. The Chapter 7 bankruptcy filers may have to wait three or four years after their discharge to be approved for a new mortgage.

Some people chose to take at least two years or more to rebuild their credit using secured credit cards and small loans, while also saving cash for the expenses involved in putting money down and closing on a new home. The longer you wait, the better interest rate you may get. This is not always true however because interest rates fluctuate.

Conventional and government-insured loans

The difference between conventional loans and those insured by the U.S. Government is the financial guarantee for the lender, in case the individual fails to pay the mortgage. Conventional loans are not guaranteed by the federal government, and because they are not secured, the buyer must have better finances.

The common government-insured mortgage loans are the FHA loans, VA loans and USDA loans:

  • FHA loans backed by the Federal Housing Administration allow participants to make down payments as low as 3.5%. Purchasers will be required to pay for mortgage insurance which increases monthly payments;
  • VA loans secured by the U.S. Department of Veterans Affairs help military service members and their families buy homes with 100% financing meaning the purchaser only needs to pay the closing costs.
  • USDA loans are insured by the U.S. Department of Agriculture and benefit rural buyers who satisfy income requirements including a steady middle class income who otherwise may not qualify for conventional loans.

Adjustable vs fixed-rate mortgages

If you are approved for a fixed-rate mortgage when interest rates are low you will be locked in at that low mortgage rate for the entire term of the loan and your monthly payment will not change. The other type of loan is an adjustable-rate mortgage loan (ARMs) which have interest rates that change from time to time based on interest rates. Some ARMs provide fixed rates for several years after which time the rate is subject to adjustment based on the rates at the future date. If interest rates are high on mortgages when you are applying, you might want an ARM so that you can try to lock in a better rate when the rates go down. You always have the opportunity to refinance your loan and select a fixed-rate mortgage after having an ARM for some time.

For more information about applying for mortgages after a bankruptcy, please call Joseph Wrobel, Ltd.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

Can my college transcripts really be withheld if I owe the school money?

At various times in life we may be asked to produce our college transcripts for a new job or an application to a program or further education. This issue arose in a question covered in the Chicago Bankruptcy Update podcast series where real questions are asked and answered by Chicago bankruptcy attorney, Joseph Wrobel. The individual seeking guidance needed a copy of their college transcript and the school refused their request, stating that an outstanding amount of $3,000 was still owing for tuition.

In this case the individual seeking their college transcripts filed a Chapter 7 bankruptcy and received a discharge. The short answer to the question as to whether the school may withhold the transcripts is a function of the automatic stay provision in the Bankruptcy Code.

When you file for bankruptcy, the automatic stay provisions protect you from collection activity.

The automatic stay takes effect when the petition for bankruptcy is filed with the bankruptcy court. The automatic stay provision prohibits creditors from engaging in collection activity while a bankruptcy case is active and until the case is over. While Chapter 7 discharge cases can be completed in a matter of months, a Chapter 13 reorganization case, involving payments to the trustee to catch up on debts, can be structured with three to five years of scheduled payments, thus the automatic stay is effective for a longer period of time.

The school’s refusal to tender the college transcripts is a collection activity. If the student does not pay the outstanding tuition, the school may refuse to offer the transcript. If, however, the request for the transcripts is made during a period when the automatic stay is active, the school is prohibited from collection activities and would be required to turn over the transcript.

You may be able to obtain a discharge of your duty to pay a debt, but the creditor may still want payment and in this case, can continue withholding the transcript, even after bankruptcy.

As soon as the bankruptcy case were to end and the automatic stay naturally terminates, the school could resume the position that they will not tender the transcripts until payment is made. Understand that the bankruptcy discharge may have the effect of terminating the school’s legal right to collect the debt, the debt still exists insofar as the school may still want the debt repaid before they tender the transcript.

A word to the wise: it is a good idea to keep copies of academic transcripts just in case a situation like this were to happen to you. While most people never plan to file for bankruptcy protection, financial emergencies and other bad things can happen to good people.

Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

July 2016 Chicago Bankruptcy Question and Answer Podcast with Joseph Wrobel

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress. CLICK/TAP HERE TO LISTEN NOW!

Sample questions answered in this 30-minute show:

  • Must all my debts be included in my bankruptcy filing?
  • What are some of the dangers of filing bankruptcy without an attorney?
  • Ex-husband filed for bankruptcy, am I stuck with the debt?
  • How can I keep my house if I file for bankruptcy protection?
  • I am newly married, can I file for bankruptcy and not include my wife?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.

Don’t believe the hype: Get the real truth about bankruptcy, ignore the rumors

Among the options for researching and gathering information about bankruptcy, there are some wrong sources of information. Asking your mother, neighbor, or someone in line at the grocery store about bankruptcy law is not a good idea for several reasons. First, the bankruptcy laws change over time and what could have been true at one point could be different later. Second, every individual’s financial circumstances are unique; what conditions of bankruptcy apply to one, may not apply to another. Third, there are so many variables in bankruptcy law that anyone who is not an experienced bankruptcy lawyer could overlook significant details that could seriously affect the outcome of a bankruptcy filing, when someone attempts for file for bankruptcy on their own and without a lawyer. Experienced bankruptcy lawyers hear most if not all of the myths or “old wives’ tales” about divorce. The following is this week’s top 5 list of dispelled bankruptcy myths.

Joseph Wrobel, Ltd. Top 5 Bankruptcy Myths: Setting the Record Straight:

  1. Your financial future will forever be ruined and you’ll never be able to finance anything again.

Wrong! Many people are able to obtain credit cards, home and auto loans within a few years of a bankruptcy filing. Lenders look at your ability to make payments. If you owe everyone under the sun the chances are higher that you may default on your obligations. If however, you went through a bankruptcy and were able to reorganize or wipe out your regularly serviced debts, you may have more money to pay bills, which makes you a better candidate to be given credit to finance house hold items, cars and homes.

  1. The bankruptcy trustee is going to come to your house and take everything and the kitchen sink.

Wrong again! Every state has exemption laws that allow you to keep a certain amount of personal property, vehicles and even equity in your home. In Illinois, for example, you may keep money you receive in child support or alimony. You may also keep any money ordered to you in restitution for being a crime victim. Home equity may also be kept, up to $15,000, so if you owe more than your home is worth or do not have more than $15,000 you may be able to keep your home. Of course there are differences between Chapter 7 and Chapter 13 bankruptcy filings, but in many cases people are able to keep their cars, homes and personal property, up to a certain dollar value. So you will not have to run out and beg on the streets for shirts and pants because you file for bankruptcy.

  1. You will be better off if you suck it up and pay off the debts you owe; until the day you die.

Nope, incorrect. The financial emergencies, whether sudden or developing slowly over a period of time, could put you so far behind the starting line that you will never be able to get ahead. Imagine you earn $50,000 a year and have a debt from a lawsuit judgement or medical emergency and owe $500,000 or more. You could make minimum payments of $1,000 for the rest of your life and never pay off more than a small fraction of that debt. This is exactly why we have insurance and bankruptcy laws. Even if your debt is $50-100,000, your ability to save for retirement may be greatly diminished or extinguished by outstanding debt. Taking advantage of the bankruptcy laws can give you a fresh start.

  1. Bankruptcy will wipe away all your debts including taxes, student loans and court obligations.

Don’t believe the hype. While Chapter 7 may help you eliminate most debts, assuming you qualify financially, Chapter 13 bankruptcy may be your better or only option to reorganize your debt and get caught up on a monthly payment plan for several years. First, forget about discharging your student loan debt. It is virtually impossible to prove the hardship necessary as a matter of law, and on the bright side, even if they garnish your wages, they can only take a certain limited amount and not the majority of your paycheck. Child support and certain court orders in family law are non-dischargeable, as opposed to civil money judgments which may be eliminated in bankruptcy. Taxes, utilities and other debts may or may not be dischargeable depending on their age and whether they meet certain conditions, which an experienced bankruptcy lawyer can explain.

  1. If you file for bankruptcy, you have to admit you are a failure and are personally flawed.

Do not be silly. Just about any situation can occur, such as a car accident rendering you incapacitated for six months or more; that would wipe almost anyone out financially. If you cannot work to pay your bills and spend down your savings you may have a bankruptcy in your future. Face it, bad things happen to good people, and that is another reason the bankruptcy laws exist, to help us with a fresh start when we need it the most. Furthermore, do not feel that you are going to be in big trouble with the court if you discharge a money judgement against you in bankruptcy. The bankruptcy laws are bigger than the court order to pay off a money judgement against you in most civil cases.

This list is hardly a complete account of all the misinformation and misunderstandings about State and Federal bankruptcy laws, and if you have any questions, even if you think they are “dumb” questions, do not hesitate to reach out and ask us. We’ll set you on the better track.  

Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with best credit repair options.      

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

Memorial Day 2016 Chicago Bankruptcy Question and Answer Podcast with Joseph Wrobel

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress.

Click/tap here to listen to the podcast

Sample questions answered in this 30-minute show:

  • Can I convert from a Chapter 7 to a Chapter 13 bankruptcy if I made the wrong filing?
  • Is there a way to stop a garnishment and get a payment plan without filing bankruptcy?
  • Will the bankruptcy trustee sell my house in order to pay off any of my debts?
  • How can I file for Chapter 7 with damaged credit and little or no student income?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.