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Stop Foreclosure with a Chapter 13 Bankruptcy

6/23/2015

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You may be able to save your house from foreclosure by filing a Chapter 13 bankruptcy in Alabama.  A Chapter 13 bankruptcy allows you to put your arrearage (the payments you have missed) in your Chapter 13 plan and pay them back over the term of your plan (usually 5 years).  You will have to pay the entire amount of your arrearage back over this period of time.  This in effect “catches up” your mortgage payments, keeping the mortgage company from foreclosing.

Other than allowing you to catch up your back payments the bankruptcy court cannot affect the terms of your mortgage.  Therefore, beginning the month after you file for bankruptcy you will have to begin making your regular monthly mortgage payments. 

This can be difficult since you were already missing payments and now you are to begin making your mortgage payments again plus a payment to the bankruptcy court.  This will require some serious budgeting and discipline, but it will be very important for you to make both of these payments.  While there may be some ways to prevent foreclosure if you miss payments post-petition (i.e. after your bankruptcy has been filed), it will be difficult.  You will also have to maintain your homeowner’s insurance coverage.

To stop the foreclosure your bankruptcy will need to be filed prior to the foreclosure sale.  The 2005 amendments to the bankruptcy laws have made the preparation of bankruptcy petitions much more time consuming.  I would recommend you see an attorney immediately and not later than 1 week prior to the foreclosure sale.

The bottom line is while it may take some cutting back on other expenses, a Chapter 13 bankruptcy in Alabama can save your house from foreclosure.

Do you have questions or comments regarding this topic?  Please call my office or email me through this website and/or make an appointment to see me in my Hartselle, AL office for your free, no obligation, consultation.

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Bankruptcy Can Save Your Vehicle

6/23/2015

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If you are behind on your vehicle payment or just struggling to make the payment, a Chapter 13 Bankruptcy in Alabama may be able to help.  First, in almost all circumstances a Chapter 13 Bankruptcy can stop a repossession by handling the payments you are behind.  In fact, the Chapter 13 Bankruptcy plan will take care of the entire balance on the vehicle.  This normally results in a reduced payment by spreading the balance back out over the 60 month period of the plan and by reducing the interest rate to 5.25%.

A Chapter 13 may possibly help you even further.  In a Chapter 13 bankruptcy you can, under certain circumstances, do what is called a cramdown.  If you meet the criteria for a cramdown, you are allowed to only pay back the current fair market value of the vehicle, not the total amount owed.

For example, let’s assume you bought a car 2 ½ years ago, financed $25,000.00 and because your credit was not the best, you have a 12% interest rate.  Your payments would be about $556.00 per month.  You would still owe $14,352.00.  Let’s say, per the NADA Used Car Guide you, the vehicle is now worth $8,000.00.  By putting the vehicle in your Chapter 13 plan you could (1) extend the loan to 5 years, (2) reduce your interest rate tremendously, (3) reduce the balance owed on the vehicle to $8,000.00.  This would in effect reduce your car payment to $152.00 (less than 1/3 the previous payment).

So, what’s the catch?  First, you must have had your car loan for at least 910 days, basically 2 ½ years in order to qualify for a cramdown.  If you have not had your car for 910 days, you can still lower the interest rate, but not the secured principal.  Second, by extending the loan through the length of the plan, you may not be able to obtain the title on the vehicle until the end of the 5 year plan.  Third, to maintain the benefit of the cramdown, you normally must complete your Chapter 13 plan.  If your case is dismissed or you convert to a Chapter 7, some issues may arise.  Fourth, your car must be worth less than the amount owed.  If your car is worth the amount owed or more, then there is nothing to cramdown; however, you may still be able to lower the interest rate on the remaining amount owed on the loan and lower your monthly payment.

A Chapter 13 bankruptcy may be able to fix many of your cash flow problems.  Please educate yourself and do not let yourself continue to struggle for no reason.  Take the first step by calling my office or contacting me through this website and making an appointment to see me at my Hartselle office.
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BIG CHANGE FOR ALABAMA BANKRUPTCY LAW -- IN A GOOD WAY

6/16/2015

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Lately most changes to the laws affecting bankruptcy have been negative or harmful to debtors.  However, just last week, a bill was passed and signed into law which is helpful for debtors.  This new law raises the homestead exemptions and personal property exemptions in the State of Alabama.  These changes finally bring Alabama in line with or at least closer to other states in this regard.

Below is an information sheet from the Alabama Appleseed Center for Law and Justice, Inc. about the new law.  “Alabama Appleseed Center for Law & Justice, Inc. is a non-profit, non-partisan public interest legal advocacy organization whose mission is to work for systemic policy reforms that achieve justice and fairness for low-income, unrepresented and other vulnerable populations.”  Alabama Appleseed deserves much credit for pushing these changes to the Alabama exemption laws.  These changes will benefit the poor, the middle class, and the elderly for years to come.  You can visit their website at http://www.alabamaappleseed.org.


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Stop Collections Harassment from Debt Collectors in Alabama by Filing Bankruptcy

6/12/2015

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All collection attempts by creditors are to stop as soon as your bankruptcy is filed.  When your bankruptcy is filed the "automatic stay" goes into place.  This prohibits debt collectors from making any effort to collect any debt against you.  It stops phone calls, letters, lawsuits, garnishments, foreclosures, and repossessions. 

The automatic stay remains in effect during the pendency of your bankruptcy.  It can be lifted by secured creditors to whom you are collateral to or to secured creditors to whom you were supposed to make payments to during the bankruptcy, but have not.

Although the automatic stay goes into effect immediately when your bankruptcy is filed, in reality creditors will not receive notice from the bankruptcy court for 7 - 10 days.  For this reason you or your attorney should inform creditors who are threatening to take actions such as foreclosure or garnishment that you have filed bankruptcy and provide the creditor with a case number.

Creditors who knowingly violate the automatic stay will be required to reverse any adverse action they took after the automatic stay went into effect (such as foreclosure or repossession) and may be subject to paying fines and debtor's attorney's fees.

If you are being harassed by collections efforts of creditors and debt collectors, contact me or another qualified bankruptcy attorney in Alabama.  The initial bankruptcy consultation is free.
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OUR LOCATION:

Hartselle Plaza

800 U.S. Highway 31S

Suite B

Hartselle, AL  35640


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(256) 778-1644


The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.
The Collins Law Offices help clients file for bankruptcy protection under the laws of the United States. 
Alabama State Bar Disclaimer: No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.
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