Archive for March, 2010

New Mortgage Modification Plan

Wednesday, March 31st, 2010

Due to the failures of previous mortgage modification initiatives and continued defaults on modified loans, the govermnet is unveiling a new plan.  The new plan targets two main types of homeowners; 1. those who owe more on their houses then they are worth and 2. those who are jobless and most need financial assistance. 

For those who are “underwater” financially on their homes under the new plan, may refinance into loans backed by the Federal Housing Authority.  In exchange the Federal Housing Authority would receive up to $14 billion in government bailout money.  According to Moody’s analytics more than 15 million homeowners are underwater on their residences. 

For unemployed borrowers, those receiving unemployment benefits would have their mortgage payments reduced to no more than 31% of their monthly income for 3 to 6 months.  Once the borrower finds a job, then the mortgage payments may be modified or revert back to the contracted amount due and owing.   

The success of the new plan depends on many factors, primarily the cooperation of private banks and lending institutions who are right now not in theposition to afford lesser payments. 

If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC at 215-545-0008  or (877) 4-LAW-411 or email brad@sadeklaw.com. Thank you.

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File Chapter 13 Bankruptcy in Philadelphia

Tuesday, March 23rd, 2010

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A Chapter 13 Bankruptcy may be filed in Philadelphia, Pennsylvania for several reasons.  The three most common situations that a person or married couple qualifies for a Chapter 13 Bankruptcy repayment plan are listed herein below:

Situation #1

A person is facing mortgage foreclosure or a tax sale on their home. By virtue of the automatic stay in Bankruptcy, upon the Bankruptcy filing on your behalf the foreclosure or tax sale is stopped. In exchange, the homeowner will pay back the mortgage or tax arrearages interest free while enjoying their home. Additionally, if any other unsecured debts exist they will be paid a mere percentage and included in the Chapter 13 Bankruptcy plan.

Scenario #2

In 2005 the Bankruptcy laws were amended. Among other changes, the medium income standards were implemented. Generally, if a person or couple’s income exceeds the medium income standards then a Chapter 13 Bankruptcy is presumed appropriate. There are a many factors in determining if a Chapter 13 Bankruptcy is necessitated based on income and therefore it is imperative that you consult out Bankruptcy Attorneys to fully discuss your situation.

Situation #3

A person has equity over the bankruptcy exemptions in personal or real property. Using the “liquidation analysis” the court will mandate a payment toward unsecured debt up to the amount of the non-exempt equity or the amount of the debt itself. Although this scenario may sound confusing, the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC can explain if you fall into this rare category of Chapter 13 Bankruptcy.

The biggest difference between Chapter 7 and Chapter 13 Bankruptcy is that in Chapter 13 Bankruptcy a repayment Plan is filed.  The Petitioner makes a payment every month on a regular basis for a period of three (3) to five (5) years.  The benefit of a Chapter 13 Bankruptcy is that the debts contained in the bankruptcy are paid back at 0% interest. 

As in a Chapter 7 Bankruptcy, there is a 341 Meeting where the trustee reviews your petition for truth and accuracy.  The hearing is generally up to a half an hour long.  Subsequent to the 341 Meeting, there is a Confirmation hearing, where the creditors and trustee have an oppurtunity to object to the filed Plan and request an amendment or modification to the Subject Plan.  If the Plan is successful at the Confirmation stage, the Judge will sign an Order “Confirming” the Plan.   Chapter 13 Bankruptcy can be a very complex and time consuming process, it is essential that you hire competent counsel to guide you through the entire process. 

If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC at 215-545-0008  or (877) 4-LAW-411 or email brad@sadeklaw.com. Thank you.

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How to File Chapter 7 Bankruptcy

Thursday, March 11th, 2010

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Initially, it is important to make certain that you qualify for a Chapter 7 Bankruptcy.  There are several steps one must take in anticipation of filing a bankruptcy, it would be a waste of both time and money to find out down the road that you don’t qualify for the Chapter 7 Bankruptcy relief desired.    To determine eligibility of filing a Chapter 7 Bankruptcy, our law office performs an appraisal on any real estate owned and calculates family income and expenses.  A home appraisal is necessary to determine whether any non-exempt equity exists.  Further, family income and expenses are most relevant for means testing under the Bankruptcy Code. 

 Once it is determined that one qualifies for Bankruptcy, we must analyze your debt.  A Chapter 7 Bankruptcy discharge is generally a discharge of all unsecured non-priority debt, such as credit cards, personal loans, medical bills, pay day loans, past due utility bills, etc.  The debts that are not included in a Chapter 7 are priority or non-dischargeable debts such as most IRS debts, child support, alimony, government fines and student loans.  As far as secured debts, homes and cars, the filing party usually has the choice to reaffirm (keep), redeem(keep and lower payments based on fair market value) or surrender (give back) the secured property. 

So now that it is determined that you are eligible and what debts need to be included, there are several items our office will need from you in order to file an accurate bankruptcy petition on your behalf.  Such items include pay stubs, tax returns, driver’s license, social security cards, financial statements and other easily accessible documents.  After all items are provided credit counseling will be ordered on your behalf.  Clients frequently ask me, do I have to go to a counseling class and for how long?  The class is set up for you to complete online or over the phone in the comfort and privacy of your own home and generally takes 20-40 minutes, upon your completion a certificate is automatically emailed to our Philadelphia bankruptcy law office.  Upon completion of the course and putting all documents into a Chapter 7 Bankruptcy Petition, the filing is made on your behalf. 

Once the Chapter 7 Bankruptcy filing is made, all creditors must stop all collection action against you, meaning all letters, phone calls and lawsuits muct cease by virtue of the automatic stay employed in a bankruptcy filing.  In a Chapter 7 Bankruptcy, there is usually only one meeting one must attend.  It is known as the 341 Meeting, held in an administrative setting and usually lasts less than 20 minutes.  After the 341 Meeting, one must complete the second course, financial management and the only thing then to do is wait for a discharge.  The Discharge in Chapter 7 Bankruptcy generally takes 90-120 after the meeting days to be mailed to the Petitioner.  After you receive the discharge you are officially debt free! 

If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC at 215-545-0008  or (877) 4-LAW-411 or email brad@sadeklaw.com. Thank you.

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NO-PAYDAY LOANS

Friday, March 5th, 2010

What are Payday Loans?

Payday loans are small loans you can use when you are temporarily out of money. Most often, payday loans are short term loans (two weeks or so) for a modest amount of money usually $50.00 to $500.00. To get a payday loan, you typically write a check for the amount you are borrowing – plus a fee. You might leave the check with the lender, and they cash it once you are ready to repay, however interest accrues daily until the loan is paid in full.

Costs of Payday Loans

In general, payday loans are extremely expensive. You end up paying an annual percentage rate that may be several hundred percent, compared to 6-11% on a mortgage or up to 35% on a credit card. For example, you might pay a $20 fee to borrow, plus daily interest, $100.00 for two weeks. The Consumer Federation of America has shown that you would pay about 426% APR on a payday loan.  The problem is the people who can least afford to pay the astronomical interest rate are the ones taking out such loans.   This is the main pitfall of a payday loan, since the fees are so high, the debt becomes almost impossible to ever pay off and the overall debt increases extremely quickly. 

People consider taking out a payday loan if they need a small amount of money, they need the amount of money fast, on a fixed income, already have existing debt maxed out, lack of  savings or are embarassed to go to a traditional lending institution.  However, instead of putting yourself into deeper debt with an extremely high interest, the long term solution would be to get rid of existing debt. 

In the event one files for a bankruptcy, they are able to restructure or discharge their debts and be able to save for their future, rather than paying the high cost of payday loans.

If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyersat Sadek Law Offices, LLC at 215-545-0008  or (877) 4-LAW-411 or email brad@sadeklaw.com. Thank you.

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