Debra BooherOhio Bankruptcy Attorney | Cleveland Chapter 7 & 13 Bankruptcy Law2024-03-07T10:39:45Zhttps://www.bankruptcyinfo.com/feed/atom/WordPress/wp-content/uploads/sites/1301967/2019/11/cropped-Favicon-32x32.pngOn Behalf of Debra Booher & Associates Co., LPAhttps://www.bankruptcyinfo.com/?p=503292024-03-04T10:40:19Z2024-03-07T10:39:45Z1. Financial hardship
One of the primary factors is the borrower's financial hardship. Lenders assess the borrower's ability to repay the loan based on income, expenses and assets. Significant life events such as job loss, medical emergencies or divorce can contribute to financial hardship. Such events may increase the likelihood of loan modification approval.
Documentation helps borrowers show their financial hardship and ability to make modified payments. Documents can include a hardship letter from the borrower and income verification paperwork such as pay stubs and tax returns. Asset information and property documentation are good, too.
2. Loan performance
The borrower's payment history and loan performance are important. Lenders prefer to work with borrowers who have a history of on-time payments but are facing temporary financial challenges. Borrowers who make late payments often or who are in default may struggle to negotiate good modification terms.
3. Property value
The current market value of the property affects loan modifications. Lenders may be more willing to modify loans for properties with equity. There is a lower risk of loss in case of foreclosure. Conversely, properties with declining values or underwater mortgages present greater challenges for lenders.
4. Government programs
Government programs such as the Home Affordable Modification Program and the Making Home Affordable initiative can help. These programs offer incentives to lenders and servicers along with standardized guidelines and support.
5. Lender policies
Lender guidelines for loan modifications can vary widely. Some lenders may be more proactive in offering modifications. They may have established programs to assist struggling borrowers. Meanwhile, others may have stricter criteria or less inclination to modify loans.
Understanding these factors can help borrowers better position themselves for potential relief from financial stress.]]>On Behalf of Debra Booher & Associates Co., LPAhttps://www.bankruptcyinfo.com/?p=503262024-01-04T07:22:29Z2024-01-09T07:21:40ZYou are not alone
Bankruptcy filings have increased recently. For the year ending on September 30, 2023, there were 433,658 cases filed in the U.S. The previous year saw only 383,810 filings. The September 2023 total represents a 12.4% increase in non-business filings and a 29.9% rise in business filings.
Unexpected expenses
Unexpected medical expenses are one of the main reasons people face financial struggles that may lead to bankruptcy. Dealing with illness or injury can result in significant bills while leaving individuals unable to work during recovery. Bankruptcy is a chance for a fresh start, relieving individuals from overwhelming medical debts and allowing them to focus on recovery.
Life is full of unanticipated expenses, from car repairs to home maintenance. Instead of viewing these situations as insurmountable hurdles, bankruptcy can be a tool for embracing financial resilience. It provides the necessary relief to regroup, strategize and build a more secure financial foundation.
Job loss
Losing a job can bring financial instability. Bankruptcy can be a step toward reinventing your career. It provides an opportunity to reassess skills, explore new career paths and rebuild financial stability with a fresh perspective.
Divorce
Divorce often brings financial challenges. Filing bankruptcy can give you a chance for financial independence. It allows individuals to separate financial ties, start anew and create a more stable financial future post-divorce.
Credit card debt
Accumulating credit card debt is a common reason for financial distress. Bankruptcy can be an effective tool for rebuilding financial habits. It offers a structured path to manage and eliminate debt, fostering responsible financial behavior for the future.
Student loans
Student loans can burden individuals for years after graduation. Bankruptcy allows graduates to manage and restructure student loan debt, making it more manageable and enabling a focus on career growth.
Natural disasters
Natural disasters can wreak havoc on finances, leading to bankruptcy. Rather than dwelling on the hardships, bankruptcy offers a way to rebuild after catastrophes. It provides the necessary relief to recover, reconstruct and work towards a more secure financial future in the face of unforeseen challenges.
Bankruptcy provides individuals with the opportunity for a fresh start, financial resilience, and a chance to rebuild toward a more stable future.]]>On Behalf of Debra Booher & Associates Co., LPAhttps://www.bankruptcyinfo.com/?p=503222023-11-07T19:07:29Z2023-11-09T07:24:58ZStrained relationships
One of the most significant downsides is the potential strain it can place on your relationship. Money matters often create tension and conflicts among family members.
About 59% of U.S. adults who loaned a friend or relative money had something bad happen, such as a lack of repayment and/or a damaged relationship with the borrower. If you fail to repay the funds promptly or encounter financial difficulties that prevent repayment, it can lead to resentment, arguments and even permanent damage to the relationship.
Lack of legal protections
Unlike formal lending institutions, borrowing from a relative does not come with legal protections and regulations. This lack of legal structure can leave both the borrower and the lender vulnerable.
Without a clear agreement, there may be no recourse if disputes arise over repayment terms or the amount borrowed. Clarity and transparency are often lacking in informal family lending arrangements, which can lead to misunderstandings and complications. Also, payments to family on money borrowed can create preferential payments that are problematic and recoverable by a trustee if you ultimately need to file for bankruptcy.
Financial dependency
When you rely on family members to pay off a creditor, you risk becoming financially dependent on them. This dependency can limit your financial independence and make you uncomfortable asking for help in the future. It can also hinder your ability to develop healthy financial habits and learn to manage your finances responsibly.
Unequal treatment
Borrowing from a relative can lead to unequal treatment within the family. Other family members may perceive you as receiving preferential treatment or causing financial disparities within the family. This can create resentment and jealousy among family members, further straining relationships.
Reduced accountability
When borrowing from a relative, the accountability for financial decisions can diminish. Instead of facing the consequences of your actions, you may become less motivated to budget, save and make responsible financial choices. This can lead to a cycle of borrowing from family members to cover financial gaps, perpetuating financial instability.
While borrowing money from a relative to pay off a creditor may seem like a quick fix for a financial problem, it comes with several significant downsides. Before proceeding with this step, carefully consider alternative options, such as negotiating with creditors, seeking financial counseling or exploring more formal borrowing arrangements. Weighing the pros and cons will help you make a well-informed decision about your financial future while preserving your family relationships.]]>On Behalf of Debra Booher & Associates Co., LPAhttps://www.bankruptcyinfo.com/?p=503132023-11-07T19:05:04Z2023-09-15T05:41:11ZProtected accounts
In most bankruptcy cases, your 401(k) and other employer-sponsored retirement accounts have protection from creditors. The court cannot generally make you use the funds in these accounts to pay off your debts. Individual retirement accounts have the same level of protection as 401(k) accounts.
Exemptions
You can generally claim an exemption for some or all of your retirement savings. Ohio offers options that you may be able to use to cover retirement savings, but you will need to understand the exemptions and how they work so that you know if you can apply them. Exemptions can be difficult to understand and apply, so be aware that you may need assistance with ensuring you use them correctly.
Bankruptcy can be quite complex. Experienced counsel can usually completely protect your retirement savings when contributions are made consistent with the Internal Revenue Code. However, you should discuss with an attorney all options available to you. Remember that bankruptcy is a challenging chapter in your financial life, but with careful planning, you can emerge from it with your retirement savings intact and your financial future secure.]]>On Behalf of Debra Booher & Associates Co., LPAhttps://www.bankruptcyinfo.com/?p=503112023-11-07T18:54:07Z2023-07-18T06:49:28ZTax debt
The bankruptcy courts may eliminate certain types of tax debt when you file for bankruptcy, depending on the specific type of bankruptcy you choose. In a Chapter 7 bankruptcy, you might have older income tax debt discharged if you meet specific conditions, like if the tax debt is at least three years old, and if you filed a tax return for the debt at least two years before filing for bankruptcy. If you opt for a Chapter 13 bankruptcy, it will not erase tax debt, but it provides a structure for you to repay the debt over time.
Tax returns
Once you have filed for bankruptcy, you might need to file different tax returns for the part of the year before you filed for bankruptcy and the part of the year after filing. This is particularly relevant if you filed for Chapter 7 bankruptcy. In this case, the bankruptcy estate, which forms when you file for bankruptcy, might need to file a tax return, known as a Form 1041.
Tax refunds
Bankruptcy can also influence your tax refunds. In Chapter 7 bankruptcy, your tax refund for the year you filed for bankruptcy becomes part of the bankruptcy estate, which means creditors could use it to offset your debts. In a Chapter 13 bankruptcy, your future tax refunds might also be part of the bankruptcy estate and used to pay your debt.
Tax liens
While bankruptcy can free you from the personal obligation of certain tax debts, it cannot eliminate tax liens. A tax lien is a claim that the government makes on your property due to unpaid taxes. If you have a tax lien on any of your property when you file for bankruptcy, the lien will likely stay in place even after the bankruptcy proceeding unless it is paid in a manner consistent with the Bankruptcy Code. Thus, what survives your bankruptcy will depend on the chapter you file and what the tax lien was or was not paid during the case.
By understanding how bankruptcy affects your taxes, you can better navigate the complexities of bankruptcy and mitigate any tax-related surprises.]]>On Behalf of Debra Booher & Associates Co., LPAhttps://www.bankruptcyinfo.com/?p=503102023-05-19T08:19:50Z2023-05-24T08:19:21ZReasons to modify a loan
Loan modification can alter the terms of a loan and make them more favorable for the borrower. Modifying a loan can help you avoid bankruptcy or foreclosure. Furthermore, changing the terms of a loan is an option for people with credit issues who cannot choose to refinance.
There are multiple ways to modify a loan. You could extend your loan's term or adjust your interest rate. If you have a variable rate, switching to a fixed rate could be advantageous. Loan modification can reduce your payments on a monthly basis. However, you could end up paying the same amount or more over time.
The loan modification process
Modifying a loan can be complex and time-consuming, so it is a good idea to examine your finances before you begin the application process. Review your expenses, earnings and debts to assess your eligibility for a modification. Next, you can apply to modify your loan through your lender. You must complete an application and submit relevant documents. Finally, you must undergo a review and discuss the terms of your modification with your lender. If approved, you can sign the necessary paperwork to change your loan.
Many borrowers with financial struggles can benefit from considering loan modification.]]>On Behalf of Debra Booher & Associates Co., LPAhttps://www.bankruptcyinfo.com/?p=503032023-03-27T02:40:49Z2023-03-31T02:39:40ZKnow which accounts have protection and which do not
Many retirement accounts have protections in place that ensure that the bankruptcy process does not take money from them to pay off debts. Roth IRAs and accounts that fall under the Employee Retirement Income Security Act, for example, both have these protections. However, there is a monetary limit to how much of an IRA has a safeguard.
On the other hand, money that is in regular investment and savings accounts is likely not protected from going to debtors during the bankruptcy process.
Know when to get financial help
As long as retirement savings are in traditional accounts like IRAs, bankruptcy should not affect them. However, a financial advisor can let you know whether or not your retirement funds are safe from this process according to the specific rules and regulations in place in Ohio.
Knowing how to handle retirement savings when filing for bankruptcy can give people peace of mind and provide them with the best possible financial outcome to get them back on their feet.]]>On Behalf of Debra Booher & Associates Co., LPAhttps://www.bankruptcyinfo.com/?p=503022023-01-20T11:22:29Z2023-01-25T11:21:02ZBankruptcy filings are in a downward trend
The United States Courts report that bankruptcy filings for the year 2021 are down 24 percent from the previous year. The decrease to 413,616 filings for 2021 is part of a larger downward trend over a five-year period, as evidenced by the contrast of 789,020 filings in 2017. Consumers can interpret this trend to indicate that people are struggling even to file for bankruptcy.
Consumers file the vast majority of bankruptcies
Government reports also show that business filings only number 14,347 for the year 2021, just over three percent of total annual filings. This exemplifies the reality that bankruptcy for individual consumers is an increasingly valid and acceptable method for debt relief. Chapter 7 and Chapter 13 are the most common forms of consumer bankruptcy, and choosing the right one is a matter of evaluating your current circumstances.
Turning to bankruptcy as a debt relief option is not a shameful option, but it is one that costs extra money in the form of a filing fee and that can alter your financial situation going forward. When debts start to get out of hand, it is good practice to consult with a bankruptcy expert as early as possible so you can understand your options.]]>On Behalf of Debra Booher & Associates Co., LPAhttps://www.bankruptcyinfo.com/?p=502982022-11-14T08:53:34Z2022-11-17T08:52:57ZChapter 7
One of the most common cases in a bankruptcy court is Chapter 7 bankruptcy. This type allows sole proprietors to turn over all of their business and personal assets for liquidation and wipe their debt. The court divides the funds from your liquidation among your creditors. During this process, the court stops creditors from taking collection actions. However, the process can not discharge all debts, such as tax obligations.
The most significant benefit of Chapter 7 bankruptcy is that it discharges all eligible debt, and you can keep your state-protected assets. The biggest drawback is that you will lose a lot of property, and your credit score will be negatively affected.
Chapter 11
Chapter 11 bankruptcy allows a business to restructure its debt to repay creditors over an extended period and remain in operation. Once filed, your company becomes a "debtor-in-possession." You will receive a temporary period where your creditors cannot take collection actions. Your payments will begin again after you create a repayment plan that your creditors and the bankruptcy judge approve.
Chapter 12
Family fishing and farming businesses can use Chapter 12. It is a type of reorganization but allows for a periodic repayment plan to allow for the seasonality of these businesses. The payment plans are typically created for up to five years.
Ideally, you will not encounter any of these types of bankruptcies. However, if you find your business in considerable debt, consider these options and which one is the best fit for you.]]>On Behalf of Debra Booher & Associates Co., LPAhttps://www.bankruptcyinfo.com/?p=502762022-09-20T10:56:32Z2022-09-23T10:56:13ZAvoid assuming
According to the United States Department of Justice, you cannot assume that declaring bankruptcy rids you of every single debt you have. While it may seem that way in some circumstances, you should look into what specific debts each form of bankruptcy covers.
You may feel anxiety when thinking about collections and how you can come up with the money to make the debts go away. This kind of emotion can lead you to make unwise decisions and potentially get into more issues with repaying the money you owe. Taking a moment to step away from your fears can help you make the best choice possible.
Write it all out
Making notes of what assets you own, along with what debts you owe and how much they are, is an important step in organizing your business before declaring bankruptcy. Knowing what liabilities you have is one way to determine whether or not to file at a certain time.
Learn about the types
Choosing between the types of bankruptcy is important. The first step you should take to assess what type works best for you is to know how many assets you have. Liquidation is different than attempting to restructure a business, and what your end goal is can greatly impact what you choose to do once you file for bankruptcy.]]>