No one can see the future, and although no one deliberately makes decisions that lead to needing a Southern Colorado bankruptcy lawyer, it happens more frequently than you might think. Debt accrues interest, fees, and grows beyond what many would ever imagine, and it becomes simply unmanageable. Excessive spending or the use of credit cards is only one possible reason. A lot of the time, unforeseen circumstances arise, like large medical bills for example. This can leave people in financial devastation that can not be undone given the monthly income they make every year. These are reasons to consider the relief that filing for bankruptcy can offer.
This may be one of the most common questions I hear as a Colorado bankruptcy attorney, "Can I keep my house if I file Chapter 7?" But the answer isn't always so simple. In Colorado, keeping your home after Chapter 7 bankruptcy will depend on your answers to three questions. Do you really want to keep it? Do you have any equity in the home? And are you current on the payments?
Deciding whether you want to keep your house may be difficult, but if you owe more than it is worth it might not be an asset worth saving. Also, if your interest rate is too high or the house needs a lot of work it might be more than you can afford to keep. Some Colorado filers find they are better off letting it go in the bankruptcy and buying another home a few years down the road. The good news is that in Colorado, you can almost always keep your home if it makes financial sense to do so.
Secondly, the trustee in your bankruptcy case will want to know if you have any equity in the home. If the house is worth more than you paid for it, then you have equity. If you have equity, the trustee will determine if you have more equity than what is protected under the state's exemption statutes. These are the laws that determine what you get to keep in a bankruptcy. Unless you have exempt equity, the trustee is not going to come after your home. However if you have non-exempt equity there are some steps that can be taken to minimize it. This will be a topic for discussion with an experienced Chapter 7 bankruptcy lawyer.
Finally, if you are behind on your mortgage payments at the time of filing, your lender could either demand that you get caught up immediately or they could ask the court for permission to foreclose. This causes some risk and it might be better not to leave this decision up to the mortgager. When you speak with a bankruptcy attorney, find out if it makes more sense to get caught up before filing Chapter 7, or if a Chapter 13 bankruptcy makes more sense. Chapter 13 allows you to repay arrears on a mortgage over a three to five year period.
One of the benefits of filing for Chapter 7 bankruptcy in Colorado is how it wipes out all of your dischargeable debts. This will include not only credit cards and medical bills, but also the debt you still owe on your home and automobile. While you may no longer owe money on your home, keeping your home after bankruptcy will largely depend on you. Below are three common options for handling your home after a bankruptcy.
Reaffirm: This process allows the petitioner to request that the judge waive the discharge of a specific debt. With a mortgage or home-equity line of credit (HELOC), you agree to continue making payments on the house as agreed. As long as you continue to do this, the mortgagor cannot foreclose. However, if you become unable to pay, the lender can not only foreclose, they can sue you for the difference between what you owe on the home and what they sell it for at auction. One of the advantages to signing a reaffirmation agreement is it allows you to rebuild your credit score faster after bankruptcy.
Stay and Pay: This means you will continue paying the mortgage without a reaffirmation agreement. Essentially, this means you are paying a debt you no longer owe, but it keeps the lender from foreclosing because they are still receiving payments. Once you have paid the full amount that was owed before the bankruptcy, the lender signs the title over. This is a popular option because it even allows you to sell the property, but refinancing is impossible since there is no current debt left on the note. Along these same lines, if you were to go into foreclosure the lender cannot sue you for a deficiency.
Surrender: If you decide not to keep your home, or you don't feel that signing a reaffirmation agreement would be wise, you may simply hand the keys over to the lender and walk away. Chapter 7 bankruptcies free you from any associated debt with regard to your home, so there is no threat of the lender coming after you later on.
As a Colorado bankruptcy attorney, I am often asked if bankruptcy rates are going up or down, and if the demographic makeup of bankruptcy filers has changed. Over the past few years, as the U.S. has gradually emerged from the recession, the number of people filing for bankruptcy has decreased, but there are a few trends that have little to do with the economy.
Many people who file for bankruptcy are lower-income individuals who simply cannot afford to pay for unexpected major expenses. A job loss or a major illness might be just enough to push them into financial ruin. While peaks in petitions are a sign of economic downturn, filings will also increase in states with fewer consumer-friendly laws
2005: A record year for personal bankruptcy
Among the patterns revealed by recent research, the number of bankruptcy filings has steadily risen over the past century, particularly within the 25 year period between 1980 and 2005. In fact, bankruptcy filings hit an all-time high in 2005 when a record of two million cases was filed. In that year, an astounding one out of every 55 households filed for bankruptcy. Interestingly, in 2006, bankruptcy filings dipped to the lowest point in twenty years.
Consumers outpacing businesses
In 1980, businesses accounted for 13% of all bankruptcy filings, but today they only account for 3 percent. The vast majority of bankruptcies are now filed by consumers. But these statistics are by no means consistent across the country. The number of bankruptcies varies widely from state to state, partially because the policies surrounding bankruptcy differ in each state, but also because of the number of people who live there.
States with highest number of bankruptcies
As of 2011 the state with the most bankruptcy filings was California, with more than 240,000. The number was so large it accounted for 17% of all the nation's bankruptcies that year. The five states with the highest number of petitions in 2011 were responsible for 38% of all the nation's filings that year.
These are the top five states and their number of declared bankruptcies in 2011:
Why are people filing for bankruptcy?
A study from 2005 revealed that 46 percent of bankruptcies were related to medical expenses from a serious illness not covered by insurance and the resulting loss of income. However, shortly after this study was completed, drastic changes in the economy caused bankruptcy from unemployment, underemployment and credit card debt.
Demographic changes in bankruptcy filers
Over the past few decades, researches have noticed some key differentiators among the "typical bankruptcy petitioner." For example, the average filer is older and married, has a high school education with no college, and earns less than $30,000 per year.
At the time of bankruptcy, the age of the petitioner seems to be getting older. Since the early 90's more senior citizens are declaring bankruptcy while fewer filers are under the age of 25. In fact, since 2007 those under 25 made up less than 2% of all filers. During that same period of time, the percentage of older petitioners more than doubled, now accounting for nearly 20% of all filers.
As a result of these fluctuations, the median age of a bankruptcy-seeker has increased from 38 to 45 years of age.
What about repeat filers?
Recent data suggests that 8 percent of those who seek bankruptcy protection have filed at least once before. Repeat filers are now responsible for 16% of all bankruptcy cases.
Some experts point to these repeat filings as proof that bankruptcy laws are exploited, but new laws have been enacted to curb abuse of the bankruptcy system. However, these recent policy changes have little effect on who files for bankruptcy and when.
Gender and marital status
Contrary to what one may believe, the gender distribution of bankruptcy filers is roughly equal parts men and women, and the gap seems to be shrinking. As of 2010, more than 64% of all bankruptcies were filed by married individuals, with only 17 percent of the debtors single, 15 percent divorced and 3% widowed.
Level of education
In 2010, about 20% of all bankruptcies were filed by people with a bachelor's degree or higher, while 36% have a high school education level and 29% have some college education.
A study from 2011 found that 60% of bankruptcy seekers earned less than $30,000 per year, a decrease from 66% four years earlier. During the same period, a higher number of filers reported earning more than $60,000 per year.
While it's true that there is a "typical profile" for someone who is likely to file for bankruptcy, certain life circumstances increase the possibility. No one is immune to having serious financial trouble. If you find yourself struggling financially, it may be time to contact a bankruptcy law professional who can help you understand your option.
Our Colorado Springs Chapter 7 bankruptcy attorneys have talked a great deal about the student loan debt trap that many young people have found themselves in over the last few years.
However, a new element of this crisis has recently emerged: That of older adults who are battling student loan debt. We're not talking about the parents of college students (although, they too are struggling).
These are individuals who have perhaps gone back to college either to change careers or boost their skill set. However, what certainly seemed like a smart move a handful of years ago has now left them burdened with debt and with fewer job prospects to boot.
It's important to note that unfortunately, a Chapter 7 bankruptcy will not erase student loan debt, except in extreme circumstances (your bankruptcy lawyer can help you explore whether that is a possibility for you). But what a bankruptcy can do is free you from the other debts that may have piled up as you worked your way through school.
These are not individuals who were careless about their future or reckless about their money. Here are some examples:
1. A 51-year-old who acquired nearly $90,000 in student loan debt after graduating from chiropractic college 15 years ago. Financial aid officers told her she could likely expect to repay it within five years. But with the economy tanking, she was never able to get her practice off the ground. Able to make the minimum payments, her loan has ballooned to over $150,000.
2. A 59-year-old attended school for arts administration back in the 1980s. He didn't finish his degree, but ended up taking various field-related jobs. As other financial obligations took priority, his student debt kept getting put to the back burner. He still owes$20,000.
3. A 64-year-old who attended law school after earning a Ph.D. in immunology, and then sent two children to college at top universities. Collectively, the family owes about $120,000.
Not all of these individuals are in terrible shape, but many live paycheck-to-paycheck. That means one medical emergency or personal injury could send them into a tailspin of debt.
You do have the ability to take the reins on the situation before that happens.
We can help.
A nationwide drought that has prompted authorities to declare a natural disaster in 1,000 counties in 26 states (including Colorado) has left many farmers abandoning acreage, filing insurance claims and, in some cases, contemplating bankruptcy.
Our Colorado Springs Chapter 7 bankruptcy lawyers know that while this drought is currently affecting farmers and those in the agriculture business, it won't be long before food prices start to soar, which will inevitably affect everyone.
When even basic expenses like food become difficult to afford, many people will be forced to choose between continuing to pay down existing debts and eating. For most, that isn't a choice at all.
A Chapter 7 bankruptcy can help by allowing you to unburden yourself from those existing debts, particularly if you are so deep you have little hope of ever being able to repay it anyway.
According to officials, this is the worst drought to slam the country in nearly 25 years.
In addition to farmers, reports indicate that restaurants, the boating industry and others will be affected as well.
So far, the U.S. Department of Agriculture has approved roughly 280 disaster loans relating to the drought, which equal more than $28 million.
But that's only a temporary fix, and those loans can be tough to get.
The dryness is a major factor for states in the south and west - and Colorado is right in primary dry zone.
What makes it especially worse for farmers is that the lack of rainfall follows record heat waves, fatal storms and raging wildfires. In fact, the last 12 months have been hotter than any other since 1895 - when we first started maintaining weather records in the U.S.
An official with the Drought Monitor reports that half of all U.S. ranges and pastures are in either poor or very poor condition, which is a spike of nearly 30 percent in just a matter of weeks.
Factoring in the recent wildfires in Fort Collins, the nationwide acreage torched by brushfires shot up from 1.1 million to 3.1 million.
While we can't adjust the temperatures or make it rain, we can help you find financial relief.
Many of you can immediately save yourself the time involved in reading the rest of this post: if you have unmanageable debt, you need a bankruptcy attorney.
There is a wide variety of on the market, such as so-called ‘debt resolution’ agencies and ‘petition preparers’. For the most part, these places will do their best to make you, the customer, feel as if they have everything entirely in hand, and that your filing will be routine.
The reality is far from the case. Frequently, the people who work at those agencies are unlicensed, uncertified, and sometimes even untrained!
A bankruptcy attorney knows that every case is unique, and it’s the time and energy that they put into each and every case that lets you take back control of your financial freedom.
Bankruptcy attorneys know the full extent of the law, and how best to prepare you to deal with it. Yes, you could potentially save money by using a cheaper, unlicensed company, but we’re not just talking about the money that you have right now, but about the money that you will have for the rest of your life.
If you come out of a bankruptcy with remaining debt or without your vehicle, you may find that you just fall right back into the same position you were in, except that this time, you won’t be able to file for bankruptcy again right away!
A bankruptcy attorney isn’t just for filing for bankruptcy, either. They can evaluate your entirely financial situation and determine whether or not bankruptcy would even be the best option for you.
Give it a try, and have a free consultation with an experienced and proven bankruptcy attorney today. Call (719) 520-0164 today!
Statistics can be deceiving.
While recently-released figures seem to indicate that home prices are actually up, the reality is that we may soon see a glut of foreclosures in Denver, Colorado Springs and across the country.
Our Colorado Springs foreclosure lawyers know that it has a lot to do with people who are underwater on their homes, and yet are hanging on by their fingertips, hoping the market will do an about-face so they won't lose as much money. this means there are fewer homes actually on the market, which is driving down the supply, and therefore increasing the demand. There have even been bidding wars in a few cases.
When we look at the figures across the country, we see an increase of little more than 1 percent on home prices, when compared to a year ago. While this may seem minimal, you have to remember that the value of homes plummeted after the market tanked in 2008. The fact that it's inching up at all is seen as an improvement - until you really analyze what's going on.
Of course, it is good for those homeowners who are looking to sell right now. They're probably still going to take a loss, but it will be blunted by this short-term spike.
However, this is not going to last long-term because we still have a large number of people who are on the brink of foreclosure. They may be making the minimum monthly payments, but just barely.
This is where our Denver foreclosure lawyers come in. First of all, if you're trying to remain in your home, we can look into helping you secure a loan modification, meaning we could fight for your loan amount to be lowered to what would be considered a fair market value.
However, there may be some situations in which it actually makes fiscal sense to default and allow the loan to go into foreclosure. Of course, that's not a decision you should make without the assistance of a skilled attorney, and we can help guide you through the process.
The other thing that is going to eventually work against these homeowners is that you have banks that are scrutinizing their loans more closely than ever, combined with a populace that has a higher track record of poor credit scores. This is ultimately going to drive down that demand.
Banks continue to reach into consumers' pockets for anything they can, regardless of whether it is going to require people to seek debt relief in Colorado or elsewhere as a result.
Now, Southern Colorado debt relief attorneys are somewhat encouraged to hear of an announcement made by the U.S. Consumer Bureau chief, who says the agency plans to go after banks for their outrageous overdraft protection fees.
Chief Richard Cordray, who recently took over the post, said the agency is also going to be asking for thoughts from the general public on how these fees are worded on checking account statements.
Cordray was quoted by CNN Money as saying that the way banks initiate overdraft fees has resulted in severe financial harm to people who are often the least able to afford it.
Banks have tried to defend themselves by saying the overdraft fees are put in place to spare their customers from being embarrassed when a purchase is denied because there isn't enough money in their account. But when that transaction is completed, the person is hit with penalty fees that generally range between $30 and $35 - sometimes for a purchase that may be just a few dollars. The example given was when a $3 cup of coffee becomes a $40 cup of coffee, due to overdraft fees.
Recent research by the Federal Insurance Corp. determined that in 2008, people who overdrew their accounts more than 20 times annually paid more than $1,600 in overdraft penalties. This is especially alarming when you consider that someone who is likely to overdraw their account that many times is probably someone who is struggling with debt in Denver or elsewhere.
That report spurred action that caused the banks to ask whether customers actually want overdraft protection - instead of signing them up automatically - but banks can still automatically enroll people for overdraft protection for online bills.
Another aspect that the bureau intends to look at is the common bank practice of clearing large purchases before smaller ones. This is a banking strategy that makes it more likely that a customer will overdraft on several smaller purchases - triggering even more fees.
The final part of the bureau's investigation is going to focus on why so many of these fees come down especially hard on younger and low-income consumers. In fact, nearly 47 percent of younger bank customers were at some point slammed with overdraft fees. Of those, more than 15 percent had higher than 10 overdrafts annually.
Nearly half of all Americans aren't able to save up as much money as they should, often necessitating debt relief in Southern Colorado and elsewhere in the country.
This is according to a recent poll which found about 45 percent of people have less savings than credit card debt. Southern Colorado debt relief attorneys know that the economy is inching toward improvement, but many people are so deep in debt that they find it nearly impossible to claw their way out.
This most recent survey, from, Bankrate.com analyzed the spending habits of more than 1,000 adults, and looked at how much people have been able to save. What they found is that just 54 percent of U.S. consumers have more savings in case of an emergency than they do credit card debt. If and when an unplanned event or emergency happens, half the people in the country will be in serious financial trouble.
What's more, about 16 percent don't have any savings.
These figures represent about a 2 percent improvement over last year - not much to celebrate.
This kind of financial insecurity is harmful to the economy overall, experts say, because when people aren't able to save, they aren't likely to spend on more than what they need day to day. If they do, they are risking their own financial future, as having money stored away for an emergency can be critical in helping you avoid finding yourself crushed by debt.
Meanwhile, another survey found that Americans are having a hard time saving for retirement. In fact, almost half the country isn't saving enough to allow for a decent standard of living once they are no longer able to work. That survey also found that a third of Americans don't have enough to cover an unexpected doctor's visit or car repair. On average as a country, we're saving less than we used to.
Stephen Brobeck, the executive director of America Saves, said what this all collectively illustrates is that the recession has ended for a large number of families, particularly those in the lower income brackets. Working families are still struggling with a sagging housing market, sky-high unemployment rates and incomes that have stayed stagnant.
An experienced Colorado debt relief attorney can help.