Friday, November 25, 2011

What is an "Automatic Stay"?

Once a debtor has filed for a Bucks County bankruptcy, an automatic stay is issued. This legal status prevents most, but not all, creditors from taking actions to collect a debt. The automatic stay is a very powerful component of a bankruptcy. The biggest benefit to the automatic stay for Bucks County bankruptcy clients is that it prevents creditor harassment. If a creditor attempts to collect a debt after a bankruptcy is filed (which triggers the automatic stay), they are in violation of the Fair Debt Collection Practices Act.

Secured creditors, upon showing cause, may request that they be exempted in a Chapter 7. This normally occurs after an individual is behind on their mortgage and the mortgage company is pursing a foreclosure. If the Bucks County resident wants to try and keep their home, it may be worthwhile to file a Chapter 13 bankruptcy.

An automatic stay will temporarily halt the foreclosure on a home (if in a Chapter 7), but once the debtor’s bankruptcy is discharged, the creditor can proceed with foreclosure. An automatic stay generally lasts until the debtor’s bankruptcy is discharged. It ends if the bankruptcy is dismissed.

Tuesday, November 22, 2011

What is a Bankruptcy Discharge?

A "discharge" in a Bucks County bankruptcy means that the debtor is released from liability for certain non-secured debts. Unless a creditor contests the removal of a debt, the discharge generally occurs 60 days after the appearance before the U.S. trustee in Bucks County. The Chapter 7 bankruptcy hearings in Bucks County are held in Trevose. Remember -- there are some debts that are not able to be discharged in a bankruptcy.

The discharge prevents the creditor from taking further action to collect a debt after the automatic stay. This includes eliminating personal contact, phone calls, and mailings by the creditor. Essentially, this is the final step for you to start fresh with your new life. You are assured that no further harassment can occur.

A copy of the discharge is mailed by the bankruptcy clerk to the debtor, the debtor’s bankruptcy attorney in Bucks County, and the debtor’s creditors.

Wednesday, November 16, 2011

What is a Loan Modification?

A lot of my Bucks County Chapter 13 clients have attempted a loan modification to save their home. So, what is a loan modification?

Essentially, a loan modification changes the terms of the original mortgage. Usually the length of the term (total years) of the mortgage and/or the interest rate are modified so the borrower can fulfill his/her mortgage obligations. Sometimes, but not often, the principal amount owed can be lowered.

It is often difficult to obtain a loan modification. The paperwork can be burdensome and the standards for modification are seemingly high. What occurs frequently is that a client hopes to put their mortgage arrears into a new principle payment through the modification.

If that fails, seeing a Bucks County bankruptcy attorney may provide the Bucks County resident with the opportunity to put their arrears into a payment plan with the trustee to save their home. This may be a great option to save their home from foreclosure and continue to attempt to work on a modification (which I always encourage clients to do).