Vance P. Truman, Attorney at Law
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Medina Bankruptcy Law Blog

How can you tell if you're spending too much on that new home?

You're looking to buy a new home and running all of the numbers, but you're worried about accidentally buying more home than you can afford. Fortunately, there are a few ways to tell.

First off, many industry professionals simply use 28 percent as their guideline. First, take all of the money you make every month. Then look at the cost of your mortgage. Be sure to include everything, from the principle payment to the insurance to the escrow accounts. The total you get shouldn't be more than 28 percent of your earnings.

What's the biggest fear with Chapter 7 bankruptcy?

The biggest fear associated with Chapter 7 bankruptcy comes largely from Hollywood movies where you see the arc of a famous person's life. Suddenly, the person becomes famous and wealthy too fast. Spending gets out of control, and the next thing you know the sports star, rocker or movie star has to file for bankruptcy.

The scene that follows usually involves creditors coming to empty out the person's house, and all the luxurious things he or she has acquired are gone. It's always the saddest moment in the film. The thing is, Chapter 7 bankruptcy isn't actually like this at all for most people.

Tips for telling the kids about foreclosure

It can be hard to talk to the children about foreclosure. You want them to feel safe and secure in the house, but you also don't want to lie to them or hide things from them.

Even if foreclosure is just a consideration for your future and you're thinking about talking to the kids, these tips will help:

How foreclosure can impact entire neighborhoods

Foreclosure may not be an isolated issue. In some cases, as property values fall, it can hit entire neighborhoods.

For example, a lot of people bought new homes when prices were high and there was a surge of construction. However, as that bubble popped, it turned out that there were too many homes. This devalued those that had been purchased and meant that many homes didn't sell.

Can you invest money while making Chapter 13 payments?

You file for Chapter 13 bankruptcy and get a five-year repayment plan. It's based around your current income and your budget basically allocates everything that you have toward paying your necessary expenses or paying into that repayment plan. You don't worry about investing because you just want to eliminate that debt.

Two years go by. You make each monthly payment. Then, you get a sudden windfall. Maybe you win a minor lottery or get an inheritance from a parent. Maybe your spouse, who wasn't working, gets a job. Perhaps you sell a valuable asset that you'd retained during bankruptcy, making a profit. Now that you have extra money, can you invest it?

Can you rent out your house to keep from going into foreclosure?

Your home is going to be foreclosed upon. It hasn't happened yet, but it's probably coming. You know you can no longer afford the mortgage payments. Can you just rent out the house?

This is perhaps not a common tactic, but it's absolutely something people have done. You may be able to keep the lender from taking back the house by letting renters live there.

What do people fear the most about bankruptcy?

Bankruptcy can be a loaded term for a lot of people. They have numerous fears about the process, some of which may be founded more in myth than reality.

First of all, people worry that all of their property is going to be taken away from them. They want to file, but not at the expense of everything that they own.

5 tips to build your credit and buy a home after bankruptcy

You filed bankruptcy right when you wanted to buy your first home. Now you're worried that you'll never get approved for a mortgage and get that dream house -- or even a starter home.

This is a common fear when people consider bankruptcy, but it doesn't need to be. You can still buy a home. You can recover from bankruptcy and it's often no trouble for those who have declared to get the financing that they need.

Contesting wage garnishments based on standard living expenses

Your wages are being garnished. You understand the debt and you don't deny that it exists. You're not contesting based on the fact that you think it's inaccurate. That doesn't mean you can't contest the garnishment at all.

For instance, you may be able to put in an exemption claim saying that you can't pay your standard living expenses because the garnishment takes too much of your monthly wages. It's a hardship that's putting you in a potential dangerous and unhealthy position.

Do co-signers have to pay after bankruptcy?

Your child wanted to buy a car and couldn't get approved alone. You decided to co-sign, saying you'd share the car. The total payment was $500 per month, and you both paid $250 of that. If your child then goes bankrupt, do you still have to pay for the debt, or is it all cleared since it was the same auto loan?

Every case is different, but you generally have to pay. You still said that you'd pay off that debt, and, even though your child can't do it, the lender doesn't care. One of you has to pay, and they can come after you for the full amount.

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