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

During foreclosure, never ignore communication

Odds are, if you're facing foreclosure, you knew it was an issue long before you got that first notice. While there are cases where people feel surprised that their home is being taken back by the bank, most people are well aware that they have been missing payments. They know the potential ramifications. They just do not feel like they have any other options.

If this happens to you, it is crucial that you do not ignore any of the documents you get from your lender. They're going to attempt to contact you. It will probably start with reminders that you need to pay. If they begin working toward foreclosure when you still don't pay, they'll send you notices to make sure you know it's coming. They're legally obligated to do so.

What is a boomerang homebuyer?

Have you ever heard the term "boomerang buyer" applied to someone who is looking to buy a home? Have you been wondering what it means?

It's actually very applicable right now. It essentially refers to someone who lost their house in foreclosure. Now, they're looking back into the market so that they can buy a new home. This progression from having a home taken away to putting in an offer on a new one is what makes people use that term.

Ohio residents: Here are some strategies to pay down bills

You look at the pile of bills and wonder just how you compiled all of this debt. And how you're going to escape it. It's clear you need a strategy to deal with all of your creditors and prioritize your bills.

Here's how to get started:

  1. Stop all unnecessary spending and divert the money you would have spent on, say, gourmet coffee to your debts. If you spend $25 a week on coffee, that's $100 a month you can put toward debt.
  2. Get caught up on all accounts by making minimum payments. You don't want to be late on your accounts moving forward.
  3. Call your credit card companies to seek a lower interest rate. If you're paying less interest, it will be easier to pay off your balances.
  4. Once you have your interest rates settled, pay off the accounts with the highest interest rate first. Some experts will say to pay off the smallest balances first. But if that small balance has just a 10 percent interest rate but the larger one carries a 30 percent rate, it makes more sense to pay off the bigger balances.
  5. Find additional work. In today's gig economy, there are many ways to find side jobs. Put all of that income, after putting aside a percentage of it for taxes, toward your debt.

Common signs that point to bankruptcy

Are you struggling to make ends meet every month? Has a medical emergency put you behind on other bills? Perhaps the company you work for has downsized and you had to take a pay cut or lost your job. No matter the reason for your financial troubles, there are options available to help you crawl out from under piles of debt.

Many people in Medina and across Ohio have found themselves in similar circumstances. While some people simply put on blinders and try to ignore the debts they cannot pay, others take a step in the right direction and begin to research real options that can help get their debt under control. For some individuals, a session of credit counseling is enough to effectively reorganize finances. However, others need to take more drastic measures such as bankruptcy. Here are a few signs that it could be time for you to start the bankruptcy process.

Seek an attorney's help to stop wage garnishment

You know you're behind on your bills. You want to pay them, but you just don't have the funds.

Now you've received a letter informing you that a creditor is seeking legal approval to start garnishing your wages. That means they can take money from your paycheck to help pay off the outstanding debt.

Tips to help curb your spending

If you're looking for debt relief, one thing you want to consider is working to curb your spending. This may not get you out of debt, but it can help you plan for the future -- after bankruptcy, debt consolidation or whatever you end up doing -- so that you don't get into debt again.

That said, in a consumer culture, it's often hard to know where to start. Here are a few things that you can do:

  • Figure out what you really use. Get rid of what you don't. Focus future purchases on the things you really enjoy.
  • Cut back on energy use around the house. Just switching to LED bulbs can save you money every month.
  • If you have things you buy a lot -- coffee, for instance, or cereal -- consider buying in bulk. You pay more up front, but you save over time.
  • Focus on hobbies that don't cost money. Stop working out at the gym and start running outside, for instance. Instead of paying to go to the movies, take the time to read some of the books you already own.
  • Don't buy bottled water. If you want to filter your water, get a filter and a bottle you can wash and refill.
  • Find a bank without fees. The last thing you need is to see some of your income disappearing every month, with nothing in return.
  • Make a budget. This is the most important step. Figure out what you can spend every month and then stick to it.

Will your lender modify a loan?

You think that you're going to go into foreclosure in the near future. Maybe you just lost your job. You got a part-time job to replace it, but you know it's not enough to pay the bills. Of course, you believe you'll have another full-time job in the future, but you anticipate a few months with far less income. If you miss all of those mortgage payments, you know you may lose your home.

One important thing to ask is whether or not your lender is open to a modification that may make it possible for you to avoid foreclosure and keep the house. This is especially possible if you can show that your financial challenges are temporary, and you fully expect to be able to pay off your debt in the future. Examples of potential modifications include:

  • Extending an introductory interest rate to keep the payments down
  • Fixing an interest rate at a lower amount if the loan originally called for an increase
  • Extending the overall length of the loan so that you take a break from making current payments and simply make more at the end
  • Increasing the balance of the loan to reflect the missed payments
  • Simply allowing you to skip a number of payments, with the goal of starting them up again in a few months

6 potential reasons for a foreclosure

From the outside, a foreclosure sounds simple. The bank essentially bought the house by providing the loan. The homeowner then stopped making payments on the loan, so the bank decided to take the house and sell it to recoup their costs.

The reality is usually very complicated. Why did the owner stop making those payments? What really forced them into foreclosure?

Can I dump my student loan debt in a bankruptcy?

A question frequently asked of consumer bankruptcy law attorneys is whether a bankruptcy wipes out student debt. Unfortunately, in all but the rarest circumstances, it does not.

Out-of-control student loan debts are being decried by some of the candidates vying for the 2020 presidential election. The problem is quite substantial, with over 44 million borrowers owing at least $1.5 trillion for their unpaid student loans. On average, a graduating senior will walk away with more than $37K worth of student loan debt. In fact, student loan debts are now number two on the list of consumer debt categories. They eclipsed credit card debts and are second only to mortgages.

Preserving property through Chapter 7 bankruptcy

One of the common misconceptions about using bankruptcy to discharge debt is the notion that filing for bankruptcy means that one must offer up all of their property. While it is true that bankruptcy requires borrowers to make sacrifices in order to discharge debt, the aim of the bankruptcy is system is to give borrowers a fresh financial start, not leave them penniless and homeless.

If you suspect that bankruptcy may help you overcome significant debt, don't let the fear of liquidating your property keep you away from financial freedom. Borrowers with high incomes often qualify for Chapter 13 debt reorganization, which may not require forfeiting any property at all. Those who do not qualify for Chapter 13 may still qualify for Chapter 7, which does typically require borrowers to sacrifice their property, but rarely all of their property.

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