Saturday, August 29, 2009
OBAMA'S HOME LOAN MODIFICATION
The loan modification program of Obama is launched to help the home owners to pay off the home loans. But in the beginning there was some misconception regarding the Obama's home loan modification program. People use to believe that when they are just facing any problem to pay off the home loan they may not have the right to apply for home loan modification. They use to think that when a person is behind on any account of home loan or the creditors are going to foreclose the property of the debtor then the debtor has the right to go for home loan modification. But this is not the actual scenario.The fact is even if a person is not at fault on any account; he or she can apply for the program if it is found that the person is facing any difficulty in paying of the loan. A person can also apply for home loan modification if it is found the debtor is not able to satisfy the basic family needs or the loan amount is higher than 31% of the total monthly income. After the modification process the home loan is modified along with the terms and condition and is adjusted accordingly.
Loan modification program has many advantages. It will decrease interest rate of the home loan and will also increase the tenure of payment. The debtor also has the right to talk to the lender or lenders before the debtor apply for it. A contract is made once the loan modification gets approved. This program will help a debtor to keep their home and also help them to stop paying extra charges.
Obama's loan modification program helped debtors in many ways and it is always a better option then refinance.
HOW DOES BANKRUPTCY PROTECTION REALLY WORKS
In some places of United States a debtor can opt for bankruptcy protection services. It is legal procedure which can also prove to be a good alternative to usual bankruptcy proceedings. So that a person can gather some idea about the debts that are going to be discharged or whether the debts can be discharged or not.The cost incurred while filing bankruptcy should also be considered and to be compared with advantages received. Because the disgrace of filing bankruptcy continues for a long time between seven to ten years and during this time there can be lot of financial stress as credit will not be easily available. So it is always advisable to enter into a bankruptcy evaluation program to judge whether bankruptcy is the only available option.
In bankruptcy protection the term "protection" means the amount of debts discharged form the total number of debts due. Before the discharge, the possessions of the default debtors are sold of and the amount collected from the sell proceedings are used to pay the debts.
As per the bankruptcy Federal Law there are two types of bankruptcy protection available to the debtor and they are Chapter 7 and Chapter 13.
Chapter 7 is also called straight bankruptcy. Here a trustee is appointed by the court who takes over all the assets of the debtor. The trustee then sold the assets and the amount received after liquidation is used for Chapter 7 bankruptcy proceedings.
In Chapter 13, a repayment plan is prepared and the debtor has to make payments according to the repayment plan that is proposed and accepted.
This is how bankruptcy protection really works.
Friday, August 21, 2009
DEBT SETTLEMENT
When a person is over burdened with loads of debt and has no option to pay back those debts then debt settlement is the best way to pay back the dues. This is a very good option as the victim does not have to pay the entire amount. He or she only needs to a pay part of it.
Debt settlement is a legal process through which a person can get out of their debts without the stigma of filing bankruptcy or making extra payments in terms of financial charges. It is a very easy process to go through if a person gets an idea of how it actually works. Here a person just has to talk to their creditors to pay a lesser amount of their actual debt. The payment is generally a one time payment. The payment varies from 20 percent to 80 percent of the total debts due depending on the negotiation with the creditors.
But there are certain obligations also and one of them is IRS. Some lenders may send an IRS form 1099 saying that the savings in the debt settlement process is counted as income so it should be taxable.
But it is not an unavoidable circumstance. A debtor can easily fill an IRS form 982 that will show that the he or she was insolvent at the time of settlement. And by filling that form a person would not have to pay anything as tax on his or her savings.
So it is always advisable that a person should choose debt settlement over bankruptcy as bankruptcy is the last resort to get rid of debts and which also have dreadful consequences.
Debt settlement is a legal process through which a person can get out of their debts without the stigma of filing bankruptcy or making extra payments in terms of financial charges. It is a very easy process to go through if a person gets an idea of how it actually works. Here a person just has to talk to their creditors to pay a lesser amount of their actual debt. The payment is generally a one time payment. The payment varies from 20 percent to 80 percent of the total debts due depending on the negotiation with the creditors.
But there are certain obligations also and one of them is IRS. Some lenders may send an IRS form 1099 saying that the savings in the debt settlement process is counted as income so it should be taxable.
But it is not an unavoidable circumstance. A debtor can easily fill an IRS form 982 that will show that the he or she was insolvent at the time of settlement. And by filling that form a person would not have to pay anything as tax on his or her savings.
So it is always advisable that a person should choose debt settlement over bankruptcy as bankruptcy is the last resort to get rid of debts and which also have dreadful consequences.
Saturday, August 15, 2009
DEBT CONSOLIDATION LOAN OPTION
When a person is high on his or her debts on more than one account then debt consolidation loan is the best option because all the debts will be consolidated into one debt and there will be one loan to pay off those consolidated debts. There are two types of debt consolidation loans available in the industry. They are home equity loan and unsecured loan.
Home Equity Loan –
A home equity loan is a type of loan, which is used by the proprietor to obtain a loan by utilizing the equity of the home as guarantee. It is one of the types of debt consolidation loan that offers great benefit as it can be obtained with a low interest rate and it comes with tax benefits. There are two types of home equity loan –
Home Equity Loan –
A home equity loan is a type of loan, which is used by the proprietor to obtain a loan by utilizing the equity of the home as guarantee. It is one of the types of debt consolidation loan that offers great benefit as it can be obtained with a low interest rate and it comes with tax benefits. There are two types of home equity loan –
- Fixed rate loans
- Line of credit
But due to the current market situation, now, the home equity loans are not easy to get. The credit market in US is totally devastated and banks are now thinking more than once to issue loan against home. Now it is not possible to get the earlier benefit of getting 125 percent of the total value of their home. Now it is even difficult to get 80 percent loan on the total home equity.
Unsecured loan –
When a person does not have to provide any security or collateral for obtaining a loan then this is called unsecured loan. But still traditional lenders will check the credit report of a person who is obtaining for an unsecured loan. And if it is found that the borrower is at fault on multiple accounts then getting an unsecured loan is a problem.
Friday, August 7, 2009
AUTOMATIC STAY IN BANKRUPTCY
Automatic stay is a legal document produced by the court, which is used to stop the debt collectors and collection agencies from taking away the property of the debt defaulters. Once a person files for bankruptcy, the automatic stay comes into play. In certain situations, automatic stay helps the debtors to protect their property. If a debtor files for Chapter 13 then the co debtors, also get the benefit of automatic stay.Automatic stay has many advantages. It helps the stops the creditors form certain actions. They are:
- Automatic stay stops the collection agencies from making collection calls to the debtors.
- They prevent the creditors to repossess the valuable property of the debtor.
- Automatic stays also prevent the "foreclosure sale".
- It even stops the creditors from filing lawsuit against any debtor.
What is the duration of automatic stay?
Automatic will remain as long as the judge wishes. It will remain until and unless a debtor gets a discharge. Automatic stay prevents the debtor from foreclosure. As soon as the arrears are discharged, the lenders have the right to proceed. And in case of Chapter 13, the automatic stay remains during the total period.
If automatic stay is violated
If the automatic stay is violated then court send notice to the creditors. But court took few weeks for this and in that time, if any creditor files any case against any debtor then the filing is considered as an invalid one.
Benefits of automatic stay
Foreclosure – Automatic stay can stop foreclosure of the debtor's property thus helps the debtor to retain their property. However, once the automatic stay is lifted, the creditors are ready to proceed.
Eviction – In this case, automatic stay can also help a debtor to some extent. But according to the new federal law, if any case of eviction is already going, then the automatic stay could not help that debtor.
Wage garnishment – Wage garnishment can also be prevented through wage garnishment. As per rule, only one forth of the salaries is permissible to use for court judgment.
Saturday, August 1, 2009
CREDIT REPAIR AFTER BANKRUPTCY
In almost every scenario, it has been found that bankruptcy is the consequence of credit mismanagement and other credit related problems. Some still believe that if they are declared bankrupt then they will be no longer eligible to apply for credit. However, this is not at all a fact as many people rebuild their credit even after bankruptcy. After a person is declared bankrupt, the credit report of that person will definitely be affected but with proper guidance, a person can rebuild his or her credit. However, credit restructuring is a time consuming process and is a difficult one too.The type of negative entries will justify the process of credit repair. If the negative entry is, a sort of wrong data entry then the debtors has the right to inform the credit reporting agencies regarding the fault and ask them to correct it. If the negative entries are about the delay in payments, foreclosure etc then it should be treated differently.
To repair the credit sometime the assets are sold to make full payment. If enough assets are not available then the debtor, can request the banker to make a repayment plan and can pay accordingly. In this way, a person can show that he or she is interested to get rid of the bad entries in the credit report. Payments must be made timely. If a person want to apply for a loan then it is advisable to apply of if he or she really needs it. The report can be improved through these ways.
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