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How Can Bankruptcy Address Delinquent Property Taxes?
If your family has experienced financial difficulties, such as the loss of a job, large medical expenses, or a disability, you may be struggling to pay certain types of debts. If you are a homeowner, you may have gotten behind on your mortgage payments as well as other expenses, including property taxes. Unfortunately, nonpayment of property taxes can lead to a number of issues that may affect ownership of your home, including property tax liens or different types of foreclosure. While bankruptcy may be an option for addressing property taxes and other debts, it is important to understand your options and the best steps you can take to ensure that you can maintain financial stability in the future.
Addressing Property Taxes Through Chapter 7 or Chapter 13 Bankruptcy
If you have not paid property taxes for multiple years, your local or county government may pursue a property tax foreclosure. However, in many cases, you are more likely to face a foreclosure by your mortgage lender. Since payment of property taxes is a requirement in a mortgage loan, failure to do so may be considered a violation of the loan agreement. If a mortgage lender has paid property taxes to avoid a property tax foreclosure, they may choose to foreclose on the property to seek repayment for this amount.
Will I Be Able to Ever Buy a House if I File for Bankruptcy?
Many people who are struggling with overwhelming debt hesitate to file for bankruptcy, even when it is their best option for debt relief. They worry that having a bankruptcy on their credit report will harm any chance they have of ever owning their own home. The reality is, however, that having delinquent payments and/or charged-off accounts on your credit report is just as – if not more – harmful and could torpedo any plans of obtaining approval for a mortgage. The following are some steps you can take to help obtain that approval in your post-bankruptcy life.
Rebuilding Credit Is Key
Once your bankruptcy petition has been completed and your debts discharged, although your credit score will likely be low, think of this as starting out with a new and clean financial slate. Rebuilding your credit should be your goal.
Start by looking over your credit report. Make sure that it is correct and that all of the items that were discharged in your bankruptcy have been removed from your credit report. Also, make sure there are no other derogatory items that should not be there.
What Are the Credit Counseling Requirements During Bankruptcy?
If you are considering bankruptcy, you have most likely been placed in a difficult financial position due to circumstances beyond your control. While most people have some debts, they will often do everything they can to meet their financial obligations. However, a person or family may encounter issues such as the unexpected loss of a job or a serious illness that leads to large medical bills while also affecting a person’s ability to earn an income. In these cases, debts may become unmanageable, and bankruptcy may be the best option for debt relief. Even though a person or family will usually be aware of the reasons why they are in this situation, a debtor will be required to receive credit counseling during the bankruptcy process.
Credit Counseling and Debtor Education
The U.S. Bankruptcy Code requires debtors to complete two types of counseling during the bankruptcy process. These forms of education are meant to help debtors understand the issues that may have led them to experience financial difficulties and encourage them to follow practices that will allow them to maintain financial stability in the future. Prior to filing for bankruptcy, a debtor will need to complete credit counseling, and before discharging their debts, they will be required to take a debtor education course.
How Can I Avoid Accusations of Bankruptcy Fraud?
If you have significant debts, bankruptcy may be your best option for receiving relief and ensuring that your family will be able to live comfortably and cover your ongoing expenses. However, it is important to make sure you follow the correct procedures when filing for bankruptcy and provide accurate information when submitting bankruptcy forms. Misreporting financial information or other types of activities could lead to accusations of bankruptcy fraud. This could cause your bankruptcy case to be dismissed, or you could even face criminal charges. By understanding the reasons why a person may be accused of bankruptcy fraud, you can make sure you are avoiding these issues and taking the correct steps to discharge your debts.
Forms of Bankruptcy Fraud
Criminal charges for bankruptcy fraud usually require prosecutors to show that a person intentionally provided false information or took improper actions to abuse the bankruptcy system. These actions may include:
Can Filing for Bankruptcy Help Me Get a Repossessed Car Back?
Debts can be a significant problem that affect a family’s financial resources and its ability to pay ongoing expenses. In cases where debts become unmanageable, a family may experience a number of difficulties as they face harassment from creditors and attempts to collect what is owed. In cases where a person gets behind on payments on an auto loan, a creditor may take action to repossess the vehicle. In these cases, debtors will want to understand their options, including determining whether they may be able to get their vehicle back by filing for bankruptcy.
Responding to a Repossession
Most of the time, debtors will want to address their debts before creditors take action to recover money owed or repossess property. Filing for bankruptcy will place an automatic stay on any collection actions and prevent the repossession of a vehicle. However, if a vehicle has already been repossessed, a debtor will need to act quickly to determine whether they can get their vehicle back. If a lender sells a repossessed vehicle through an auction, it will belong to the new owner, and the debtor will not be able to regain ownership.
Are There Alternatives to Bankruptcy That Will Help Improve My Credit?
Most American consumers have debt in some form, and those who experience financial difficulties may struggle to repay these debts. Failing to make payments on time can have a significant effect on a person’s credit score, and this may make it more difficult to obtain loans or other forms of credit in the future. A low credit score can also affect a person in other ways, including their ability to find employment or obtain housing. While those who are struggling with debts may be able to receive relief by filing for bankruptcy, this will have a further negative impact on their credit score. As they determine how to rebuild their credit, a person may consider some alternatives to bankruptcy, and by consulting with an experienced attorney, they can understand their best options for receiving debt relief and maintaining financial stability.
What Are My Options for Protecting Assets During Bankruptcy?
If you have significant debts that you are struggling to repay, you may be considering bankruptcy. However, you may be worried that if you file for bankruptcy, you could lose certain assets that you own, such as your home, your family’s vehicles, or valuable possessions. By understanding the laws that will apply to you when you file for bankruptcy or seek other forms of debt relief, you can determine your options for asset protection and the best ways to address your debts and maintain financial stability.
Using Bankruptcy Exemptions
If you are planning to file for Chapter 7 bankruptcy, you may be required to turn over certain assets, which will be liquidated to repay as much of your unsecured debts as possible before these debts will be discharged. However, certain types of property are exempt from liquidation. As you prepare for bankruptcy, you may be able to utilize these exemptions to avoid turning over your assets.
UPDATE: Can I Keep My Car if I File for a Texas Bankruptcy?
Originally published: February 28, 2020 -- Updated: December 2, 2021
UPDATE: In addition to understanding how filing for bankruptcy may affect ownership of a vehicle, a debtor will want to determine whether they can use a “cramdown” to reduce the amount they owe on an auto loan while addressing other debts during the bankruptcy process. This option is available in a Chapter 13 bankruptcy, and it can ensure that a person will avoid the potential loss of their vehicle while still being able to make affordable payments.
A cramdown is a reduction in the amount owed on an auto loan. A debtor may be eligible for a cramdown if the remaining amount that they owe to a lender is greater than the actual cash value of the vehicle. In addition, the debtor must have originally purchased the vehicle at least 910 days before filing for bankruptcy. For example, if $20,000 is owed on a loan, but the car’s market value is $13,000, the amount of the loan may be reduced to $13,000. The remaining $7,000 will be classified as an unsecured debt and included in the debtor’s Chapter 13 repayment plan. By reducing the amount of this loan and discharging other debts, a person can ensure that they will be able to maintain financial stability and avoid the loss of their vehicle.
How to Prepare for Your 341 Meeting After Filing for Bankruptcy
If you have significant debts that you are struggling to repay, bankruptcy may be your best option for regaining financial security and ensuring that you will be able to address your ongoing needs going forward. By filing for bankruptcy, you can put a stop to harassment from creditors and prevent collection actions such as wage garnishment, repossession of property, or home foreclosure. You can then determine your best options for receiving relief from the debts you owe.
One of the most important steps during the bankruptcy process is the “meeting of creditors,” which is commonly known as the “341 meeting,” since it is addressed in section 341 of the U.S. Bankruptcy Code. This meeting usually takes place at a bankruptcy court, and it will be conducted by the trustee assigned to the bankruptcy case. While creditors or their legal representatives may be present at this meeting, in many cases, they do not choose to attend. By understanding the issues that will be addressed during the 341 meeting, you can make sure you are properly prepared, and you can avoid any issues that may affect your ability to complete the bankruptcy process.
How Can I Address Harassment From Debt Collectors and Creditors?
Debts are a reality for most Americans, and while most people are able to make ongoing payments, some may experience financial difficulties that make it difficult to pay back what is owed. If you have gotten behind on payments, you may have begun receiving calls from creditors. Debt collectors can sometimes take aggressive actions to attempt to recover money, and if you have experienced harassment by creditors, you will want to determine the best ways to address this issue. A skilled bankruptcy lawyer can advise you of your options and work with you to determine the forms of debt relief that are available.
Debtor Rights Under the Fair Debt Collection Practices Act
Federal laws dictate the rights of consumers and the restrictions that apply to creditors who attempt to collect debts. The Fair Debt Collection Practices Act (FDCPA) ensures that debtors are protected from harassing behavior such as:
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