When individuals or small business owners are considering filing for bankruptcy or looking at other legal remedies, they want to know what their options are, what the process is like, what to expect, and what the impact will be moving forward. What you should know is that you are not alone as hundreds of thousands of people each year have to file for bankruptcy and are looking for options to eliminate debt or stop a foreclosure sale. While every case is different, below are typical examples of common situations and results so that you will have an understanding that you are not alone in your situation and that bankruptcy or debt settlement can offer you a fresh start, the temporary delay in a foreclosure you are looking for or a payment plan to get you back on track.
While it is never a good idea to wait until the very last few days to stop a foreclosure sale, some borrowers are left with no choice. This often occurs because they either procrastinated on taking action, they thought they were going to be approved for a loan modification, they were told by the bank their foreclosure sale would be postponed and it was not, they thought they would have funds to cure the arrears, or they were in the process of selling their real estate but just need more time to close the sale. A chapter 13 bankruptcy can stop a foreclosure sale immediately due to the bankruptcy automatic stay. While there may be other remedies such as filing a lawsuit to restrain a foreclosure sale in superior court if you have the time to do so, which may or may not be approved, a chapter 13 bankruptcy is a sure thing to stop a foreclosure sale if it’s your first case filing and you own the real estate.
Caroline was a typical client who needed to file an emergency chapter 13 bankruptcy case to stop a foreclosure sale that was happening within a few days of when she contacted the law firm. She had been working with a real estate agent on selling her home, even had an accepted offer in hand, but needed more time to complete the sale transaction.
With no time or options left to stop the foreclosure sale, she turned to Symmes Law Group, PLLC to help stop her foreclosure sale. Caroline filed a chapter 13 emergency bankruptcy petition which typically does not involve filing a complete bankruptcy case filing as only the voluntary petition section, list of creditors, statement of social security number and completion of the credit counseling requirement are required.
After filing of the emergency chapter 13 bankruptcy petition, attorney Richard Symmes notified the foreclosing trustee hired by the bank of the filing date and case number and the pending foreclosure sale was postponed to a later date. If Caroline wanted to cure arrears on her property over a 5-year period should could do that, but in this case, she only wanted to sell her property, and she now had the time she needed to do that. If a complete bankruptcy petition is not filed, debtors are given 2 weeks to file the balance of the petition or their case can be dismissed. With that said, I typically see emergency bankruptcy cases dismissed about a week prior to their scheduled 341 bankruptcy meeting that is typically scheduled in about 45 days from the filing date.
It should be noted, that in order to sell real estate while in a bankruptcy case, it requires court approval or the dismissal/closure of the case. Typically, a case is closed within 45 days of filing if no further action is taken on a case. Borrowers, considering filing for bankruptcy, should also be aware of chapter 13 debt limits as you would want to avoid any claims of filing a case in bad faith and risk being converted to Chapter 7 liquidation bankruptcy.
In Caroline’s, case, she was able to successfully stop the foreclosure sale, sell her home after the bankruptcy case was closed, keep the equity in her home and start fresh. Since the case was dismissed, she of course did not get a discharge of any debts, but the sale was stopped which was her goal.
For those considering filing an emergency bankruptcy, you should be aware that the bankruptcy filing itself will still report on your credit report that you filed a bankruptcy case, but it will show that the case was dismissed and that you did not get a discharge of your debts. This reporting can last for 7 years, but you should be able to finance real estate, post filing, although you may have to wait 2 years from the date of filing.
Chapter 7 bankruptcy may be a great option for individuals or small business owners who are personally liable for debts looking for a way to get a fresh start and relief from their overwhelming debt burden. A typical chapter 7 bankruptcy client will have a household income below the Washington state median income for their family size or have more than 50% of the debts related to business, only have equity in assets up to the allowed bankruptcy exemption limits, and have at least $10,000 worth of debts, although there is no debt related restrictions. It’s common the debtors to bide their time before seeking out help until they reach a breaking point. Typically, that breaking point comes in the form of a wage garnishment or a summons and complaint for collection of debts. This was the case of Andrew who owned a business that he wanted to shut down and found himself with $166,173 in unsecured debt including $46,000 in student loans which would not be dischargeable, $599,000 in secured debt related to his business equipment as well as a $461,863 mortgage for a home that he was a 50% owner of. While he could continue to run his business, he was not able to keep up with his monthly debt payments and fell behind and eventually a lawsuit was filed against him to collect on the debt for nonpayment.
Andrew contacted Symmes Law Group and explained his situation including debts, assets, income and co-signers. Andrew explained that he owned a home and a vehicle that he wanted to keep but that he wished to surrender all business equipment. Based on his income over the past 6 months prior to filing it was determined that Andrew would qualify for Chapter 7 bankruptcy. He was told that he could protect $125,000 of equity in his primary residence and $3,250 towards a vehicle as well as $5,750 towards a vehicle, all household goods, $500 in cash in a bank account and his retirement accounts using the Washington State Bankruptcy Exemptions. Because Andrew was expecting large a tax refund, he was advised that he would have to provide that to a chapter 7 bankruptcy trustee along with any addition non exempt cash he had in his bank account on the date of filing, but he would be able to keep his home and vehicle along with his other exempt assets and receive a discharge of his debts. Andrew’s case, was different than most in that most people filing bankruptcy get to keep all their assets and not have to pay anything to the bankruptcy trustee.
Upon filing of his bankruptcy case, all collections, including the pending lawsuit were stopped immediately due to the bankruptcy automatic stay. Andrew went to court for his 1 court appearance in about 30 days after his case was filed with attorney Richard Symmes in attendance and the chapter 7 trustee who asked Andrew some basic questions about his assets and debts and then investigated any non-exempt assets in which he could liquidate for the benefit of unsecured creditors.
During the course of Andrews bankruptcy case, his business assets that he wanted to give back were repossessed and auctioned and applied to his balances, the chapter 7 trustee collected any non-exempt assets and paid Andrews creditors the small amount he was able to collect.
Andrew received a bankruptcy discharge of all of his debts (aside from student loans) in about 90 days after his case was filed and now lives debt free, but that is not the end of the story because Andrew had 1 co-signer on a business debt with Bank of America in the amount of $506,203. While Bank of America could no longer pursue Andrew, they could try to collect against his co-signer Aaron.
Aaron came to Symmes Law Group a few months after Andrew received a bankruptcy discharge and once he received a summons and complaint from Bank of America. He owned no assets of major value aside from the 50% interest in the home he shared with Andrew, was well below the median income in Washington State and looked to be a good candidate for chapter 7 bankruptcy.
Aaron filed for chapter 7 bankruptcy, stopped the Bank of America lawsuit from moving forward and garnishing his wages, went to his 1 court hearing in about 30 days after his case was filed and received his bankruptcy discharge in 90 days. He was able to keep all of his assets including his 50% interest in his home and paid nothing to the chapter 7 bankruptcy trustee. Aaron was now debt free.
Most debtors while file for bankruptcy are able to see credit score improvements after they receive a bankruptcy discharge if their scores were low to start with, get new vehicle financing immediately after their case is filed and qualify for home loans in about 2 years after their chapter 7 cases are filed. On the downside a bankruptcy can report on your credit report for up to 10 years after filing, but for most people the affects are minimal after a couple of years.
Chapter 13 bankruptcy can be a great option for individuals looking to reorganize their debts and repay creditors over a 3-5 year period or make up arrears on a primary residence over that time. Those considering filing chapter 13 bankruptcy typically are behind on their mortgage payments, have unsecured debts they are looking to manage or eliminate, already filed a chapter 7 bankruptcy in the last 8 years, looking to discharge debt associated with traffic violations or have a household income above the Washington State median income for their family size. It should be noted that in order to file for chapter 13 you must be below the chapter 13 debt limit which as of 2020 is $419,275 in unsecured debts not tied to property, or $1,257,850 in secured debt which is tied to property such as real estate. If somebody is above the debt limits, they may need to consider filing a chapter 11 bankruptcy case. A chapter 13 payment plan is typically based on how much disposable income a person/family has to be their creditors every month and can be affected by household size, priority debts such as taxes/child support or the value of any major assets. At a minimum, debtors need to repay priority debts as well as make their mortgage payment and cure arrears, as well as make any auto payments and attorney/trustee fees. The chapter 13 trustee charges a fee of up to 10% of the payments you make to manage your case. As of 2020 this fee is at 9%.
When Steve and his wife Jessica contacted Symmes Law Group, PLLC they were behind $8k on a Condo Mortgage and HOA payments, had $140,277 in unsecured debts including student loans, $81,000 was owed on priority debts such as child support and IRS Taxes, and Steve was the owner of a local business that he wanted to continue to run. The business made a good income, but they felt they were drowning in their debts and were not going to be able to meet their obligations every month.
Symmes Law Group helped Steve and Jessica successfully propose and confirm a plan in the bankruptcy court in which they proposed to pay on their condo, cure arrears and pay all priority debts over a 5 year repayment period along with any fees owed to Symmes Law Group as well as the chapter 13 trustee. This plan proposes that Steve and Jessica only pay .01% or $1 to their unsecured creditors over the course of the 5-year repayment plan. They are several years into the plan and when they complete the plan, they will be all caught up on their mortgage and priority debts and all of their non student loan unsecured debt will be discharged in the bankruptcy. While the percentage debtors need to pay to unsecured creditors can vary, this is a case where the debtors clearly did not have funds to pay to non-mortgage, auto or priority debts and they were able to come out ahead in Chapter 13 bankruptcy.
Sometimes it makes more sense for somebody to settle their debts instead of filing for bankruptcy. This could be the case when a person is trying to settle a lower dollar amount, when a person has too much equity in non exempt/protected assets, or they have access to a lump sum of funds in which to negotiate settlements with creditors and don’t have enough or want to pay the full balance of their debts. When you consider using debt settlement as an option to become debt free you must understand that an average settlement is about 50% of the current balance, that you will need to go delinquent at least 180 days on average before a favorable settlement will be reached, and that your failure to make payments will be reported to the credit bureaus and then updated to show that you settled your accounts for less than the full balance. This reporting can stay on your credit report for up to 7 years. Additionally, any debts forgiven over $600 may be counted as income on your tax returns for that year and you may receive a 1099 from the creditor. When Natalie and Luke came to Symmes Group they had a significant debt, a failed business, a business that was still operating and a home with significant equity. Due to the equity in their home, chapter 7 bankruptcy was not an option as they would lose their home as they had more than $125,000 of equity in their primary residence. They decided to initially file chapter 13 to get a 5-year repayment plan to pay down their debts. After a year of being in the plan, they decided that they wanted to put their home on the market and capitalize on the hot real estate market and use proceeds to pay down their debts. Therefore, the bankruptcy case was dismissed, their home sold quickly, and then the debt negotiations began. Under the chapter 13 plan, Natalie and Luke were repaying a significant portion of their unsecured debts over 5 years, while in debt settlement they were shooting to pay about 50% of their debts with the proceeds from the sale of their house so that they could be done with dealing with debt issues and could move on.
Symmes Law Group negotiated the settlements for Natalie and Luke in lump sum payments as lump sum settlements will get the best savings. They had 1 business loan with US Bank and a trailer repossession with a credit union. On average credit unions and auto repossessions will settle result in less savings than a credit card.
|Lump or Installment
|Bank of America
|Bank of America
|Bank of America
When all of Natalie and Luke’s accounts were settled, they saved a total of $46,890.78 off of their original balances and Symmes Law Group took all debt collection phone calls and letters until the accounts were settled. The results vary on every debt settlement matter based on your creditor, your hardship, whether your creditor is a credit union and ability to pay, the value of your assets and the age of your debts. Natalie and Luke’s case is just an example of settlements we have obtained as we have settled accounts for 10 cents on the dollar before, but it’s more common to settle for about 50% of your balance. The more it looks like a creditor can recover from you, the higher your settlement amount may be.
Sometimes it makes more sense for somebody to settle their debts instead of filing for bankruptcy. This could be the case when a person is trying to settle a lower dollar amount, when a person has too much equity in non exempt/protected assets, or they have access to a lump sum of funds in which to negotiate settlements with creditors and don’t have enough or want to pay the full balance of their debts. When you consider using debt settlement as an option to become debt free you must understand that an average settlement is about 50% of the current balance, that you will need to go delinquent at least 180 days on average before a favorable settlement will be reached, and that your failure to make payments will be reported to the credit bureaus and then updated to show that you settled your accounts for less than the full balance. This reporting can stay on your credit report for up to 7 years. Additionally, any debts forgiven over $600 may be counted as income on your tax returns for that year and you may receive a 1099 from the creditor. When Mike was served with a summons and complaint, he knew that he had to take action, but he wasn’t sure exactly what to do. He contacted Symmes Law Group to go over his options and explained that he did not want to file for bankruptcy and believed he could come up with funds in which to negotiate settlements with his creditors. He had debts with Lending club for $32,440, Citi Bank $11,355, CitiBank $10,551 Bank of America $10,120.45 and WebBank $29,562. All of these debts ended up going to various debt collection companies or law firms seeking to collect on the debt.
Symmes Law Group negotiated the settlements for Mike, some in lump sum payments and others in monthly installment plans. On average lump sum settlements will get the best savings.
|Lump or Installment
|Bank of America
When all of Mikes accounts were settled, he saved a total of $36,708.40 off of his original balances and was assisted in responding to summons and complaints from debt collection law firms and took all debt collection phone calls and letters until the accounts were settled. The results vary on every debt settlement matter based on your creditor, your hardship, whether your creditor is a credit union and ability to pay, the value of your assets and the age of your debts. Mike’s case is just an example as we have settled accounts for 10 cents on the dollar before, but it’s more common to settle for about 50% of your balance. The more it looks like a creditor can recover from you, the higher your settlement amount may be.
Under Washington State’s Foreclosure Fairness Act (RCW 61.24) homeowners can stop a foreclosure sale without having to file for bankruptcy or file a lawsuit in superior court to restrain a sale. In order to stop a foreclosure sale through the Washington State foreclosure fairness mediation program, the real estate must be your primary residence and you must file for mediation through a housing counselor or attorney after you get a notice of default and within 20 days after your trustee sale is recorded in your county. Your lender must also not be on the states exemption list as they must conduct a minimal amount of foreclosures per year. Foreclosure fairness mediation is an affective way to stop a foreclosure sale and the end goal aside from stopping a sale on your home is to obtain a loan modification through your lender, putting any arrears you owe on the back end of your loan.After falling behind on their mortgage due to a job loss and sending in documents to their lender ServiSolutions to no avail in an attempt to obtain a loan modification, Ellen and Steve sought out professional assistance from Symmes Law Group to help get their loan modification approved and stop the foreclosure process on their home. When Ellen and Steve contacted Symmes Law Group they had received a notice of default from their lender stating they were behind $23,144 and a trustee sale would be forthcoming if no further action was taken.
Upon being retained, Symmes Law Group immediately sent correspondence to the Washington state department of commerce informing them that Ellen and Steve would like to request foreclosure fairness mediation. Within a couple of days, a mediator was assigned to their case and an attorney from their lender was also assigned. A mediation date was set for all parties to attend and Steve and Ellen were then informed from the servicer’s attorney and mediator of the documents that would be needed to review them for a loan modification which included a package from the bank which asked about assets, debts and income, a hardship statement, last tax return and last 60 days of paystubs and bank statements. These documents would be due the following month as would information from the servicer showing the servicers calculations and how they reviewed the information.
It’s typical that the lender will make a decision on whether to offer a loan modification on a property prior to actually going to mediation. If they don’t have a decision or need more information it’s common for the mediation date to get postponed until a decision is reached. In Steve and Ellen’s case, they were informed that they were approved for a trial modification in which their arrears would be placed on the back end of their loan the bank did not have a decision on the mediation date, but the parties mediated anyways discussing the documents provided, and next steps. A second mediation date was scheduled; however, Steve and Ellen eventually received a trial modification which required them to make 3 good faith payments. Once the 3 trial payments were made, they received a full loan modification which extended the term of their loan to add the arrears to the end of the loan and made them current once again on their mortgage payment. No second mediation session was necessary.
The key to being approved for a loan modification is to show you have income to pay your mortgage but perhaps you suffered a hardship previously where you could not make your payments. Ideally you will want to show at least 2 months of income and ability to service the loan. On the other hand, it can also be used as a non-bankruptcy tool to stop a foreclosure sale.
Attorney Richard Symmes is also a managing broker in Washington state equipped to assist clients buy and sell real estate. He currently has his license through EXP Realty and utilizes their network of brokers, tools and marketing prowess to make sure you get top dollar for your real estate. When Becky contacted Symmes Law Group she was initially looking for options as she was living on social security, out of work and she knew a pending trustee sale would be forthcoming. Attorney Symmes explained to her that she could try to save her home through chapter 13 bankruptcy or foreclosure fairness mediation, but that her income was not going to allow her to retain her home and that she may want to consider selling her home. Becky knew she had equity in her home but also owed some outstanding debts and by selling her home she could pay off her debts and even have enough left over for a down payment on a new residence.
Becky therefore decided to move forward and list her property on the MLS with the help of Richard Symmes who also enlisted the help of another broker in her area through EXP Realty. Within a matter of weeks pictures were taken of her home and the property was listed for $229,000. Immediately the property received several inquiries and agents seeking to show their clients the home. The first week the home was on the market Becky received 3 offers to purchase her property, one above her asking price at $237,500 which was accepted. An inspection was scheduled for the property, and while there were a few repairs to take care of, the property closed in less than 45 days from when the offer was accepted and Becky was able to find a new place to live, walking away from her home with over $75,000 in her pocket. Becky was able to turn a scary situation of foreclosure into money in her pocket in a matter of months.
Credit repair, or credit auditing as we call it, is a process in which individuals can dispute items on their credit report that may be affecting their credit scores. Per the Fair Debt Collection Practices Act, if a creditor cannot validate a debt is yours, it must be removed from your credit report. Therefore, debts that are not in collection and with original creditors will be easier to validate than debt that have been sent to collection with no proof that you owe the money. With that said, we take a wholistic approach to credit as you should be working on building your credit scores moving forward and not only focusing on past negative items which may remain, even after auditing your credit. When Patrick was looking for help with his credit, he was willing to do whatever it took to help get him back over 720, which is usually the threshold to qualify for the best loan terms. Patrick is a real estate investor and his credit scores are very important in helping him obtain the best terms on mortgage loans, not to mention car loans or being approved for rental agreements. When Patrick came to Symmes Law Group he had scores of 683, 662 and 658 with the three major credit bureaus which included several negative items including delinquencies, collections, tax liens and a foreclosure. After several months of Patrick paying down his debts below 25% of his current available credit, Symmes Law Group sending out dispute letters and removing at least 8 negative items including tax liens from his credit and assisting him to be added as an authorized user on high limit credit cards his scores soared to 746, 769, and 745 with the three major credit bureaus and he was now in a position to capitalize on the best interest rates available and continue to run his successfully real estate investment business.
While result can vary with credit repair and most debts or delinquencies with original creditors who are reporting the items will remain on your credit, the most helpful tool to helping you remove negative items is time and the proper advice on how to improve your credit moving your forward, setting you up for success and the lowest rates whether you are looking to purchase a home, get new credit cards with the best rates, qualify for an apartment rental or a new vehicle loan.
Estate planning is something that everybody should consider looking into whether you are somebody with assets, children and a family or whether you are single with minimal assets. If you are not looking into estate planning for yourself, you should look into It for your friends and family who will need to handle your personal and financial matters when you are gone.It is recommended that everybody have the basics for an estate plan which is a Will, Power of Attorney, Medical Power of Attorney (Living Will) and an optional Advanced Health Directive. Other basic plans may choose to add a trust to their plan in the form of a separate trust or a testamentary trust set up within a will.
A will allows for an individual to name a personal representative to handle your affairs when you are gone, make specific gifts to friends and family and name executors of a trust to be set up later as well as guardians for kids should you no longer be around to care for them.
A power of attorney allows for somebody else to act on your behalf should you be incapacitated and typically relates to financial accounts.
A medical power of attorney allows somebody to act on your behalf should you be incapacitated and relates to making medical decisions. The person you choose to make medical decisions may be somebody different than your personal representative or regular power of attorney.
An advanced health directive gives more specific instructions with regards to the use of life sustaining treatment and makes it so your family does not have to make these tough decisions for you.
A trust can be a testamentary provision set up in your will, providing instructions on how to set up a trust or it can be a separate document that sets up a trust at the time it is created. A trust contains assets and lists out provisions as to who will be the trustee, beneficiary and executor of the trust, determining how assets will be distributed. A trust may be revocable or non-revocable. Creditors will not be able to access assets within a non-revocable trust, but then the transfer is permanent whereas a revocable trust can be revoked at anytime prior to death. Many people opt for a non-revocable trust as they want to make sure their assets are kept out of the probate process to administer assets when somebody passes away.
When Richard and Alyssa came to Symmes Law Group for help with their estate plan they were married a couple of years and now had a 1 year old at home and decided they needed to get their estate planning documents in order. They decided that a basic estate plan would be sufficient for their needs and opted for a testamentary trust provision in their wills so that kids were taken care of should they not be able to care for them in the future. They owned real estate, had retirement accounts as well as other investments. They decided that each other would be their personal representatives and each of them would inherit 100% of other assets which would then pass to their children if they were not around. They also picked backup personal representatives, named guardians for their kids, executor and trustee’s for a testamentary trust. For example, they decided Alyssa’s mom would be the guardian of any kids as long as she was able to care for them and in the alternative the kids would be cared for by family friends. With regards to the trust funds if one was to be set up, they decided Alyssa’s dad who has experience in finances, would be the best person to manage a trust for the kids benefit. With regards to their retirement accounts and bank accounts they did not need to mention these in their will as they had pay on death provisions already on the accounts.
Richard and Alyssa also had powers of attorneys created along with a medical power of attorneys, naming each other as their power of attorneys and then listing backups on who they would like to make tough decisions for them should they not longer be able to make the decisions on their own.
At the end of the day, hopefully none of these documents will need to be used soon, but at least they now have piece of mind that their affairs and kids will now be taken care of should they no longer be around to make the tough decisions.
When somebody passes away, most people don’t know where to turn or what to do regarding the next steps and how to handle somebody’s personal belongings and estate. In Washington State, anybody who has at least $100,000 worth of assets at the time of their death must go through the probate process. Otherwise, a personal representative can complete a small estate affidavit to handle their affairs. The probate process is a court procedure in which a persons Will if they had one is filed with the Superior court in the county where they resided, an administrator or personal representative is appointed by the court, assets are liquidated, distributed to beneficiaries, and creditors are paid before a final report is filed closing the case. During a probate case, creditors can file claims and interested parties can object if they have a problem with how the estate is being handled. When Ricky came to Symmes Law Group, his mother had recently passed away without a will and attorney Symmes had previously assisted her in a bankruptcy matter. She owned a home with equity, some personal belongings and a vehicle. She also owed a few debts including $18,920 to a nursing facility where she was living.
Ricky wished to put his moms house on the market but could not do so unless he or somebody else was appointed as an administrator of his mom’s estate. Upon being retained to handle the probate matter, attorney symmes filed a verified petition to appoint Ricky as the administrator of his mom’s estate, an oath of personal representative, proposed orders and his mom’s death certificate. The court reviewed the information and signed an order allowing Ricky to become the administrator of his mom’s estate. At this time notice of the probate case was also provided to any creditors informing them to file claims and notice was put in a local paper. Creditors had 4 months to file a claim in the case from the publication of the probate notice or else their claims would be barred.
After Ricky was appointed, he began liquidating assets and was able to sell his moms home above what she owed on the property. Only one claim was filed in the probate case and that was from the nursing facility which was paid from the proceeds from the home sale. Once all the assets were liquidated and creditors paid, Ricky had to file a final report declaring that the estate had been administered and then the case was closed. With the proceeds from the sale of the house, Ricky was able to purchase a home for himself as he was the sole beneficiary of his mom’s estate.