Seattle Bankruptcy News - Symmes Law Group

How Can Bankruptcy Benefit Real Estate Investors and Consumers?

How Bankruptcy Can Help Real Estate Investors

Last week attorney Richard Symmes had the opportunity to be on one of our favorite podcasts for real estate investing, the Seattle Investors Club Podcast. In the episode you will learn about attorney Richard Symmes’ background and experience in bankruptcy and foreclosure defense and how can bankruptcy benefit real estate investors and consumers alike moving forward.  You can check out the episode here:

Can Bankruptcy Benefit Real Estate Investors and Consumers?

The answer is yes.  As we talked about in the episode every real estate investor when they come across a distressed home owner should be looking to provide options to those in need.  The better understanding an investor has of those tools, the better you will be able to help those in need.  Those tools can consist of Chapter 7 bankruptcy, Chapter 13 Bankruptcy, Loan Modification or Foreclosure Fairness mediation.

If these options do not make sense, the best option for the homeowner might actually be selling the property so that they can have equity to move forward and the real estate investor can have the property they were seeking to rehab or hold.  It’s a win/win situation if everybody is on the same page and everybody is in agreement as to what is the best options moving forward for everybody.  The first step is to check out where the distressed owner is on the Washington state foreclosure timeline and offer some options from there.

How Can Foreclosure Fairness Mediation Benefit Distressed Homeowners?

In Washington State we have a law called the Foreclosure Fairness Act (FFA) (RCW 64.24.163).  This act allows homeowners with loans from most big banks (smaller bank or individual lenders are exempt from the law), to apply to the state through an attorney or housing counselor for mediation. This mediation may be requested once a notice of default is received by the homeowner and up to 20 days after a trustee sale date is recorded with the county.  This act also only applies to primary residence and not investment properties.  Once the state has accepted the referral a mediator will be appointed and local attorneys for the bank will be notified.  The goal of the mediation is to help a distressed homeowner get a modification to stay in the residence.

The best benefit of the FFA mediation is that once the mediation process is started, a homeowner cannot be foreclosed upon until the mediation process is complete.  This process can last several months if not longer so it will allow the distressed homeowner to buy time to weigh their options as well as have the opportunity to be reviewed for a loan modification without living in fear of a foreclosure date or having to file for bankruptcy.  If the distressed homeowner is denied a loan modification and mediation session is closed, the foreclosure process may start up again.  If necessary a bankruptcy could be filed at a later date to delay a sale further.

How Can Chapter 7 Bankruptcy Benefit Distressed Homeowners?

In most cases involving distressed homeowners looking to stop a foreclosure sale, chapter 7 bankruptcy does not make the most sense.  Chapter 7 bankruptcy is a start fresh, liquidation bankruptcy, although most times, debtors get to keep all their assets under a certain amount per exemption laws.  The filing of the bankruptcy will stop a foreclosure sale due to the bankruptcy automatic stay, but it allows a bankruptcy trustee to liquidate assets for the benefit of creditors.

In Washington, homeowners can protect up to $125,000 of equity in a primary residence located in Washington State by utilizing the Washington State bankruptcy exemptions.  If there is the potential to receive any more than that amount a bankruptcy trustee is likely to sell the property for the benefit of creditors. Distressed homeowners also need to watch out for trustee’s trying to short sell a property for the benefit of creditors if there is no equity and the mortgage is delinquent.  Court have allowed trustees to “carve out” funds from the short sale for the benefit of creditors.  This means the bank takes the property back, and gives money to the trustee for doing their dirty work and these funds benefit the distressed homeowners creditors.

This means that chapter 7 bankruptcy is not the best option for distressed home owners unless they have significant unsecured debt like credit cards or medical debt and they are ok with the possibility they may lose their  home if the trustee wants to sell it for the benefit of their creditors.  There are also other factors that may impact whether a chapter 7 makes sense or is possible and a bankruptcy attorney should be consulted prior to filing anything.

How Can Chapter 13 Bankruptcy Benefit Distressed Homeowners?

Chapter 13 bankruptcy is likely going to be the best and most tool to a distressed homeowner.  A chapter 13 bankruptcy can be filed anytime prior to the actual foreclosure sale in order to stop a foreclosure sale from happening. A chapter 13 bankruptcy allows a distressed homeowner to make up payments they are behind over 5 years while also making their normal mortgage payments.  Being able to afford such a plan is key if this option is going to be a viable long term plan.  Filing a chapter 13 bankruptcy can also eliminate other unsecured debts as part of a case and the amount a debtor needs to pay is based on equity in assets, family size and household gross income.

If a complete chapter 13 bankruptcy case is not filed, it may be referred to as an emergency filing that consists of a distressed homeowners name, address, social security number and a list of their creditors.  From here the distressed homeowner can decide to file the balance of the required bankruptcy schedules or let their case get dismissed. By filing an emergency case it can buy a distressed homeowner 30-45 days on average to figure out their next plan of action, whether that be catching up on a loan, a loan modification or selling to a third party.  Filing the balance or the required bankruptcy schedules will allow a debtor to buy more time, but they will also have to start making payment to the chapter 13 bankruptcy trustee. If no payments are made or the balance of schedules are not filed a bankruptcy case can be dismissed or in the rare case, converted to a chapter 7 liquidation if a debtor has been abusing the process or is a serial bankruptcy filer.  If a debtor wishes to sell a property while in a bankruptcy, it would require court approval or the dismissal of the case.

If you come across homeowners who are looking for options to stop a foreclosure sale in your real estate business, give Symmes Law Group a call at 206-682-7975 to speak to a foreclosure defense attorney and learn about how we may be able to help.  

How Do I Rebuild My Credit After Filing Bankruptcy?

How Do I Rebuild My Credit After Filing BankruptcyIf you are considering filing for bankruptcy or you have recently filed for bankruptcy, you may be wondering, how do I rebuild my credit after filing for bankruptcy?

Like most consumers, you may assume that filing bankruptcy will completely destroy your credit scores and that you will never be able to obtain credit, buy a home or purchase a vehicle again.  The reality is quite the opposite.  While a bankruptcy can remain on your credit report for up to 10 years as a public record which is a negative item in of itself, it is usually outweighed for most people after they obtain a bankruptcy discharge which erases most debts and negative reporting of the past.

A big part of your credit score is how much debt you have in relation to your available credit lines and what negative history you have.  If all of your debt and negative items disappear, your credit score will likely go up.  For instance if your scores are in the 400-600 range, it’s typical for scores to increase 100+ points after a bankruptcy filing.  If you scores are in the 600 700 range, there may be a minimal impact on your scores.  If your scores are 700+ at the time of filing a bankruptcy, then you may see a decrease in your scores, however as we will discuss here, you can improve your scores over time after filing for bankruptcy.

Should I check My Credit Report After My Bankruptcy Case Closes?

Yes! After your bankruptcy case closes, you may be free of debt, but that doesn’t mean there may not be some remnants remaining from your past.  You should monitor your credit for several months to make sure creditors and credit bureaus have updated their records and reporting history on your credit reports.

Discharged debts that appear on your credit report can have a negative impact on your credit score.  You should dispute negative items immediately with the credit bureaus and creditors to get your scores reporting correctly.  The longer the negative item remains on your credit report, the longer it will take to rebuild so it is best to be proactive about the situation if you spot an error.

What If My Reaffirmed Debt is Not Reporting On My Credit Report?

In a chapter 7 bankruptcy case, debtors are allowed to reaffirm secured debts such as an automobile loan.  If you choose to reaffirm the debt, your lender should continue to report your payments on your credit report and you will also be liable for the debt post bankruptcy filing.  If you do not reaffirm a debt, you will not be liable for a debt post filing, but your secured debt will not be reported on your credit report.  Whether you should sign a reaffirmation agreement depends on each individual situation.

If you did sign a reaffirmation agreement and the debt is not reporting correctly you will want to contract your creditor and the credit bureaus to get this resolved as the omission could have a significant impact on your credit score.

Will I Qualify for a Car or Home Loan After Filing Bankruptcy?

The short answer is yes.  One of the most common statements clients make to me when I see them at court in about 30 days after filing their case is, why do I get so many offers for credit and cars after filing?  The answer is because creditors know that you cannot file for chapter 7 bankruptcy again for 8 years and chapter 13 after 4 years from a chapter 7.  Therefore, they are willing to take a risk on you with regards to offering credit.  The rates you will receive will likely depend on your credit score, which is why it is important to monitor your score and make sure items are reporting correctly.

With regards to home loans, most bankruptcy and federal lenders will offer you a home loan after 2 years from your chapter 7 bankruptcy filing date and immediately after you exit a chapter 13 plan.

What if I Incurred More Debt After Filing Bankruptcy?

After filing for bankruptcy, you don’t want to make the same mistakes you made before, including borrowing more than you can afford to pay back.  Sometimes accumulating debt is unavoidable such as with a medical problem or job loss, but if you can avoid incurring more debt it is advisable as an individual will only qualify to file bankruptcy again after 8 years.  Therefore, it is best to live within your means and accumulate savings if at all possible.

With that said, not all debt bad debt.  If for instance you get a car loan, credit or a home loan, and make payments on these every month, that can help build your credit.  For best results you want to have several lines of credit, but not actually use all the credit available to you.  This means use credit, get perks associated with that, and then pay down the debt every month.  You don’t want to have balances more than 25% of your available credit lines.  Secured credit cards are another way to build your credit if you don’t otherwise qualify for regular credit cards.

If you live in Washington State and are looking for assisting in rebuilding your credit score after filing for bankruptcy, give Symmes Law Group a call at 206-682-7975 to speak to a credit repair attorney and learn about your options.

What are Possible Remedies for An Unlawful Foreclosure?

Remedies for An Unlawful ForeclosureIf your home has been foreclosed upon, you may be looking for possible remedies for what you may consider an unlawful foreclosure. In Washington state most foreclosure sales have to go through the Washington state non judicial foreclosure process. It is also common during this process for a bank to change servicers which can cause confusion as to who is doing what and whether your trustee sale date has been rescheduled. You should know that under RCW 61.24.040 a servicer change during the foreclosure process is not reason alone to reset the foreclosure process and furthermore courts have ruled that a homeowner was still notified of the possible sale and could have taken court action prior to the trustee sale date.  Therefore, it is very difficult to get a property back after a foreclosure sale has occurred if the servicer and trustee will not voluntarily rescind the sale.  This also means that homeowners should be pro active to either file bankruptcy to stop a foreclosure sale or file a lawsuit months in advance if possible for injunctive relief to make sure a sale does not happen before you have your day in court. Bankruptcy is the easiest and most cost efficient way to stop a sale, but bankruptcy is not for everyone as circumstances may very from one consumer to another. If filing for injunctive relief in Washington state superior court, you must allow enough time to give all parties notice of the lawsuit and get the case on the courts calendar which can take time.

With that said, after a foreclosure sale, although chances of getting a sale rescinded are slim, a homeowner may be entitled to damages if they believe the foreclosure sale was unlawful, although expect a long costly litigation fight from the bank.  In order to mitigate legal fee’s the first step is to report the issue to the Washington State Attorney General if you think you have been taken advantage of by the bank. For more information on remedies for an unlawful foreclosure you can license to attorney Richard Symmes discuss this topic on 1150 KKNW radio here:


Below are possible causes of action for damages if you think your property has been unlawfully foreclosed upon.

File a Claim under the Washington Consumer Protection Act (RCW 19.86)

In order to protect themselves from unfair and deceptive practices, consumers are allowed to bring private suits against individuals and businesses that engage in unfair or deceptive business practices.  The consumer may recover actual damages, treble damages ($25,000 maximum in most cases), and attorney’s fees.  Two types of actions may be brought under the law: 1) By the Attorney General or 2) By a consumer (under more stringent requirements).

What does a consumer have to prove to win a CPA case

In 1986, the Washington Supreme Court established the current five-part test for a private cause of action: the consumer must show:

  • an unfair or deceptive act or practice,
  • occurring in the course of trade or commerce
  • that affects the public interest and
  • causes harm to the consumers’ business or property (Damages)
  • Damages caused by the business actions.
    1. Emotional damages even if related to the business or property damage are not recoverable under the CPA
  • Courts have also ruled that Debt collection is subject to the WA CPA (Stevens v Omni Insurance – Div. I 2007).

File a Claim under the Breach of Duty of Good Faith under the WA Deed of Trust Act RCW 61.24.010(4)

The Washington state deed of trust act states that “The trustee has a duty of good faith to the borrower, beneficiary, and grantor.” Further, the WA supreme court has stated “Trustee’s have obligations to all the parties to the deed, including the homeowner: Bain v. Metropolitan Mortgage Group (2012).

File a Claim under Negligence or intentional Misrepresentation

In order to win a claim for damages under negligence theory a consumer would have to prove the following:

  • Defendant supplied information for use in a business transaction that was false
  • The defendant knew or should have known the information was supplied to guide the plaintiff in a business transaction
  • The defendant was negligent in obtaining or communicating the false information
  • The plaintiff relied on the false information
  • The plaintiffs reliance was reasonable
  • The false information proximately caused the plaintiff damages.

These are just some of the possible remedies for an unlawful foreclosure. If you are considering filing a lawsuit against your bank, you should be prepared to be able to finance such a claim and expect push back from the lender or trustee who filed the claim.  Claims can often be appealed and tied up in court for years, therefore stopping a sale before it happens through bankruptcy or a pre foreclosure lawsuit is ideal, with the ladder offering no gaurantees a judge will stop your sale.  if you want the closest thing to a sure thing to stop a foreclosure sale, filing bankruptcy due to the automatic stay may be the best way to go.

If you are in need of stopping an upcoming foreclosure sale, give Symmes Law Group a call at 206-682-7975 to get the counsel you need and learn about your options.  

Can I Qualify for a Home Loan with a Low Credit Score?

qualify for a home loanThe short answer is yes you can qualify for a home loan with a low credit score, but the higher the credit score the lower your interest rate on the loan will be, which will determine which programs you qualify for from a lender and what your monthly payments would be moving forward.

If you are looking to refinance a loan to get cash to finance other life events such as settling prior debts or a home remodel and have a low credit score, a lender may require that you have more equity in a home to mitigate any risks they are taking by giving you a loan. With a new mortgage loan, a bank may require at least a 10% down payment on any scores below 580. Symmes Law Group has partnered with Majestic Home Loans to offer various mortgage products including cash out refinance options and new home loans. You can complete a fast track application HERE to learn about what programs you may qualify for and get pre-approved by submitting the following information to the lender for review:

If Applying To Qualify for a Home Loan:

  • Wage Earner – Current 1 month’s Pay-stubs & W-2s for previous two years.
  • Self Employed – Personal & Business Tax Returns for the previous two years.

If Applying for a Refinance:

  • Mortgage Statement
  • Home Insurance declaration page
  • Wage Earner – Recent 1 month’s Pay-stubs & W-2s for previous two years.
  • Self Employed – Personal & Business Tax Returns for the previous two years.

Your credit scores are made up of a three-digit numbers that ranges anywhere from 300 to 850. The higher the score the better the credit. There are several calculations a lender may use obtaining your scores and most will use information from the 3 major credit bureaus, Equifax, Experian, and Trans Union. For conventional mortgages, most lenders ask that a credit score be at least 620. Those with excellent credit above 740, are typically offered slightly better interest rates and allowed to have a smaller down payment. But what if the score is below 620? What if the score is under 600 or even 580?

Scores that are sub-600 are often due to a recent event such as a recent payment delinquency, collection account or short sale. individual lenders can have their own internal credit guidelines but what that really means is if one lender says “no” that doesn’t mean the next lender will have the same answer.

If scores are in the neighborhood of 580 then adding compensating factors can help push through an approval such as a 10% down payment on the loan. Once you complete your fast track application you will be advised on what loans you may qualify for, but some examples are FHA, USDA, Conventional Loans, Jumbo Loans, FHA Streamline Refinance, VA Streamline Refinance, Cash Out Refinance or Home Equity Line of Credit to name a few. Every program comes with different guidelines and rates and how much you may have to put down for a down payment it is a new loan you are seeking.

If you have filed for bankruptcy in the past you may still qualify for a home loan, sometimes immediately. With Majestic Home Loans you would qualify for a loan after a chapter 7 bankruptcy after 2 years from your filing date on FHA, VA and conventional loans, while applying after a chapter 13 bankruptcy you would only have to wait 1 year to qualify for a loan. If no bankruptcy discharge was given in the bankruptcy case, then an applicant may qualify immediately at the time of applying for the loan.  A discharge order is issued by the bankruptcy court when you complete your case and are no longer obligated to pay back certain debts.  Sometimes a discharge order is not issued if your case was dismissed for various reasons or withheld for violating the laws of the bankruptcy code.

If you are in the market for a new home loan or home refinance be sure to complete the fast track application HERE and give Symmes Law Group a call at 206-682-7975 to get the counsel you need if you have questions or need assistance in the loan application process.  Symmes Law Group, PLLC is not a licensed loan officer or mortgage company and any qualifications and loan approvals would be subject to a particular lenders and their qualifications.

How Do I Transfer Real Estate in a Probate?

How do I transfer real estate in probate

Dealing with the assets, real estate and belongings of a love one who has recently passed away is never easy. If the loved one who passed (“The Decedent”) had assets of over $100,000 in Washington State then their estate must go through a process called probate.  The purpose of the probate process is for the personal representative of the decedent to notify all potential creditors of the decedent of the passing, for creditors to make any claims to assets of the probate estate, and allowing the personal representative to liquidate and transfer any assets to beneficiaries of the decedent.  The First step being able to transfer real estate in a probate is to open a probate case and get a personal representative appointed.  Attorney Richard Symmes was on the 1150 KKNW talking about this topic and you can hear the full segment here:

(1) Open a Probate and Get a Personal Representative Appointed in the Probate Case to Transfer Real Estate in a Probate.

A probate case is typically opened in the Superior Court in the county where the decedent lived.  If the decedent had a Will, it would name who the chosen personal representative is.  This Will would be filed with the court along with a motion appointing the personal representative and an Oath of the Personal Representative.  If there is no Will, then a motion seeking to be appointed as the personal representative would need to be filed by a person petitioning to be the personal representative of the decedent. If the family and heirs are in agreement on who the personal representative should be and how assets should be distributed this process can go smoothly.  Otherwise, aspects of a probate can be adversarial. Once the motion is approved the personal representative will received “Letters Testamentary” or “Letters of Administration”. These letters will allow a personal representative to act on behalf of the decedent.   

(2) Provide Notice to all Beneficiaries and Known Creditors. 

Once a personal representative is appointed with non-intervention powers they will need to provide notice to any known beneficiaries and known creditors of the decedents estate.  This allows creditors to file claims in the case and beneficiaries to be put on notice of a possible distribution or the right to object to such an appointment or the handling of the probate matter. 

(3) Liquidate Assets and Transfer Real Estate in a Probate.

The personal representative is considered a fiduciary, meaning that they are accountable to the beneficiaries for their actions.  The personal representative is tasked with making sure the assets of the decedent including real estate, are bequeathed to the proper beneficiaries accordingly.  The personal representative may have the power to list for sale a property if it needs to be liquidated or transfer the property to beneficiaries.  The personal representative has the right to choose who to hire as legal counsel or as a real estate broker should they need assistance with the probate process or transferring real estate in a probate.  The transfer of property is typically done through a personal representative’s deed which transfer’s the property on behalf of the decedents estate to the proper beneficiaries or purchasing party. This deed is different than a typical warranty deed in which a title company would provide if the property is sold in a typical manner and goes through the title and escrow process. 

(4) Pay Creditors and Close Out Probate

Once all real estate and property has been liquidated and transferred to the proper beneficiaries and any creditors who have filed claims in the probate case have been paid, the probate case will be ready to close. Any funds or assets remaining prior to closing may then be distributed by the personal representative to the proper beneficiaries per the decedents will if applicable. 

(5) Close the Probate

One all assets and real estate has been liquidated or transferred and creditors have been paid, the personal representative may close the probate case and file a Declaration of Completion of Probate or report of final accounting. This report should contain information on who was paid what, expenses of the estate, and any transfers made to beneficiaries.

If you live in Washington State and need assistance with probate or selling or transferring real estate while involved in an active probate, give Symmes Law Group a call at 206-682-7975 to get the counsel you need.

How Long After Bankruptcy Can I Buy A House?

 

How to buy a house after bankruptcyIf you are wondering how long after bankruptcy can I buy a house? You are not alone.  Getting a mortgage after bankruptcy can seem to be a never-ending process. However, with the assistance of our mortgage experts, you can expect to receive the most efficient, and effective services we’re able to offer. Typically, you’ll have to wait for a period of 2 years after a discharge and 4 years after a dismissal.  However, there are home loan programs that can be available to you as soon as 1 day after discharge. You are also able to get a mortgage during your Chapter 13 bankruptcy but with some extra stipulations.  To learn more about when you can buy a house after bankruptcy read what mortgage experts have to say as provided by the author of this article Robert Weaver.

How Long After Bankruptcy Can I Get an FHA Home Loan?

Some lenders make it possible to get an FHA Home Loan as soon as 1 day after discharge.  In some instances you can receive an FHA loan during the Chapter 13 plan, or after 12 months of successful payments and approval from the trustee.  There are a number of stipulations which you must adhere to best qualify for an FHA home loan.  Some mortgage companies commonly see the duration of time to qualify for an FHA loan after bankruptcy as 3 years. As long as you’re properly aligned with the qualifying factors, there are mortgage companies that will work to get you for a FHA home loan.

How Long After Chapter 13 Bankruptcy Can I Buy a House?

Getting a Mortgage after Chapter 13 Bankruptcy requires the participant to undergo different seasoning periods after their Chapter 13 discharge.  Based on the type of home loan program the seasoning periods vary based on the borrowers current financial position.  Loan programs such as FHA, USDA, and VA loans tend to be even the most lenient for the borrower. This is possible because you’re able to borrow just a year into your bankruptcy plan due to the government-backed nature of the FHA, USDA, and VA loans themselves. Your ability to get a home loan can be affected by factors such as credit score, lack of savings, foreclosure/short sale, etc.

Position Yourself to Purchase a House After Bankruptcy

One key component to improving your chances of buying a house after bankruptcy, is by making on time monthly payments on your repayment plan.  A great way to begin making continuous monthly payments is by getting a secured credit card, and paying it off each month. Making regular continuous payments is crucial to rebuilding your credit score after bankruptcy.  It also shows the courts that you are financially responsible enough to get a mortgage.

Securing a mortgage after Chapter 13 Bankruptcy can take as little as 25 days, to as long as 2 months.  The most common issues that slow the loan process down are credit problems, problems with the property itself, and how quickly your lender receives the required documentation from you.

How Long After Chapter 7 Bankruptcy Until I Can Buy A House?

Chapter 7 Bankruptcy entails a waiting period of typically 2 years in total to obtain a mortgage. This waiting period can also be shortened by improving your overall financial status by paying down existing debts.  You should also begin to build wealth in the form of a savings account, and collateral.

Can I Buy a Second Home after Bankruptcy?

You’ll likely have to wait for a period of 2 years after discharge before you can request a second mortgage.  A better option for many borrowers instead of a second mortgage is to do a cash-out refinance.  When choosing to do a cash-out refinance a borrower has the opportunity to pay off their first mortgage.  In doing so the borrower will receive cash they might need to address other needs. Cash-out refinances work for borrowers after the third year in their Chapter 13 bankruptcy plan or as soon as 1 day after discharge.

If I Filed Bankruptcy Because of Medical Bills, When Can I Buy a House?

Chapter 7 Bankruptcy is the most common filing option for those seeking to dissolve their debts from unsecured sources, such as medical bills. You’ll have to wait a period of two years from your Chapter 7 discharge to apply for a home loan. If you filed a Chapter 13 bankruptcy to deal with your medical bills, then you should be able to get a mortgage as soon as one day after discharge.

If you live in Washington State and need assistance with filing bankruptcy, give Symmes Law Group a call at 206-682-7975 to get the counsel you need.

Should I Have a Will In Washington State?

Last WillIt is a good idea to have a will of your own in Washington State if you want to make things easier on your family when you pass away.  A will is a legal document in which you appoint a personal representative to manage your affairs, name who will care for your children, provide specific gifts to individuals, give burial instructions or even provide instructions for a trust within a will called a testamentary trust for minors or a special needs trust for those who cannot manage inheritances on their own. A will may also allow an individual to specifically disinherit people or give instructions for those who should not be named as a personal representative.

If I Have a Will, Who Should I Name As My Personal Representative?

The person you name as your personal representative should be reliable, responsible, willing and able to carry out the terms of your will and able to navigate the probate process should the need arise.  In Washington State any estate that includes assets of more than $100,000 must go through probate.  The personal representative duties include paying creditors, filing the will in court as part of a probate if necessary, making distributions of assets to heirs, and liquidating property. This person, often with the help of a probate attorney will be the point of contact for creditors and heirs of the estate.

What If I Don’t Have a Will?

If you don’t have a will at the time of your death then you will die intestate.  This means that the family members and friends will need to decide what your wishes were as to your estate and if there is disagreement it could cause litigation within the probate court. Not having a will at the time of death may also cause confusion in terms of who will inherit which assets, who will be the guardian of your children or who will be the personal representative of your estate.  Having a will should be as much for you as it is for your family to make sure your passing does not cause a burden or in fighting among family.  Any disputes as to succession or inheritances will ultimately be settled by state law, so if there are any specific gifts to friends or family that you wish to be made, you should be sure that you list these in your will.

What is the Process for Having a Will Drafted?

You should consult with an estate planning attorney to discuss your needs and wishes.  Most attorneys have a questionnaire that you will need to fill out listing out your personal representatives, guardian and possible individual gifts.  Backups for these people should also be listed.  Once your estate planning attorney reviews your information they will be able to assess your situation, advise you, and follow up with any questions.  Once a draft of your will is created, your estate planning lawyer will review it with you and make any changes or updates that you request.  Once the will is completed it will be time to sign the document to make everything official.  Wills require that you be above 18 years of age, you have 2 witnesses, and be of a sound mind at the time of signing the document.  It can also be a good idea to have the document notarized to make things more official in case you expect any disputes as the document.  Once the documents are signed, you should keep the will in a safe location and advise your personal representative or family as to the location of the will should you pass away.

If I Have a Will, Can I Make Changes At a Later Date?

Yes!  Your will can be changed at a later date and should state that all previous will have been revoked.  Updates may need to be made from time to time to consider life events such as children, marriage, acquisition of assets or changing your mind about specific gifts listed in a will.

If you live in Washington State and are looking for an estate planning attorney to assist with the drafting of a will, give Symmes Law Group a call at 206-682-7975 to get the counsel you need.

What Happens After Filing Bankruptcy?

after filing bankruptcyOne of the most common questions that I am asked as a Seattle bankruptcy attorney is what happens after filing bankruptcy?  This is a loaded question and how things transpire after filing bankruptcy will depend on each case individually however I have compiled a list of what most debtors can expect.  I discussed this topic on 1150AM KKNW recently and you can listen to the full audio here:

(1) Do I have to Go to Court After Filing Bankruptcy?

Most Consumers who file bankruptcy will need to go to court one time for a 341 meeting of creditors.  This meeting generally lasts 5 minutes although you should plan to be at court for about an hour.  The purpose of the meeting is to allow the bankruptcy trustee to ask you questions about your assets and financial circumstances. Creditors may attend however that is usually unlikely unless a creditor wants to question you about your business affairs in order to prove some sort of fraud or ask about assets.

(2) Your Credit Will Improve Over Time After Filing Bankruptcy

When you file for bankruptcy, you must list all of your debts, collections, taxes etc. in your bankruptcy petition.  Most debt will be discharged (eliminated) once you receive a bankruptcy discharge from the bankruptcy court in about 90 days after filing in a chapter 7 case or after your plan is completed in a chapter 13 case.  One of the major factors affecting your credit score is how much unsecured debt you have and how much of your available credit lines are you using.  If all your debt goes down to zero, then you are no longer maxing out your credit and your scores will likely rise if they started out lower.  Yes it is true that a bankruptcy will show up on your credit report and can stay they for up to ten years, but for most 1 negative items is better than many other debt related negative items appearing on a credit report.  After receiving a bankruptcy discharge, consumers should review their credit reports to make sure everything is reporting correctly, showing closed accounts and zero balances.  It is advised post filing that you sign up for a secured credit account or two that will report positively to your credit after your case is filed and you can build up your scores from there.

(3) Will I be able to buy a car, a house or obtain credit after filing bankruptcy?

Yes!  Once of the most common comments I get from clients after filing for bankruptcy is “Why do I get so many offers to buy cars?” The answer is now that you have filed for bankruptcy, your credit score has likely improved and creditors know you cannot file for bankruptcy for several years.  When you file for bankruptcy the information is public record which is how auto dealers may obtain your information to send you mail.  The interest rate on the vehicles will of course vary but rest assured you will be able to get a vehicle post filing and most people get to keep the vehicle they already have should they choose to do so.  In terms of obtaining a home loan, most lenders will loan to you after it has been 2 years since you have filed for bankruptcy.  It should be noted that some apartment complexes do not like renting to bankruptcy filers but usually you can find somebody that will work with your situation.

(4) How Do I deal with non dischargeable debts after filing bankruptcy?

Some consumers have debts that are not dischargeable in bankruptcy.  These can include child support, some types of taxes, court fines, student loans or speeding tickets (Dischargeable only in Ch. 13).  For these types of debts, chapter 13 bankruptcy can allow for you to pay off these debts over a period of 5 years.  Outside of bankruptcy it is bet to negotiate a payment plan with the individual creditor and see if you can budget the payments to something that you can afford.

(5) What if a Creditor Contacts Me After Filing For Bankruptcy?

Creditors are forbidden from contacting consumers after filing for bankruptcy due to the bankruptcy discharge order.  With that said if you have a debt that is not dischargeable then a creditor can contact you regarding that debt and you should set a payment plan per #3 above.  If a creditor is contacting you post bankruptcy discharge when the debt should have been dischargeable it is likely they did not receive notice for one reason or another.  You should contact the creditor and provide them with your case number and filing date.  If they require additional information you can mail or fax them notice of the discharge and 99% of the time this will clear up any confusion.

(6) What if a Creditor is Still Reporting Negative Items on My Credit After Filing Bankruptcy?

If a Creditor is still reporting negative items on your credit report or an account is reporting as having a balance when it should show zero after filing bankruptcy you will need to dispute these items with the creditor and the credit bureaus reporting the negative items.  You should always send your disputes in writing through the mail in order to have any possible claims in the future.  Under the Fair Credit Reporting Act, if mis information continues to be reported you may have a claim and be entitled to $1,000 in damages.

If you live in Washington State and are considering filing for bankruptcy, give Symmes Law Group a call at 206-682-7975 to learn about your options.

Should I Use National Debt Relief to Settle My Debts?

National Debt ReliefIn my debt relief practice I am coming across more and more consumers who have used National Debt Relief to help them manage their debts and negotiate settlements on their behalf, only to regret the decision to sign up with National Debt Relief at a later date.  With that said National Debt Relief is licensed in the State of Washington and appears to be complying with the Washington Debt Adjusters Act under RCW 18.28 which requires debt adjustors to charge no up front fee’s and limit their fees to 15% of the total debt listed on the signed contract which includes payments for any third party trust accounts used for holding client funds and making disbursements.  If a consumer decides to cancel services with National Debt relief and debts are not settled, any funds in a third party trust account must be refunded.  Consumers should know that attorneys such as Symmes Law Group, PLLC are exempt from the Washington Debt Adjustors Act and do not need to meet its requirements as attorneys are not considered debt adjustors.

It is also important to know that National Debt Relief uses a company called Global Client Solutions to manage your payments as a third party processor and trust account servicer.  This company has a history of working with many debt settlement companies who have been sued in the state of Washington and across the country for violating various debt adjusting and consumer protection laws.  Global Client Solutions has also been sued itself on a national level by the Consumer Financial Protection Bureau and in the state of Washington.

At the very bottom of the National Debt Relief website you will find a disclosure in very small print which reveals what you might expect working with National Debt relief.  The disclosure states that:

Clients who are able to stay with the program and get all their debt settled realize approximate savings of 50% before fees, or 30% including our fees, over 24 to 48 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for various reasons, including their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period of time. We do not assume consumer debt, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. Read and understand all program materials prior to enrollment, including potential adverse impact on credit rating.”

What Does this National Debt Relief Disclosure Mean?

If you enroll with National Debt Relief they state that you can expect to save potentially 30% on average and that does not include paying taxes on debt forgiven over $600.  Additionally what they don’t mention is that to obtain a favorable settlement you will need to stop making payments on your debts which will increase you total debt in the short term, hurt your credit, and open you up to potential lawsuits and debt collection phone calls due to non payment.

The potential to be sued for debts due to non payment is what causes consumers to reach out to a debt settlement attorney to learn further about their options. In my experience consumers typically accuse National Debt Relief of not settling their debts in time to avoid the lawsuit or not informing them that they could be sued on the debts when it all could have been avoided in the first place had the consumer talked to a debt relief attorney from the beginning of their financial problems.

Is Using National Debt Relief a Good Idea?

For most people I would say that signing up for National Debt Relief is not a good idea. While on its face, having you pay no up front fees with the goal of making you debt free in 2 to 4 years sounds great.  However the truth is there may be better options which can accomplish the same goals for a lower cost and that have less of an impact on your credit and your sanity from being sued by a debt collector.  Debt settlement in my opinion is best suited for people who have already been delinquent with their debts and have lump sums to offer up front to negotiate settlements of 50% or less in many cases.  Otherwise chapter 7 bankruptcy or chapter 13 bankruptcy may be the best fit to eliminate debt or pay off debt over a 3 to 5 year repayment plan and avoid being sued by a lawsuit.

Finally, if you do want to proceed with a debt settlement program I would always advise using somebody local or a debt settlement attorney who can help you in a similar fashion as National Debt Relief and likely save you on fees associated with the settling of your debts without the worry of thinking about whether you are being taken advantage of as attorneys are regulated by their states bar association and are subject to rules of professional conduct in order to maintain their bar license.  Additionally a local attorney can take creditor calls and assist with defending a debt collection lawsuit and settling the case prior to any judgment as part of services offered.

You can check out a full review of the National Debt Relief program by Nerd Wallet HERE.  

If you live in Washington State and are considering hiring National Debt Relief or are looking to settle your debts, give Symmes Law Group a call at 206-682-7975 to learn about your options first.

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How Can You Protect Yourself as a Real Estate Investor Washington State?

Protect Yourself as a Real Estate InvestorIf you are thinking about becoming or are a real estate investor in Washington State you will want to know how to protect yourself as a real estate investor to make sure that you set yourself up for success and minimize risk whenever possible.  With that said you will want to weigh the costs of having the maximum protection with what each option is actually going to do for you and the costs of such protection. Below I have outlined some common questions and answers and various information that can help you in your real estate investment business.  This is all meant to be general advice and you should consult your own accountant or real estate attorney should you have questions about your specific situation.

You can also listen to real estate investor attorney Richard Symmes on 1150 AM KKNW on how you can protect yourself as a real estate investor in Washington State here:

What is the easiest way to protect yourself as a real estate investor in Washington State?

At a minimum I would recommend that you hold property in an LLC and create a separate LLC for each property which would insulate each property from creditor claims against each business. An LLC provides for limited liability should a tenant or other party file a lawsuit against you or your business during a lease term or a rehab. Forming multiple LLC’s protects all the other properties from creditors of each property. This also keeps your personal assets safe and unreachable by a creditor.  However real estate investors should be aware of something called piercing the corporate veil in which an individual may be held liable even if you have formed a business. The best way to avoid this from happening is to make sure you keep all business activities separate from your personal activities and bank accounts and actually treat the LLC’s you have set up as a separate business from yourself.

Should I form a Series LLC in a state other than Washington to Hold Washington Property?

Washington state does not have a legal entity called a series LLC, however several other states do allow for the creation of a series LLC.  A series LLC allows for the owner to create one LLC holding company as a parent company and then as many other series businesses as part of a LLC stemming from the parent company. So it would be XYZ company which holds XYZ 1, XYZ 2, XYZ 3 etc.  This allows for the creation of 1 LLC and filing fee’s with the state of incorporate and as many other sub companies that you want in the series.

A series LLC can be useful if you own several properties so you can create numerous series companies within the same LLC.  With that said this type of business is not ideal if you just have a single or a few properties.  You would also have to keep in mind that if you form a series LLC in a state other than Washington, the business would need to have an agent for service in the home state in which the company was formed and you would likely have to pay taxes of the state in which you have formed the company if applicable.  Finally, you have to remember that Washington does not recognize the series LLC which may cause you issues down the road if there are disputes or litigation which require court intervention.

You would have to weigh these drawbacks with the cost to form several normal LLC’s in Washington and the fact that Washington does not have a state income tax.  Therefore, if you just have a couple properties my advice would be to just stick with a Washington state LLC. If you own numerous properties then I can see how a series LLC can be useful but it may not be worth the additional cost time and effort.

Is the Transfer of Real Property to an LLC Taxable? 

Most investors have to get a loan in order to invest in their next project and usually can get better interest rates if the loan is taken out personally and recorded against the property. This means that the property will initially be held in an individuals name and the investor will later want to transfer the interest to an LLC.

Do I have to Pay Washington State Tax on a property transfer to an LLC?

So, if you do transfer a property from an LLC, there is generally no Washington state excise tax associated with a quit claim deed transaction if there is no consideration (value) paid for the property. If there are taxes assessed it would be in accordance with the Washington Real Estate Excise Tax (REET). The tax also applies to sales or transfers of controlling interests in entities (e.g., corporations, partnerships, limited liability companies, etc.) that own real property. The exemptions to this tax can be found in the REET statutes, chapter 82.45 RCW, or in the rules or regulations adopted by the Department of Revenue, chapter 458-61A WAC.

Consideration means money or anything of value, either tangible or intangible, paid or delivered, or contracted to be paid or delivered, including the performance of services, in return for the transfer of real property. The REET applies to both transfers when two properties are exchanged and there is no exemption when the transaction involves an IRC §1031 exchange. Consideration also includes the amount of any lien, mortgage, indebtedness or other encumbrance given to secure the purchase price or remaining on the property at the time of sale, including the assumption of an underlying debt. A sale where the buyer assumes the underlying debt and pays no additional consideration is fully subject to REET.

Do I have to Pay Federal Tax on a property transfer to an LLC?

The answer to this question depend on how your LLC is taxed.  If it is a sole member LLC and taxed as a disregarded entity there will be no federal tax incurred.  If the LLC is taxed as a partnership or corporation the answer may be different based on several factors.  You should consult your accountant.

Will My Mortgage Lender Call My Note Due If I Transfer a Property to an LLC?

Most likely not, but the due on sale clause in your mortgage note (not in every mortgage note but most) is more likely to be enforced if you fall behind on payments.  The due on sale clause allows a mortgage company to call a note due in full should you sell or transfer your property so there is some risk to doing this.

The Garn St. Germain Act of 1982 addresses the basic conflict between homeowners looking to protect their assets, and the bank’s insistence that the homeowner buy the property in their own name. The Garn St. Germain Act prevents lenders from enforcing the due-on-sale clause when residential properties are transferred into a revocable trust and there is no change to the rights of occupancy.

It should be noted that if you have a loan that is not federally backed, then the Garn St. Germain Act may not apply.

Should I Transfer My Investment Property to a Revocable Trust or Land Trust?

A common question that many real estate investors have is whether they should transfer their property into a revocable trust or “Land Trust”.  A revocable family trust can include real estate as well as other assets set aside for beneficiaries vs. a “land trust” generally just includes 1 property held in the trust.  The main purpose of transferring property into a trust as a real estate investor would be to avoid the due on sale clause discussed above and for privacy as a trust is not a document that is filed publicly in your county’s recorders office.

States that don’t have specific rules for land trusts such as Washington state, simply govern them using standard trust laws based on the state laws available.  In almost all cases, the investors who establish a “land trust” are establishing a revocable trust. The land trust laws and trust laws in general are clear that a revocable trust does not give the grantor (the guy that sets up the trust and puts the property into the trust) any type of asset protection. It doesn’t matter who the beneficiary is. All trust laws state that if the trust is revocable, the courts can require the grantor, when they are sued for any reason, to “revoke” the trust and give the property in the trust to the grantor’s creditors.

The goal of the land trust is to make it look like you the investor do not have any real estate in your name if you are sued.  This is wishful thinking however as most attorneys and insurance companies may look into or ask questions through litigation discovery that could reveal who the true trustee or beneficiary is of the land trust and open you up to being discovered as the true owner. Think of the land trust as more of a smoke screen or costume designed to trick aggressive creditors into thinking you don’t own any assets of major value.

A land trust has three parts: a grantor, a trustee, and a beneficiary. When you choose to form a land trust, your lawyer can serve as your nominee trustee and you the real estate investor can become the designated beneficiary and eventually assign your interest to an LLC you own.  This allows the investor to reap the rewards of property ownership, such as investment income, without being publicly identified as the owner. The trustee’s role is to manage the trust itself and the investor should be named as the successor trustee once your initial trustee resigns so that the real estate investors name does not appear on any publicly recorded documents.

As you can see a land trustee can be very complicated and defeat the purpose of anonymity if it is not set up correctly.  Furthermore, keeping your assets in a land trust can cause issues when you try to sell or refinance your property as you most likely will have to transfer the property back to your personal name, the acting trustee or beneficiary prior to moving forward with refinancing plans depending on the situation.

Personally, I think going through this land trust process is more trouble than it is worth unless anonymity is of utmost importance. While it is nice if your name does not show up on public records for purposes of asset protection, this strategy can be easily defeated should a creditor initiate a lawsuit and delve deeper into your finances and holdings.  With that said, if you believe that creditors won’t file a lawsuit because they can’t find any assets in your name, this may be a worthy asset protection strategy.

If you live in Washington State and are looking for a real estate investment attorney to assist with the protection of your real estate, give Symmes Law Group a call at 206-682-7975 to get the counsel you need.

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