Seattle Bankruptcy News - Symmes Law Group

What is the New Small Business Chapter 11 Bankruptcy?

New Chapter 11 Small Business BankruptcyOn Friday August 23, 2019, President Trump signed the Small Business Reorganization Act of 2019 into law, which includes a new small business chapter 11 bankruptcy.  This law will go into effect in February of 2020 and could benefit many small business debtors who are considering filing a chapter 11 bankruptcy next year.  I discussed this topic on the New Urban Unlimited Radio show on 1150am KKNW and you can listen to the segment about the new small business chapter 11 bankruptcy here:

How Does the New Small Business Reorganization Act of 2019 Help Small Business Owners?

If you are a struggling small business owner, this new law may have no affect on your debt relief options. For many struggling small business owners, the best option may be to close the business and then file a personal chapter 7 or chapter 13 bankruptcy or consider debt settlement options.

In chapter 7 bankruptcy a debtor allows for a debtor to receive a discharge of most debts, and they are allowed to keep a limited amount of exempt (protected) assets. Non exempt assets may be subject to an appointed trustee liquidating the assets on behalf of creditors. A debtor in chapter 7 may also be subjected to income limits and you can’t have disposable income remaining to pay creditors and still file a chapter 7.

In a chapter 13 bankruptcy no assets are liquidated and sold, but you do have to pay back the value of any non exempt assets in addition to any disposable income you may have. The catch here is there are debt limits in chapter 13 which are currently $1,257,850 in secured debt (tied to property) and $419,725 in unsecured debt (credit cards, personal loans, medical bills etc). You will not be eligible for chapter 13 if you exceed these debt limits.

There is also the standard chapter 11 bankruptcy in which there is no debt limit and debtors can propose a repayment plan, however standard chapter 11 bankruptcies can be very expensive and time consuming requiring monthly reports, creditor committees, trustee’s are usually not appointed to manage payments which means you are in charge, and cram downs are not likely available (cramming the debt owed on an asset down to the actual value of the asset).

The new streamlined small business chapter 11 bankruptcy will allow for a trustee to be appointed to the case to manage payments, there will be no creditor committees, no monthly reports and cram downs may be available. In general, the new streamlined chapter 11 bankruptcy will be treated much like a chapter 13 bankruptcy in which a debtor will only have to pay whatever disposable income they have available to creditors that is fair and equitable.

Who Can Qualify for the New Small Business Chapter 11 Bankruptcy?

The new chapter 11 small business bankruptcy will be available to:

(1) Small businesses or debtors who have a total debt of less than $2,725,625. This number may be inflation adjusted every three years.

(2) The debtor must be engaged in commercial or business activities other than a single asset-real estate debtor.

(3) At least 50 Percent of the liabilities arose from commercial or business activities.

(4) The debtor is not a member of an affiliated group of debtors (Corporate organization) who’s debts together exceed the statutory threshold.

How Does the New Small Business Chapter 11 Bankruptcy Work?

When a small business bankruptcy is filed under chapter 11, a trustee will be appointed to the case much like in chapter 7 or chapter 13 bankruptcy. The role of the trustee will be to collect payments on behalf of creditors and distribute the funds much like in a chapter 13 case. The small business chapter 11 trustee will also monitor the debtor’s plan of reorganization and could object to a plan if it is not fair and equitable to creditors as proposed.

The debtor in a small business chapter 11 bankruptcy will be required to have a status conference within 60 days of filing the chapter 11 petition, file a report no later than 14 days before the first status conference, and file a plan within 90 days that is fair and equitable in which all projected disposable income of the debtor will be paid to a chapter 11 trustee.

A small business chapter 11 plan can last 3-5 years and at the completion of the plan and a discharge should be given to the debtor, forgiving all remaining unsecured debts per the court order.

Why Should a Small Business or High Net Worth Debtor Consider Chapter 11 Bankruptcy?

The new law makes small business chapter 11 bankruptcies faster and less expensive by creating a new subchapter of Chapter 11 of the bankruptcy code specific to small businesses. In the past chapter 11 bankruptcy did not make sense for most small business debtors because of the expense and requirements of a normal chapter 11 bankruptcy case.

The new small business chapter 11 bankruptcy makes the most sense for debtors who have debts above the allowed chapter 13 debt limits, do not qualify for chapter 7 bankruptcy, or may lose an asset that they want to retain if they were to file a chapter 7 bankruptcy. This new plan may be the perfect solution to those who want to file chapter 13 but are over the debt limits due to various business ventures.

As an added benefit to the small business chapter 11 bankruptcy, a small business debtor may cramdown and/or modify a mortgage claim if in course of operating a business the debtor obtained a secured mortgage loan on their primary residence. The mortgage loan must not have been used to primarily to purchase the debtor’s residence, and the loan funds were used in connection with the debtor’s small business. This is a useful tool to change the terms of home equity loans and second mortgages obtained by the debtor for business purposes.

If you are a small business owner struggling to figure out your next move and you live in Washington State, give Symmes Law Group a call at 206-682-7975 or contact us to speak to a bankruptcy attorney and learn about your options.

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How Should Consumers Prepare for the Next Recession?

Prepare for the next recessionIf you want to prepare for the next recession, you will need to take steps now to ensure that you are ready to protect what you already have and build a nest egg for the future. As of the time of this writing in September of 2019 the financial and real estate markets have seen a record run up since the last recession in 2008.  Financial markets go in cycles and typically after a bull run up, the markets retrace into a recession for a period of time before trending back up again. Since the market has been on an up trend for over a decade it is likely that a recession is coming soon with many experts predicting that a market recession or crash could come to fruition in the year 2020.

While this upcoming recession may not be an immediate crash, it could be a long drawn out downtrend as we are starting to see signs of the start of a recession in 2019.  You should prepare for the next market crash by utilizing offensive and defensive strategies to set yourself up for success and financial security in the future.  I discussed the topic of how to prepare for the next recession on 1150AM KKNW radio and you can listen to the audio here:

What are Defensive Strategies to Prepare for the Next Recession?

Defensive financial strategies to prepare the the next recession are tactics you can use to make sure you can maintain your status quo in a recessionary period.  These defensive strategies include (1) paying or eliminating high interest debts, (2) Having a 3-6 month emergency fund and (3) not panic selling the market.

(1) Pay off or Eliminate High interest Debts

If you have the funds to do so, now is the time to pay debts down as low as you can to set yourself up for success when the next recession hits. In generally paying your debt limits below 25% of your available credit limits will put you in a position to get the best interest rates for borrowing credit.  If you don’t have funds available to pay down your debts, that is ok as there are other options available to you.

Bankruptcy can eliminate  your debts and allow for you to prepare for the next recession.  A chapter 7 bankruptcy discharges most types of debts if you can qualify, while allowing most people to maintain all of their assets. If you own a home with more than 125,000 in equity or own other major assets or are a high income earner, chapter 7 bankruptcy may not make sense.  That is ok as you could still consider chapter 13 bankruptcy, which allows for payments on debts over 3-5 years to become debt free while maintaining all assets in most cases.  Some consumers in chapter 13 have to pay back all of their debts, while others only have to pay back some of their debts.  This depends on a household income, assets, family size and types of debts among other factors.

If bankruptcy is not an option for one reason or another a consumer can consider their debt settlement options where they may be able to pay less than the full balance of their debts.  This usually works best if a person is already delinquent on the debts, but now has the ability to pay off the debts in a settlement amount for a lump sum.  Rarely does it make sense to go on a payment plan with the numerous debt settlement companies as these companies charge a significant fee, cause accounts to go delinquent if they are not already delinquent and can do significant damage to a consumers credit report.  There are also tax implications in which a consumer may have to pay taxes on any debt forgiven over $600.  This is not the case in bankruptcy.

(2) Have 3-6 months in Savings for an Emergency Fund

If you get laid off in a recession or you are self employed and you don’t have disposable income to pay expenses, you will want to be sure to have an emergency fund available so live on. You should consult with an attorney if thinking about bankruptcy as they can advise how much funds you can have on hand for retirement or savings.  Failure to have an emergency fund available with no source of income coming in is not going to help you.  You should know that funds in a retirement account are likely exempt (protected) in a bankruptcy filing, so before draining your retirement funds to settle debts, you should consult with a bankruptcy attorney.

(3) Don’t Panic Sell The Market

If you are invested in retirement accounts already such as an IRA or 401K, it likely will not make sense to panic sell when the market starts to crash. If you are holding securities for retirement in the long term, it is likely you will miss out on gains if you sell at the bottom of the market and don’t get back in to the market to realize the gains from a recovering market.  It is very hard to time the market so often times it makes sense to just hold and wait for the recovery or you could miss out on possible gains after the market start to recover.

Also if you were to sell off parts of your retirement accounts, you will need to consider that you may have tax consequences and penalties for doing so. Therefore selling off parts of your retirement accounts premature is not advisable in most cases and you should just hold the accounts, collect your dividends and wait until the market recovers.

What are Offensive Strategies to Prepare for the Next Recession?

(1) Build a War Chest and Save Cash

Once the market is in a recession it will allow great opportunities for investing in the market to buy at the bottom and realize gains in the long term. You should be saving for when this time comes so you can realize the gains at a greater rate when the market recovers. This is the best time to purchase real estate as well as a primary home or investment property as interest rates and purchase prices will likely be at a low point until the market recovers.  Once the market recovers you will be in a prime position to profit on the gains.

In the meantime while building your war chest, you should keep money in a high interest online savings account. At the moment some of these accounts allow for 2% returns or higher on your money, making these accounts insulated from a market crash and allowing for a modest return in the meantime while you wait to make your next move in investing when the time is right to invest the funds. If you put your excess funds in a CD or other investments they may have lockup periods, making your cash unavailable for a period of time.

(2) Systematically Invest in the Market

When the market starts to decline, it is advisable to dollar cost average your investing on the way down. This is because nobody knows how low a market will go from its current level and if you buy the market at regular intervals all the way down until it levels then your buy in is averaged out and you don’t miss out on a possible recovery of gains. Its extremely difficult to predict the bottom on the market, so as long as your average buy in is lower than where the market started, you will be primed to benefit from gains in the market.

(3) Update Your Resume or Prepare Your Business to Prepare for the Next Recession

If there is a market recession it likely means that big companies will have to lay workers off as they will not be able to afford their salaries any longer. This means that you may be out of work and you will want to have your resume ready in case you need to start applying for jobs right away. While things are going well is the best time to update your resume and be prepared.

If you are self-employed, you may be insulated from having to apply for work, however its possible your business will suffer in the next recession. While it’s a good idea to have an updated resume handy, you will want to start thinking about how you can adapt to a new market if you would anticipate a drop in revenue as part of the recession.

Remember its not a matter of if, but when the next recession will happen so if you live in Washington State and are looking for options for eliminating your debt to prepare for the next recession, give Symmes Law Group a call at 206-682-7975 to speak to a debt relief attorney and learn about your options.

What is Financial Self Defense?

Financial self defenceFinancial self defense is a term used to describe your overall financial well being and planning for the future and unknown.  I had the chance to discuss this topic on 1150 AM KKNW radio with Dr. James Gore the host of the New Urban unlimited radio show and JR Gillespie of All Star Financial Insurance. You can listen to our full discussion on financial self defense here:

Should Financial Self Defense Include Creating a Household Budget?

Financial self defense starts with implementing the correct budgeting based on your household income and making sure you are not living outside of your means.  By sticking with your budget you can keep an eye on overspending and make sure you are saving something for your future.  These days 78% of Americans are living paycheck to paycheck so it’s important to get a financial plan in place so you can put funds away for savings and  rainy day.

Should Financial Self Defense Include Obtaining the proper insurance?

Insurance can come in many forms and amounts.  Some of the most popular types of insurance include medical insurance, life insurance and disability insurance.  Having the proper insurance can insure that your family is taken care of if you are not around or unable to work in the future.  For instance if you are a business owner and have an accident which makes you unable to work, having the proper insurance can make sure you still get a paycheck every month even though you are unable to work.  Insurance will help you stay on track and stick to your budget so you don’t have to be one of the 78% living paycheck to paycheck.

Should Financial Self Defense Include Business Planning?

If you are a business owner or real estate investor, having your businesses set up as an entity such as an LLC can make sure you will not be liable for business debts should you run your business properly.  For example if you are facing collections for a business debt that you are not personally liable on or somebody slips and falls at a property you own and the property is owned by a business, your personal assets would be protected. Proper business planning can save you from having to personally deal with such an emergency and makes sure you can stick to your budget and continue to save for your future.

Should Financial Self Defense Include Estate Planning?

Estate planning is something that everybody should be thinking about.  A typical estate plan consists of a will, power of attorney, medical power of attorney and a health directive.  Having a will in place will make sure your assets will go where you want them to for the protection of your family when you pass away.  A will can also set up a testamentary trust for your children and name guardians so there is no question as to you wishes.  A power of attorney makes sure that your finances can be controlled by another should you become incapacitated and medical related documents make sure the right person is making your medical decisions should you not be able to. Having things documents in place avoids confusion by your family should something happen to you and makes sure there are safeguards in place for your estate and is part of the financial self defense strategy.

What Can I Do If I Did Not Utilize a Financial Self Defense Strategy or I Had An Emergency?

It is never too let to start thinking about your financial self defense plan moving forward.  You can start be talking to professionals who can set you up on a plan to make sure you are protected moving forward.  If you are already in financial distress then there are also options such as chapter 7 bankruptcy, chapter 13 bankruptcy and debt settlement that can get you back on track and in control of your financial future.  Once you have a plan for your finances you can start rebuilding your credit and be protected should there be a financial emergency in the future.

If you live in Washington State and are looking for options for how to implement a financial self defense strategy, give Symmes Law Group a call at 206-682-7975 to speak to a financial planning attorney and learn about your options.

10 Things that Prevent Consumers from Getting Out of Debt

Getting out of debtMost consumers who are buried in debt are likely looking for options in getting out of debt. There are options to get out of debt, such as debt settlement, chapter 7 bankruptcy and chapter 13 bankruptcy, but a consumer needs to be willing to learn about their options and take action by scheduling a free debt consultation.

If no action is taken, the consumer will likely fall further behind, continue to do harm to credit, face possible lawsuits and garnishments and end up needing to address the issue in the future when they have ran out of all alternatives. I talked about this topic on the radio at 1150 AM KKNW and  you can listen to that segment here:

What are the 10 things that prevent consumers from getting out of debt?

(1) Emotions. Dealing with debt can be very stressful and emotional at times. These emotions can cause a person to simply bury their head in the sand and ignore the reality that action needs to be taken.

(2) Family. Sometimes family can be a great help in dealing with financial distress. Other times unfortunately they can provide bad, uneducated information regarding bankruptcy or debt settlement. Cultural dynamics and values may also come into play when dealing with debt to a consumers which can affect how a consumer takes on the debt issues. A consumer in financial distress should always consult with a professional first to get the facts before making any decisions that could be based on misguided information.

(3) Fear. Most people want to pay their debts, however if an when the time comes where you simply cannot keep up with payments, there is fear of what might happen if a bankruptcy is filed or a creditor files a lawsuit. The reality is that most people emerge from a bankruptcy in much better financial condition than they started, but may have heard or received bad information regarding bankruptcy and options that are available to help.

(4) Procrastination. In order to resolve financial issues, you need to be willing to put in some time to get the information from professionals that can help you out of your situation and then once that is received, you must be able to execute on the plan of action you decide. Sitting around for a year or longer when you know what needs to be done will only continue to cause stress and fear of the unknown when you could have resolved the issues at a previous date and obtained a fresh start.

(5) Financial Barriers. While you may already be experiencing financial distress, it is true that most professionals such as attorneys do not work for free as they need to work too to support their families. With that said, you can come up with a plan in order to pay legal fees by stopping payment to creditors who may be included in a bankruptcy or debt settlement plan.

(6) Pride. Nobody wants to file for bankruptcy or go late on paying their bills. You can feel like a failure and it does take an ego hit. With that said, bad things can happen to good people that are out of your control whether it be medical, a job loss, or a business that didn’t work out.

(7) Stubbornness. Even when you have the facts and know you are out of options; sheer stubbornness can cause people to wait until the 11th hour to take action. This usually happens when a judgment or wage garnishment is issued from a debt collector and then you are faced with not having funds to pay basic living expenses.

(8) Over Rationalization. Yes, you can rationalize every angle and possibility for dealing with debt and hang on as long as you can but most of the time that will not make the debt go away, or it is simply not the smartest move if you could get rid of debt today, but this may not be an option in the future due to an inheritance or new higher paying job. You should live in the moment and decide how to take action based on the current situation not what ifs.

(9) Too Busy. You may have a job, perhaps a good job, but you may still be dealing with debt issues from a divorce, prior business or being unemployed previous. Now you are very busy, but you realize something needs to be done to stop the financial bleeding. This results in no action being taken if you don’t take the time to get your financial house in order.

(10) Not Understanding What to Do. If you have not sought out professional help with how to resolve your debt then you may not know what direction to go, even though you want to try to resolve the problem. Perhaps you have consulted with somebody and you are still confused. Until your situation improves you should strive to get the answers you seek to understand the action steps you need to take.

If you live in Washington State and are looking for options for getting out of debt, give Symmes Law Group a call at 206-682-7975 to speak to a bankruptcy attorney and learn about your options.

10 Things Young Families Should Think About When Drafting a Will and Estate Plan

drafting a willAn estate plan for 99% of people usually consists of a drafting a will, durable power of attorney and a medical power of attorney with an optional health directive. A trust may also be created, however for most common folks it is not necessary as a testamentary trust provision can be added to a will for the benefit of minor children. Attorney Richard Symmes discussed the topic of drafting a will and 10 things young families should think about when drafting an estate plan on 1150 AM KKNW which you can listen to here:

(1) What Goes into Drafting a Will and Do I Need One?

As a general rule of thumb, everybody should have a will. This is a legal document that allows you to name a personal representative to handle your affairs when you are gone, it can provide for specific gifts to individuals or organizations, it can include a testamentary trust provision that states a trust shall be created for the benefit of minor children and will include your estate assets and it will name a guardian(s) for your minor children and trustee for your testamentary trust.

Having a will makes it so that your assets are administered per your wishes and can make sure that your children are taken care of. It also takes the burden off of your family to try and determine how you would have wanted your assets distributed. If you don’t have a will and die intestate (without a will) then all of your assets will be administered per Washington state law.

(2) Who Should I Name as My Personal Representative?

The person that you name as your personal representative should be somebody that you trust will handle your affairs per the instructions set out in your will. This is typically a spouse or a sibling but you may name anybody you wish. It is advisable to name a primary person and then one or two backup options in case the personal representative you name is unable to serve.

(3) How Does a Testamentary Trust Work?

A testamentary trust is simply language placed into a will that instructs the personal representative to set up a trust, most likely for children, should they pass away. The trust provision can include language that can restrict how any testamentary funds are to be distributed and shall name a trustee to manage the trust and all the beneficiaries. It is important to think about how you want these funds to be used such as most families like to put restrictions on the trust funds such as they may be used for education and support but not until a certain age are all the funds distributed to a beneficiary.

(4) Can I Disinherit People in My Will?

Yes, you can place restrictions in your will that can specify certain people shall not receive any benefit from your estate as well as limit who can serve as a personal representative or trustee of your estate or testamentary trust.

(5) Do I Need a Separate Trust Set Up Now?

For most young families the answer is no. If assets are placed in a trust before an individual’s passing, then they do not have to pass through probate. Probate is the process of administering assets and paying debts in a court proceeding. Anybody with more than $100K in probate assets upon their death must go through probate in Washington State. Things like life insurance proceeds or assets placed in a trust do not have to go through probate which is beneficial as probate is the process of distributing assets and paying creditors under a court proceeding which can delay family members from receiving assets in a timely fashion.

Furthermore, with regards to real estate, families can record a transfer on death deed which would transfer a property upon death and also avoid probate. For high net worth individuals there may be tax benefits to creating a separate trust or if you want anonymity with regards to your estate a separate trust may be a good idea and trust docs are not filed in court for public viewing.

(6) What is a Durable Power of Attorney?

A durable power of attorney is a legal document that allows you to act on ones behalf if they become incapacitated. This usually applies to being able to access bank account and handle ones personal affairs. If somebody passes away, however you may need to open a probate case to get testamentary letters to access accounts, transfer title in real estate or gain access to a safety security box.

(7) What is a Medical Power of Attorney?

A medical power of attorney names an individual to act on your behalf when it comes to making medical decisions. You may want this person to be different than your personal representative for various reasons such as training in the medical field or being more compassionate when it comes to handling your medical affairs.

(8) What is a Health Directive?

A health directive specifically advises under what situations the hospital shall stop administering life saving health care. For instance, if you are in a coma with no brain activity do you want them to continue life support or not? When you sign a health directive it should be in the presence of two witnesses. Once, again this reduces the burden for loved ones in an already difficult time.

(9) What If I Don’t Have Assets of More than $100K?

If you don’t have assets of more than 100K at the time of your death, then your estate can avoid probate and your heirs can sign a small estate affidavit to administer your estate in order to close out accounts and distribute funds accordingly. If you had a will, it will still need to be filed with the Superior Court in the County where you lived. Nevertheless, it is still advisable to have a will so that you can name a personal representative to handle your affairs and give specific gifts to any beneficiaries you see fit, otherwise the state will make these decisions for you.

(10) Should I have an Attorney Draft My Estate Planning Documents or Do It Myself?

With all the technology and do it yourself services out there you are probably thinking you can handle drafting your estate planning documents on your own. I don’t blame you, but it is just like any other legal matter where you could represent yourself or hire an attorney. Having an attorney will allow you to get all your questions answered during the process and have peace of mind that the documents are being drafted correctly. If you create the documents on your own, you may save a few dollars, however you will need to be careful that the laws cited in the documents apply to your state and that they are doing what you intend them to do. At the end of the day, hiring an attorney isn’t crazy expensive as most estate plans can be created for between $1,000 – $2,500 for the docs listed in this article.

If you live in Washington State and are looking for assistance in drafting a will or an estate plan, give Symmes Law Group a call at 206-682-7975 to speak to an estate planning attorney and learn about your options.

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? Attorney Richard Symmes discussed how to rebuild credit after filing bankruptcy on 1150 AM KKNW and you can check out the discussion here:

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.

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