|
Date: August 11, 2009
Host: Michael D, Siegel View Transcript | Archive Index For All Legal Chats Bankruptcy is traumatic enough as it is, what with facing financial ruin and dealing with a roller coaster of emotions, without adding the mind-numbing details of the bankruptcy code to sort out. Join Michael Siegel, an attorney who deals with bankruptcy and other credit issues, on August 11th at 10 PM Eastern (9 Central, 7 Pacific), to get your bankruptcy or other consumer credit questions answered. MICHAEL SIEGEL practices in the fields of bankruptcy, consumer rights, commercial litigation
and real estate. His main office is in New York City, and he maintains an office in Jersey City,
New Jersey. Michael spent eight years representing large institutional creditors at large law firms in New York City and New Jersey. Now a partner at Siegel & Siegel, P.C., Michael represents mostly individual consumers and businesses. Michael is a graduate of the University of Chicago Law School. He is admitted to the bars of New York State and New Jersey, as well as the Federal Courts in New Jersey and the Eastern and Southern Districts of New York.
http://www.lawyers.com/siegelandsiegel Live Chat Transcript uzee: "ok thanks"
uzee: "Hi Michael.."
Michael D. Siegel: "Sorry. Go ahead"
Michael D. Siegel: "I stepped away for a moment"
Michael D. Siegel: "Please post your question when you are ready."
uzee: "oh ok... no problem, thank you"
uzee: "I am ready, should I go ahead?"
Michael D. Siegel: "yes"
uzee: "I'm in Michigan and currently evaluating my credit related options. I owe about 200k on my home which is now worth probably 160k or even lower. I'm considering either a short sale or foreclosure, I have heard that foreclosure affects your credit for 3 years and short sale affects for 2 years. Is that correct?"
Michael D. Siegel: "No."
Michael D. Siegel: "Both impact your credit negatively. Your first issue is whether you want to keep the house at all."
uzee: "so foreclosure stays on the credit longer, like 7 years?"
uzee: "well... In my current situation no..."
Michael D. Siegel: "All credit entries are on your credit report for 7 years. Each impacts a score slightly differently."
uzee: "ok..."
uzee: "If foreclosure affects credit for like 7 years, then how would it affect my credit cards? I have about 10k credit card debt, would it help my credit if I continue payments on the credit cards or it wouldn't matter? I have an opportunity overseas but I dont know if I'll be able to continue making credit card payments from that job."
Michael D. Siegel: "If you want to walk away you might try a deed in lieu of foreclosure in which the bank takes title to your house, and waives any deficiency."
uzee: "but that would negatively affect the credit also, wouldn't it?"
Michael D. Siegel: "10K in credit card debt is a manageable number."
Michael D. Siegel: "Any default is negative."
Michael D. Siegel: "Bankruptcy stays on your credit for 10 years."
uzee: "I agree its manageable if you have enough money to continue making payments after your expenses..."
Michael D. Siegel: "If you can deal with the house with no lingering liability, I would do so, and then pay the credit card debt. If you are going abroad, you could declare bankruptcy before you go and be debt free."
Michael D. Siegel: "In that case you would walk away from the house and the debt."
uzee: "when you say "deal with the house with no lingering liability" do you mean doing the "deed in lieu of foreclosure" ?"
Michael D. Siegel: "I am not a fan of short sales, since you are really just working for the bank at that point."
uzee: "oh really.. ok thanks I did not know that"
Michael D. Siegel: "Yes, start and see if the bank will take a deed in lieu."
Michael D. Siegel: "If so, that is your best option."
uzee: "is it lesser negative than actual foreclosure?"
Michael D. Siegel: "You can negotiate your departure time and maintain control over the process."
Michael D. Siegel: "Yes, it is a less negative since there is no deficiency."
Michael D. Siegel: "A foreclosure runs the risk of a deficiency."
uzee: "oh ok... thats a good option if they agree"
Michael D. Siegel: "Yes."
uzee: "ok now, if I consider a worst case scenario where they dont agree to the deed in lieu, and I cannot make credit card payments also, would it not be better if I dont declare bankruptcy, since then It would remain on my credit for 7 years as opposed to bankruptcy for 10 years ?"
Michael D. Siegel: "bankruptcy is really the easiest and cheapest way to deal with everything at once."
Michael D. Siegel: "The three year difference is not critical"
uzee: "hrmm.. why would you say 3 years difference is not critical"
uzee: "oh and by the way, my wife does not work and doesn't really have any credit of her own but her name is on the house, would her credit be hurt too?"
Michael D. Siegel: "Because your score goes up over time as the negative events recede in the past. While the foreclosure might provide a definitive end date, credit card debt is constantly sold and re-aged in a way that makes those negative events repeat."
Michael D. Siegel: "Yes, if her name is on the loan, not just the title, all of these events impact her credit."
uzee: "ok... and to your above comment about credit card debt re-aging, does that mean they don't go away even after 7 years?? I thought anything on your credit gets wiped after 7 years ?"
Michael D. Siegel: "Yes, but each event is recorded. If the debt is sold to a collection agency, or written off, these events are noted on the report, and cause a negative score."
Michael D. Siegel: "These events each last seven years, which means that an old default can keep reappearing."
uzee: "oh ok.."
uzee: "The other reason I have against bankruptcy is that I will first need to pay a bankruptcy lawyer approximately $1000-$1500, please dont take this personally, I'm just asking if thats true, then I would be out of pocket another $100 or so..."
uzee: "I mean out of pocket another $1000 or so..."
Michael D. Siegel: "Yes, that is true."
uzee: "ok... but that cost could save me from credit card debts re-appearing right...?"
Michael D. Siegel: "But if your car was broken you would pay a mechanic to fix it. Your finances are broken, and you should not be cheap about it and be willing to pay a professional to do the job right."
Michael D. Siegel: "Yes, bankruptcy is a bright line that will stop debt from reappearing."
uzee: "I absolutely agree... that was not my intention I was just asking to make sure"
Michael D. Siegel: "No offense taken. I just mean that you will be saving 10K on the credit card and 40K on the deficiency on the house, and to get it right you should hire the right person."
Michael D. Siegel: "In light of that 1K is not a lot."
uzee: "100% agreed :)"
Michael D. Siegel: "Good lcuk."
Michael D. Siegel: "I still think you should try the deed in lieu first."
uzee: "thanks very much... lastly can a bankruptcy be filed from abroad as well?"
uzee: "I definitely will try the deed first as it seems the best option"
Michael D. Siegel: "It is hard to do so. You need a residence in a Federal court district. You also need to appear for a trustee meeting. I would try to do this before you leave"
uzee: "oh ok... thanks very much once again for your time, I really appreciate it.."
uzee: "what state do you practice in?"
Michael D. Siegel: "Good night."
Michael D. Siegel: "NY and NJ"
uzee: "ok thanks and good night"
Michael D. Siegel: "Now I can answer the preposted questions."
Michael D. Siegel: "lgharmon2: "How do the following complicate chpter 7 in TX: 1) Ex-husband's name still on house. 2) Have a paid off car and making payments on one. 3) Still have two active and current Credit cards. Do we have to liquidate the house, car, and lose the active cards?""
uzee: "Oh I'm sorry that I took so much of your time"
Michael D. Siegel: "There is no way anyone could answer this question with this limited data. The short answer is that you do not have to liquidate."
Michael D. Siegel: "ash4cakes: "I have petitioned for chapter 7. two days prior to the 341 meeting, my attorney forwarded me a mail from some lawyer from Dpet. of Justice asking questions on my case. he objected to some items from my statement of income & expenses. we provided a subtantiation to those items. later the 341 meeting went well - now this DOJ lawyer is raising objections to my case & moving for dismissal ( as my attorney informed me). My question is: is my case being audited? if so, what can happen now? AS far as we thought (in fact my attorney spoke to the trustee also) everything went well & I should get the discharge but now things seem to have reversed. please let me know what are my chances to get the discharge? who takes the final decision & when will I come to know about it? what are my options? can I convert it into chapter 13 & if so, when should I file? I am very worried, so plesae help me. Thanks much in advance.""
Michael D. Siegel: "For the US Trustee to be involved, there must be problems with the case. The objections likely relate to the means test. Before converting, which you can do as of right if you qualify, or allowing the dismissal, check with another lawyer on why this is happening. Reach out to the US Trustee yourself and get the motion adjourned while you seek a second opinion. Do not wait until the motion day."
Michael D. Siegel: "coach2coach: "I just had a truck repoed and I want to know if it is better to now file bankruptcy or deal with the repo on my credit report. I am self employed and cash flow runs uneven. I had talked to Ford two days prior to the repo and they told me that I had until Friday the 31st of July to make the payment, but they repoed the truck on Thursday night. Is there anything that can be done?""
Michael D. Siegel: "You can pay to get the truck back. A bankruptcy may not get the truck back, and you will have to pay to keep it even if it does. If you are willing to kiss the truck goodbye, then filing now or later is not different."
Michael D. Siegel: "jbbk77: "Everyone tells me if your credit score is already down to 470 and your credit card debts are already in a collection agency; there's no reason not to file bankruptcy. Wouldn't it be better to pay the 30% offer you can get from the collection agency? How would the two affect my cerdit differntly? In my situaton I could afford to make the payment on a loan that would pay off the settlement offer.""
Michael D. Siegel: "Paying the discounted amount actually counts just as negatively as the bankruptcy. Also, there are tax implications to paying a short amount and you will get a 1099 form outside of bankruptcy. There is no point to throwing good money after bad. If you have access to credit, use it to set yourself up going forward and not on old debt."
Michael D. Siegel: "Jean Robinson: "in 2000 I entered into a partnership contract with two sisters in a daycare. I was to receive percentages in total receipts and percentage in money loaned which started the daycare. 2004 they defaulted and fought me up to 2009 on the grounds of usury which of which I won and then each eventually declared personal bankruptcy 7. Is my contract still binding on present profit even though the past money debt is erased? They registered the daycare as owners and underhanded listed the daycare as LLC. Knowing bankruptcy was to follow. What to do?""
Michael D. Siegel: "It depends on the terms of your contract. There may be ways to collect if you have an interest in the business as an owner. But if your contract you are calling a partnership is really just a loan, then you are going to be out of luck."
Michael D. Siegel: "Gatuso1971: "On February 10, 2008 I borrow a $100 from a private family (husband and wife) which I knew, located in La Grange, IL. She asked me to sign an agreement, which was hand written, stating that if I will pay the money back in a week there will be no interest applied, but after that they will charge me around %150 for each day after that week. I paid the money with cash in the week interval so I can avoid any extra charge. But she did not give a receipt for my payment, saying that everything is fine. I do not have a copy of the agreement too, since she never gave it to me. Since there is a year and a half since then, can they charge me thousands of dollars now?""
Michael D. Siegel: "No. The interest is usurious and cannot be enforced. You would have a defense of payment, and no one is likely to pursue such a case."
|
