The Consequences Of An Iva
As well as there being positives to having an IVA, there are also a number of negatives you need to think about too. These include:
damage to your credit history your IVA will be noted on your credit file. However, as its likely youve already been missing payments, and may already have defaults noted on your file, this may be of little concern to you at this point. Having a damaged credit history will make things a little more difficult for you in the future, if and when you come to apply for credit again. You may find its more difficult and more expensive than it would have been previously
your name will appear on the Insolvency Register this is a public register that can be searched by anyone.
a restricted budget you will be expected to put all the money you can into your IVA, this means that youll have to forego some of the things you may be used to having. Read our full, in-depth guide on the advantages and disadvantages of an IVA.
Protecting Your House With Chapter 13 Bankruptcy
If your mortgage isn’t current or your home’s equity is partially nonexempt, you’ll have a better chance of retaining your property in Chapter 13 than in Chapter 7 bankruptcy.
Chapter 13 bankruptcy lets you make monthly payments for three to five years to a bankruptcy trustee who distributes those payments to creditors who’ve filed proper proof of claim forms. The benefit of the repayment plan is that you can use the Chapter 13 repayment plan to do the following:
- catch up on back payments, and
- pay for any nonexempt equity.
If you have enough income to do these two things while paying your monthly payment and meeting your other Chapter 13 payment obligations, you’ll be able to keep your home. Also, if your home is worth less than what you owe, you might be able to remove a wholly unsecured junior loan. Most people can’t do this, but lien stripping is a powerful tool when available, so check it out, just in case.
How To Qualify For A Home Equity Loan
Check your credit score before you start shopping around for lenders and loan terms. You’ll most likely need a credit score of at least 680 to obtain a home equity loan. A higher score is even better. You probably won’t be able to qualify for either type of loan until you repair your credit score if you can’t meet the minimum requirement.
You must show that you’re able to repay the loan. That means providing your credit history and your household income, expenses, debts, and any other amounts you’re obliged to pay.
Your property’s loan-to-value ratio is another factor that lenders look at when qualifying you for a home equity loan or HELOC. It’s often best to keep at least 20% home equity in your property, which translates to an LTV of at least 80%, but some lenders allow bigger loans.
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Deed Signed By Mistake
How could someone sign a deed by mistake? Well, if they didnt know what they were signing or thought they were signing something entirely different and never meant to transfer their property, they could have a claim of non est factum , which would void the warranty deed transaction.
This could happen if the seller has a disability like blindness or is illiterate, meaning they have to rely on someone else to tell them what theyre signing. You can avoid this by making sure you have a trustworthy closing agent who will make sure all parties understand all of the documents, but if a deed was signed by mistake in the past, it could still affect your title in the present.
Increase The Value Of Your Home
Another great way to build home equity is to increase the value of the property. For instance, you could invest in interior remodeling, landscaping, solar panels or technology to make your home more energy efficient. Before deciding to spend on a remodeling project, make sure the improvements will give you a high return on investment . Fixing up the kitchen, building a patio and replacing the roof are great ways to increase the value of your property.
How this affects equity in your house: By increasing the value of your home, you can increase your home equity, even without changing the amount that you owe. When taking this approach, remember that overall market conditions can have an effect on your homes value nd not all renovations will increase the value of your home or provide the same amount of return. For example, a garage door replacement has a 94% return on investment while a midrange bathroom remodel only has a 60% return on investment on average for 2021. Do your research before making any renovations and choose wisely.
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How To Know If Your Home Is Exempt
Figuring out whether your home is exempt is a simple math problem if you owe more than the market value, its exempt. Be sure to check what the exemption rules in your state are, because thats part of the math. Less simply, the paperwork you fill out requires you to list what you owe, the exemption and your equity. You file the items you believe are exempt in Schedule C. This not only includes your house, but you also get an allowance for your car, and items like furnishings, things necessary to do your job, and more. Its always a good idea to get help from an expert in bankruptcy wholl guide you through this complicated procedure.
Can I Keep My House If I File Chapter 13
If you have sufficient income to keep up with your mortgage, you will not lose your house. Chapter 13 bankruptcy involves a 3 – 5 year repayment plan. Long-term secured debts, like home mortgages, remain in place. Just like after a Chapter 7 filing, youâll continue to make your regular monthly mortgage payments after filing. In other wordsâ¦
If youâre current with your mortgage payments â¡ï¸ everything will stay basically the same.
You’ll continue making your regular monthly mortgage payments – typically directly to the mortgage company – while your Chapter 13 reorganization is pending.
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Going Bankrupt When You Own A Home
If youre in debt but you own a house, one of the first questions you might ask a Licensed Insolvency Trustee or other financial professional is if you can go bankrupt.
The short answer is yes.
There are cases in which your debt can cause you to go bankrupt, even if you own a house.
But, that doesnt automatically mean youll have to lose your house.
More importantly, you should ask yourself whether you should keep your house, and then look at your other options for getting out of debt.
Need Help Reviewing Your Financial Situation?Contact a Licensed Trustee for a Free Debt Relief Evaluation
Pay Off Your Mortgage
The single most effective way to increase your home equity is to pay off your mortgage faster than anticipated. If you cant afford to pay off your remaining mortgage in full, try making larger monthly payments, or even just a few extra payments per year. Not only will that help you build home equity faster, but youll also save thousands of dollars in interest. Before you do this, check with your mortgage lender to make sure there isnt a penalty for paying your mortgage off early.
How this affects equity in your house: Making extra payments to your mortgage principal is the most straightforward way to increase your home equity. Every dollar you pay early toward your mortgage is one dollar of your home equity increased.
Is An Iva Right For Me
Theres no maximum or minimum amount you need to owe and no particular number of creditors you need to have to apply for an IVA. All that needs to be in place is your genuine inability to pay back what you owe in a reasonable amount of time. What this means to you, will form part of the discussion you have with your debt advisor.
You also need to have some kind of regular income coming in every month, so that you can commit to monthly payments. This is important because if your IVA fails, it could lead to bankruptcy.
Foreclosure And The Coronavirus Pandemic
During this pandemic, which has created extraordinary hardship for millions of people, there are relief options available to homeowners. If you have a government-backed mortgage , youâre protected under The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. This allows homeowners to get into a forbearance program if theyâre unable to make their mortgage payments because of COVID-19. Currently, there is no expiration date for this benefit.
âForbearance is not automatic, you have to request itâdonât just stop paying your mortgage,â says Cristian Salazar, deputy director for communications at the Center for NYC Neighborhoods, a nonprofit that promotes affordable homeownership in New York. âContact your servicer and explain that you have been affected by COVID-19. Itâs critical that you make every effort to pay your mortgage until you have the opportunity to speak with your servicer.â
Stopping payment on your mortgage before speaking to your servicer could put you at risk of being ineligible for future relief, Salazar says.
Here, weâll go over the basic foreclosure process and what you can do to avoid foreclosure. Keep in mind, foreclosure procedures and laws vary by state.
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Ask Your Lawyer About North Carolina Bankruptcy Exemptions
Different states might allow certain exemptions when filing for bankruptcy, so it may be in your interest to ask your lawyer which exemptions you might qualify for. Bankruptcy exemptions can help people retain some or most of their assets when filing Chapter 7 bankruptcy, or it can serve as a way to refinance your debts if you are filing Chapter 13 bankruptcy. Your lawyer may go into more detail and explain which bankruptcy filing might be more suitable for your financial situation.
In North Carolina Cases, debtors are usually prohibited from using the federal bankruptcy exemption system. To accommodate this barrier, people who want to file for bankruptcy may use state exemptions to help them. Below are two aspects of North Carolina exemption law that might help you not lose your house if you file Chapter 7 bankruptcy.
If I File Bankruptcy Will I Lose My House
The first question anyone contemplating bankruptcy asks is either Is bankruptcy right for me? or Will I lose my house? We answered the former above and now well delve into the latter. Actually, the house question is probably asked more commonly.
And, we have good news.Many folks are able to keep their house and bankruptcy. The best test is whether you can make up any back payments and make current and future payments as well.
- If you can make the mortgage payments, you likely can keep your house.Remember that you need to be able to make your real estate tax and homeowners insurance payments as well.
- There is more good news: Second and third mortgages that are no longer secured by the value of the property can be discharged and make keeping your house easier.
Chapter 7: If you file a Chapter 7 bankruptcy, your home state may offer exemptions that protect the equity in your house up to a certain amount. Some states protect just a few thousand dollars of equity and other states protect 100% of home equity other states are somewhere in between and some states provide a choice between home state and federal exemptions.
- See our How to Find a Bankruptcy Attorney article that references your state to determine how much equity you can protect.
- If you live in New York, go to How to Find a New York Bankruptcy Attorney.
Never give up your house without getting good advice.
In Chapter 13 bankruptcies, so long as you can make all house payments, you can keep your house.
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Do I Owe Money If The House Sells For Less Than I Owe
In the event that your home sells for less than the balance owed, the lender can file something called a deficiency judgment. This is a lawsuit that requests the borrower pay the remainder of the loan amount. For example, if you owe $300,000 on your mortgage, but the house only sells for $275,000, the deficiency is $25,000. A lender might try to collect the outstanding balance.
Some states, however, have anti-deficiency laws or restrict deficiency judgments after foreclosure.
No Access To The Property
A landlocked property without access to a public street will probably have a right-of-way easement attached to the title. This easement allows the property owner to use a road or path through someone elses property. A property that is landlocked with no access is illegal in some states, drawing into question your ownership.
If an adjacent property has no access, you should check your ownership documents. There could be an easement attached which will limit how you use it and make it harder to sell in the future.
Can You Continue Making House Payments After Chapter 7 Bankruptcy
Its also important to be sure you can afford to continue paying the mortgage payment after a Chapter 7 bankruptcy. Losing the house after your case might put you in a worse financial position. Why? If the lender couldnt sell the home for the amount you owe, youd be stuck with a deficiency balance depending on the laws of the state you live in.
Worse yet? Youd have to wait eight years to file a second Chapter 7 bankruptcy, leaving the lender plenty of time to collect a deficiency balance using collection methods such as garnishing your wages or levying on a bank account.
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Where To Find Your State’s Bankruptcy Exemptions
Your state’s bankruptcy exemptions are in your state code. If you’re not sure where to find your state’s statutes, we can help. We provide state exemption lists and even links to online statutes in Bankruptcy ExemptionsWhat Do I Keep When I File for Bankruptcy? Scroll down to the middle of the article for the link to your particular state.
But remember, mistakes can be costly. You must read the code section itself to be sure it applies or speak with a knowledgeable bankruptcy lawyer.
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When Does Foreclosure Begin
Borrowers who get behind on their mortgage usually go through a series of steps before they face foreclosure. Foreclosure is the result of breaking your repayment agreement with your lender and failing to make alternative arrangements for repayment, such as a loan modification.
The repayment agreements are outlined in the promissory note you signed at closing, as part of your mortgage commitment. These agreements may differ by lender and jurisdiction. So be sure to refer to your agreement for particular rules that govern your mortgage.
Will I Lose My Home If I File For Bankruptcy
Most people who file for bankruptcy are able to retain their house. There are, however, two ways that you can lose your house when you file bankruptcy in Kentucky or Indiana:
- If you fail to make your mortgage payments. This is no different than if you had not filed bankruptcy. Failure to make your mortgage payments will result in the mortgage company starting a foreclosure process against you, which will ultimately result in the sale of your house through a courthouse auction. Although a Chapter 7 bankruptcy filing will temporarily delay that process as a result of the automatic stay, once this form of bankruptcy is complete , the creditor can start the foreclosure process or restart it if it has been stayed.
- If you have too much equity. Equity is what you would get for your house if you sold it, after paying off the mortgage, and any other debt against it, such as tax liens. If you file Chapter 7, you are only allowed a certain amount of equity that you can have in your house and still keep it. The amount that you are allowed is called your homestead exemption. The amount varies by state. In Kentucky, it is $23,675 per person. In Indiana, it is $19,300 per person. If you own the house with your spouse, each of you is entitled to that amount of exemption.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
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Chapter 7 Bankruptcy Can Help People Retain Their Assets
Chapter 7 bankruptcy is a method to retain most or all your exempt assets, and all non-exempt assets may be used to pay off debts to creditors. Because this bankruptcy chapter does not include a repayment plan, this filing may be more suitable for people who are up-to-date with their mortgage payments and can continue paying their mortgage payments after filing.
If you are facing potential foreclosure, your lawyer might suggest filing Chapter 13 bankruptcy instead, as this method can help you catch up with payments you fell behind on and offer a payment plan over three to five years.
With both Chapter 7 and Chapter 13 bankruptcies, you might also be able to claim certain exemptions that can help you retain more assets and property in bankruptcy.
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