What is your advice for people that are afraid of creditors garnishing their wages.

The only time a creditor can garnish your wages or take your car or try to garnish your bank account is if they have a judgment against you. Once they have a judgment against you, they have the right to do all kinds of bad things to you including sometimes intercepting your tax refunds, garnishing your wages, bank accounts, seizing your cars, etc.  You need to see me immediately if that happens to you because a bankruptcy filing will automatically stop all these kinds of bad things that a creditor can do to you. Let’s say for example you had an accident and there is a judgment against you because you didn’t have insurance to cover for the damage, if you cannot pay that judgment or make arrangements to pay their judgment, the DMV will suspend your driver’s license. We can file a bankruptcy, get that debt discharged and get back your driver’s license and you’ll not have to pay that debt at all. Many people don’t know that and they drive around with suspended license. But remember, if you get caught with a suspended license, you can actually go to jail. So don’t do that. If your drivers license is suspended because of a judgment due to a car accident, we can get your license back and get rid of the debt at the same time.  

So what’s happening in 2012 as far as the loan modifications with the banks? Are they more flexible? What is this current status?

Loan modifications are not working. Very few people are getting loan modifications and even when they get them, the payments are so high that people default within a few months. Again, you’re taking a chance. I would say you should apply for a loan modification as a delay tactic so that they can delay your foreclosure or they can delay the foreclosure or filing the foreclosure case against you. But if you’re depending on them giving you a good loan modification, it doesn’t happen many times. In the past 7 years, I have seen about 3 clients who have got principal reduction and that’s a very small percentage. I have some clients that have got loan modifications but they were not always affordable. So loan modifications are difficult to get, and even when you get them they are not affordable. Bank of America is probably the worst bank to deal with. They will just give you the run around for the next 8 months and then say, “Oh, we cannot approve your loan modification application.”

Any suggestions for people that want to get back on their feet after they go through these terrible times?

Immediately after your bankruptcy or during your chapter 13 bankruptcy, you should take steps to repair your credit because bad credit means you are going to pay higher interest rate on cars, on future mortgages, etc. etc. And that will cost you a lot of money throughout your lifetime. Immediately they should take steps to do something about their credit and I can give you many ideas on some things that you can do yourselves and some things I can do for you through our credit restoration services. Of course you have to always try to see if you can get a better job, make more money,  save more money. Those are important things that you need to start doing. Be a little bit more responsible. Don’t use your credit card for frivolous stuff and all those things that you want but don’t really need. Nobody needs a 2012 Mercedes E450, but yes, we all need a decent car to go to work.  There are other things that I can suggest that you need to do to get back on track. One thing for sure is just because you filed for bankruptcy it is not the end of your life. It is actually a beginning of a new fresh start for you. So, anybody that tells you, hey, if you file your bankruptcy that’s the end. Don’t believe them because they just don’t know better. Many times the people who are closest to us will tell you don’t ever file bankruptcy. It’s our mother or father or brother or sister or family members and our close friends. If you really want to know what bankruptcy can do to you and what it cannot to you, come and see me. I’ll explain to you in plain language how it affects you, what you can do and what you cannot do. My goal is not just to put people in bankruptcy but also to keep them out of bankruptcy if they are not qualified for one.

What happens when there is an increase of income while you are still in chapter 13? Is that going to jeopardize their chapter 13 payment plan?

In this district in Broward and Palm Beach, it has not mattered so far how much money you make after you file the chapter 13 bankruptcy. But I must say that with a caution and the reason is in the bankruptcy law itself says very clearly that if your income increases in the future, you have to modify your Plan to increase payments to your creditors. I know the chapter 13 trustee in Miami has filed motions to modify a debtor’s plan to increase plan payments. I have not seen the Broward and Palm Beach trustee doing so at this time. If something like that is about to happen to you, you need to come and talk to me. Maybe there are other alternatives that we can work on, maybe even convert your case to a chapter 7 right away and give up some of your assets to the Chapter 7 Trustee or buy them back from the Trustee with your new money. So, as long as you keep in touch with me about your financial situation, I can guide you every step of the way. 

How does it work for people that have a second mortgage?

If you have a second mortgage on your home and you don’t have equity in your property and your home is underwater, we can get rid of it in a chapter 13 bankruptcy and as long as you successfully go through a chapter 13 and get a discharge that second mortgage will go away forever.

Some people might have maybe a second home or an investment property. What happens in that case?

For investment properties, you have an option. You can always file a bankruptcy and give it up if you don’t want it. But if you want to keep it and let’s say it’s providing a decent amount of rent to cover the principal interest, the homeowners fees and all those things, you can actually reduce the principal on your investment home in a chapter 13 bankruptcy as long as you’re willing to pay the balance in five years with about 5% to 6% interest. So let’s say for example you owe $200,000 on a condo but the condo’s only worth $60,000. As long as you can pay $60,000 over a 5 year period with about 5% or 6% interest, you can actually keep your condo and keep on renting it out, collect rent, and own it free and clear in 5 years. That is the magic of Chapter 13.