What is a Reverse Mortgage?

Family Standing in Front of White House

A reverse mortgage is a loan borrowed against the equity in your home. You must be at least 62 years old to qualify for a reverse mortgage, so it is often used by people of retirement age to supplement Social Security or other retirement income.

Instead of making a payment each month as you would with a traditional mortgage loan, a borrower receives money with a reverse mortgage. The loan is secured through the equity in the house, and accrues interest monthly. Money may be received from the lender through a lump sum, monthly payments, or a combination of both. Since the borrower does not make payments back towards the balance, the loan grows each month as interest is tacked on.

The loan will come due when the home is no longer the primary residence of the borrower(s). This will happen as a result of either the property being sold, the resident(s) moving out, or death.

Once the home is not the primary residence of the borrower, the balance can either be paid by the borrowers or their estate, or the home can be sold to pay back the loan. If the property is sold, the difference between the loan and the sale price (in other words, any remaining equity) will belong to the estate. If it is sold for less than the full loan amount, the lender must absorb the loss. They can then request reimbursement from the Federal Housing Administration to cover their loss.

While a reverse mortgage can be used to supplement retirement income and ensure a comfortable lifestyle, there are pitfalls that need to be carefully considered. We recommend that anybody considering a reverse mortgage discuss it with a trusted financial advisor before making any agreements.

Can I File Bankruptcy If I have a Trust Fund?

Girl on White BackgroundWhen it comes to bankruptcy, it’s important to know the limitations of a bankruptcy. One area we occasionally have people ask about is whether they can file bankruptcy or not if they have a trust. To answer this question, yes; generally speaking, someone with a trust fund is more than likely able to file a bankruptcy.

There are two different types of trusts. There is a revocable trust and an irrevocable trust. A revocable trust is when the grantor (the person who created the trust and put property into it) of the trust has full access and control over the trust and at any given time can access the property in the trust. This is true only until the passing of the grantor. The beneficiary of the trust (the person that will receive the trust) is not able to control the assets of the trust until the grantor of the trust is deceased. Even then, the beneficiary may not have full control over what happens to the trust. This is due to there being provisions and rules associated with the trust that may limit what the beneficiary can do with the trust and the assets in the trust.

An irrevocable trust means the trust cannot be changed, and the assets in the trust cannot be accessed, without permission from the beneficiaries. This is because the grantor of the trust has given up their rights of ownership of the assets in the trust. The beneficiaries may not be able to access a trust instantly, but because the grantor has removed their ownership rights, the beneficiaries of the trust have some legal rights to those assets.

The main concern with trust funds is whether or not the trust can be protected from creditors. There are many allowances that will let you protect a trust. One of the most common allowances in the legal field is a “spendthrift” clause. A spendthrift clause can limit creditor’s claims to trust assets, regardless of whether the trust is revocable or irrevocable.

If you are a beneficiary or a grantor of a trust fund, and you are considering filing for bankruptcy, it is very important that you make your attorney aware of the trust. You should also have your bankruptcy attorney or trust attorney look over the trust and contract to be sure that it can be protected from creditors.

How Do You Dispute A Debt On Your Credit Report?

Father and Daughter Surfing the WebErrors in credit reporting can be detrimental to an individual’s financial health and stability. New lines of credit can be denied or offered at inflated interest rates because of incorrect negative information provided by even one of the three credit reporting bureaus. Some experts estimate that one in every four credit reports contains inaccurate information that could stop individuals from obtaining new lines of credit.

The first step to correcting inaccurate or outdated information on your credit report is knowing what creditors are seeing when they pull your information. While you can pay each credit reporting bureau a fee to see your report at any time, federal law requires that each bureau allow you to see your credit report for free once every 12 months. A website has been created to allow individuals to pull all three reports for free. AnnualCreditReport.com is one of the few places you can pull your credit reports without fear of having to pay anything. It is the site recommended by the Federal Trade Commission.

When inaccurate information is found, it must be disputed with each individual credit bureau that is listing it. If, for example, there is incorrect information on all three reports, it must be disputed with all three bureaus separately. If only one credit reporting bureau is showing misinformation, then only that bureau needs to be contacted.

To dispute anything on your credit report, gather any supporting documents you have as evidence. Write a letter to the credit reporting bureau explaining clearly what the inaccuracy is and provide the correct information so that the error can be corrected. The Federal Trade Commission has created a sample dispute letter that can be used as a guide. Attach your supporting documents to the letter to ensure that your complaint is addressed and corrected. We typically encourage folks to send these letters certified mail, return receipt requested, so you have evidence that you properly gave notice of any inaccuracies.

Each of the credit bureaus has set up a page on their websites to allow individuals to file online disputes. Access them here:

File dispute with Equifax

File dispute with TransUnion

File dispute with Experian

Once your complaint has been submitted, the credit reporting bureaus will investigate the inaccuracy, and will usually send a response in the mail no later than 30 days from the day that the dispute was submitted.

If you still are unable to have the improperly listed debt removed then you should contact the Federal Trade Commission to let them know of the improper reporting and the credit bureaus failure to properly remove the inaccuracy.

Should I Tell Creditors I’m Filing Bankruptcy?

TelephoneWhen it comes to filing a bankruptcy, one of the most frequently asked questions are “what should I tell my creditor’s after I have decided to file a bankruptcy?” One of the main issues that people with unsecured debt struggle with is the constant and harassing phone calls from creditors. In order to defer some of those phone calls from creditors, clients can inform their creditors of their decision to file a bankruptcy and give them an idea of which chapter (Chapter 7 or Chapter 13) they will be filing.

For a client that has already retained an attorney and provided the attorney with their paperwork, the client may give the creditor their attorney’s contact information. The client should inform the creditor that they have retained an attorney and let the creditor know that they should no longer contact them, but instead, should contact their attorney.

By a client informing a creditor of their bankruptcy filing, the creditor will usually stop all contact with the client and begin contacting the client’s attorney. However, creditors are technically allowed to contact a client regarding the debt owed until the client has been issued a case number after their bankruptcy is filed. A client will not receive their case number until their bankruptcy petition has been filed with the court.

Why Is Confirmation So Important In A Chapter 13 Bankruptcy?

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When you initially file a Chapter 13 bankruptcy your Trustee and creditors get a copy of a proposed plan.  This tells the creditors how they are classified in the plan and how much you are estimating that they will be paid for the duration of the bankruptcy.   Both the bankruptcy Trustee and the creditors have the option of reviewing the plan and either accepting or objecting to the plan terms.

Once you file your bankruptcy, your attorney is required to mail a copy of your proposed Chapter 13 plan to all of your creditors within 5 days from the date the case is filed.  This gives everyone who is listed in the plan a chance to review how they will receive payment and whether or not they agree with the plan.  If they do not agree with the plan, they have the right to file an Objection with the court stating their reasoning.  At the 341 Creditor?s hearing (roughly a month after the case is filed), the Trustee will review your plan and have your attorney make any necessary amendments, if he agrees to the plan at that point, he will recommend confirmation.

Confirmation sets your plan in stone and is essentially put in place for your protection.  Once your plan is confirmed, there is no changing it unless a Motion and Order is filed with the court.  This prevents an unsecured creditor from coming up years later stating that they do not agree with the proposed payment.

Am I Personally Responsible for Business Credit Card Debt?

Male on White BackgroundYou are only personally liable for the debt if you sign as a personal guarantor. 

What is that you ask?  It is someone who ?guarantees? (hence the derivative ?guarantor?) to pay for someone else?s debt should they default on their obligation.  It is quite like a co-signer but normally applies to business debt.

As you know, businesses come and go as the days go by.  It is quite easy to open and close a business; and as many credit card and loan companies understand this, they will often have the owner of the company personally sign as a guarantor on the loan.  This protects the creditor should the business close; this way even if the business itself is not open, there is still a live body that obligated to pay them their monies owed.

The good news is that if you have signed as a personal guarantor on a business credit card or loan and the business has closed, should you file a bankruptcy, you can include that business debt as part of your personal debt to relieve your personal liability on the debt owed.  If the business is still open then the creditor has every legal right to go after the business for the debt owed, but not you personally.

What Should I Expect at my Foreclosure Hearing?

Foreclosure on Rental Property | Filing for BankruptcyIn the State of North Carolina, foreclosure hearings are held by the Clerk of Court or Assistant Clerk of Court, as judges rarely hear foreclosures. The Clerk of Court is only to hear cases involving “legal defenses.” Cases involving any other type of defense, such as defense of fraud cases, are to be handled through Superior Court. This is due to North Carolina being a “Power of Sale” state.

There are three possible outcomes of a foreclosure hearing. The first outcome is that the Clerk of Court will deny the right to foreclosure. During a foreclosure hearing, a mortgage holder is required to prove four different components in order for the Clerk of Court to approve a foreclosure sale. Generally, the mortgage holder provides the Clerk of Court with documents supporting each of the four components. The four components considered at a foreclosure hearing are as follows:

1. Reasonable debt occupied by the mortgage holder or party seeking to foreclose.

2. Default on the debt

3. The right for the mortgage holder to foreclose based upon the deed of trust to the home

4. Notice of hearing was sent to the Debtor

If the mortgage holder does not prove the existence of the four components, the Clerk of Court will not approve the sale.

The second outcome of a foreclosure hearing is the Clerk of Court will issue a continuance. Under Section 45-21.16C of the General Statutes, the Clerk of Court may continue a foreclosure hearing up to 60 days. This could be due to the Clerk’s conjecture that the issue can be solved with time. For example, the Clerk may issue a 60 day continuance if the Debtor is in the process of working something out with the mortgage company. If the Clerk issues a continuance at a foreclosure hearing and the Debtor is present at the hearing, the Debtor will receive a written order from the Clerk stating the continuance.

The third outcome of a foreclosure hearing is the Clerk of Court will issue a “sale date”.

More than likely, the Clerk of Court will approve a foreclosure sale if the mortgage holder can prove all four components mentioned above. If a mortgage holder is able to prove all four components, the Debtor will receive a “sale date”, which represents the date at which the Debtor’s home will be sold. The sale date usually follows approximately 20 days after the foreclosure hearing. Once a Debtor receives a “sale date”, the Trustee, whom is listed on the deed of trust, will then post a “notice of sale” flyer at the county courthouse bulletin board in addition to sending notice to the borrower. They may also put the “notice of sale” in the upcoming newspaper.

Once the sale date has arrived, the State of North Carolina issues a ten day upset bid period. The ten day upset bid period allows for the filing of a bankruptcy within that ten day period in order to stop a foreclosure. If a bankruptcy is not filed before the sale date or during the ten day bid period, the Debtor will no longer own the property. If you have a foreclosure hearing or foreclosure sale date pending it is important that you immediately contact an experienced bankruptcy attorney to learn more about how you can save your home.

How Do I Request My Tax Transcripts Online?

Laptop ComputerOne of the most important documents we need in order to file your bankruptcy are copies of your tax returns for the last 4 years. We must have both federal and state. If you cannot find your tax returns, check with your tax preparer or ask the IRS or State for a copy of your returns. You may order a tax transcript online from the IRS website. Transcripts are free and you can get them for the current year and the past three years. You can download and print your transcript immediately or request the transcript be mailed to your address on record.

In order to get a transcript online you must first verify your identity online by registering as a guest or creating a User ID/password. As part of the registration process, you will be asked for an e-mail address they will send you a confirmation code. You’ll use the code to continue with the registration process. Don’t close the window or navigate away from the IRS page to check your e-mail; the confirmation code will be sent to your e-mail address within 10 minutes of requesting it.

When requesting the transcript online, you will need to provide your name, social security number, date of birth, filing status and the street address you provided on the last tax return you filed. You will also need to answer a few identity verification questions that only you can answer, such as your previous address, mortgage information, etc. So make sure you have all the information gathered before requesting the transcript online. If you filed your tax return electronically, it takes about 3 weeks before the tax transcript will be available. If you mailed in a paper copy of your tax return, it takes about 6 weeks. If you did not pay all the taxes you owe, your return and your transcript may not be available until mid-May, or a week after you pay the full amount owed.

Can An Undocumented Worker or Illegal Immigrant File for Bankruptcy?

Question Mark ManCan a person who is not a legal resident of the United Stated file for bankruptcy in the US? According to 11 USC §109(a), any person that resides or has domicile, a place of business, or property in the United States or a municipality, can in fact file a bankruptcy. This means that anyone who lives, owns a business or owns property in the United States can file for bankruptcy, whether they are here legally or not. They do, however, have to have some sort of identifying number such as a social security number or a tax payer ID number.

However, if someone is applying to become a legal citizen of the United States, a bankruptcy on their record could negatively impact their application. Immigration officers typically delve into many areas of a person’s life, including their finances. An immigrant must be able to prove that they are of good moral character in order to be granted citizenship in the United States. Although we have never heard that filing a bankruptcy has stopped someone from receiving citizenship, it is something that should be considered. Having a bankruptcy in their record could throw up a red flag to the immigration office about their morality. There is currently no law that states that a bankruptcy can affect your immigration status legally, but the issue of morality could come in to play.

There is also the chance that information divulged in a bankruptcy proceeding could affect ones immigration status. If in the bankruptcy it is revealed that there are taxes owed, jobs that were obtained illegally, refusal to pay child/spousal support etc., this could greatly affect ones chance to stay in the US and be granted citizenship. If you are an immigrant to the United States and are considering bankruptcy make sure to contact an immigration lawyer and /or bankruptcy lawyer in your area soon.

What is the Statute of Limitations on Student Loans?

Research on a White LaptopA statute of limitation sets a time frame to let a creditor know how long they have to try an come back and sue you for a debt that you owe. As discussed before, there are different statute of limitations depending on the type of debt that is owed. Unfortunately with student loans, there is no statute of limitations. Most student loans are Federal student loans which are backed by the Department of Education, in which they can come after you indefinitely for the debt that you owe. Under very rare circumstances, you may qualify for a cancellation of debt if you happen to become permanently disabled. Even more rare, you may try to discharge student loans within a bankruptcy if you fall within certain guidelines.

If you are having difficulty paying your student loans you can always attempt to see what your repayment options are including an income based repayment plan or asking for deferments until you are financially able to repay the loan.

Occasionally there are instances of private student loans in which there is a statute of limitations.  Usually, when signing up for the student loans you have agreed to the statute of limitations for the state in which the student loan lender resided. Therefore, if you are disputing the statute of limitations of a private student loans make sure you are aware of the limitations in the proper estate. Most student loans are backed by the federal government but it is not uncommon to see private student loans as well.