Chapter 7 bankruptcy in Maine: Chapter 7 in Maine is synonymous with bankruptcy. Chapter 7 bankruptcy is the most common form of bankruptcy and is usually the easiest to maneuver. Chapter 7 is a 90-120 day process in which most debts are eliminated. Most people are eligible for Chapter 7, especially if their income is below the median income in the estate (around $40,500 for a 1 person family, $50,000 for 2, $60,200 for 3, and $70,000 for 4). Many whose income exceeds the median are also eligible after we take deductions.Chapter 7 is known as the liquidation chapter, but most individuals, unlike businesses, can protect all of their property from liquidation. Under Maine law, you can protect from $47,500 to $95,000 of equity (value above debt owed) in your home, $5,000 of equity in one car, most retirement accounts up to $1 million dollars, furnishings valued at less than $200.00 each, clothing, $750 in jewelry plus a wedding ring, and $5,000 in business tools and equipment.In order to complete a Chapter 7, a lengthy petition or form must be prepared, listing all assets, debts, income and expenses.
You must review and sign this form with me and complete a 1 hour online course. Once the case is filed, you must attend a brief meeting with myself and a trustee. If you want to keep your house or car on which you owe money, you might want to consider signing a reaffirmation agreement, which renews your duty to pay the debt, but allows the creditor to report payments on your credit report. If you don’t reaffirm, you may be able to keep the house or car by continuing to make payments. If you can’t do that, the creditor will repossess it, but you won’t be liable for any debt on the property. About 60 days after your meeting, you will receive your discharge. You are required to complete a second online course after you file and before the discharge date.When you file Chapter 7, all creditor contact must immediately stop and in most instances, your credit card, medical, utility and personal loan debts are discharged at the end of the process. Creditors cannot send 1099s for discharged debt, report the debt as owed, or seek payment. If creditors do seek payment, you may have a claim for damages. I have worked on cases where courts awarded as much as $80,000 in damages for these violations! Unfortunately, student loans, recently filed taxes, trust fund or employee taxes, and support obligations usually cannot be discharged.The costs of Chapter 7 depend upon a variety of factors including complexity. My fees typically range from $1,000 to $1,800, plus filing fee of $330 and credit counseling fees of $50. The average cost, including all fees is $1,706. We cannot file your case until the fee is paid in full, but we can set up a payment plan. Once I receive $200 towards the balance, you can tell your creditors you have retained me and stop the dunning calls. We can discuss how to file an answer to a lawsuit to gain more time
Foreclosure Defense – In Maine.
Homeowners have a right to mediation in foreclosure. We can use that as a vehicle to get a loan modification that might otherwise take a year or more to be approved. We often modify a first mortgage through mediation, then file Chapter 13 to eliminate a second mortgage, home equity loan or a credit card judgement.
Consumer Law Violations:
Whether you are in bankruptcy or dealing with a debt collector, there are laws protecting your rights. Often creditors and debt collectors violate those rights. We can determine if you have a claim for monetary damages and pursue that claim on your behalf, frequently at no cost to you.
While I focus my practice on representing consumers, I also represent individuals who have claims against other people in bankruptcy. Just because someone files bankruptcy doesn’t mean an ex-spouse or wronged lender doesn’t have rights. However, there may be a very short time to take action to protect those rights.
A reinstatement is the simplest solution for a foreclosure, however it is often the most difficult. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender’s approval and will ‘reinstate’ a mortgage up to the day before the final foreclosure sale.
Forbearance or Repayment Plan
A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.
Mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These typically result in a lower payment to the homeowner and a more affordable mortgage.
Rent the Property
A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, can convert their property to a rental and use the rental income to pay the mortgage.
Deed-in-Lieu of Foreclosure
Also known as a “friendly foreclosure,” a deed-in-lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property.
Many have considered and marketed bankruptcy as a “foreclosure solution,” but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.
If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage.
Servicemembers Civil Relief Act (military personnel only)
If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Servicemembers Civil Relief Act. The American Bar Association has a network of attorneys that will work with servicemembers in relation to qualifying for this relief.
Sell the Property
Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area.
If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.