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Debtors Strip Their Second Mortgage Without Having To File Chapter 13 Bankruptcy

Posted on Tuesday, 19th April 2011 by Toby Duncan

Some people with minimal credit card debt file Chapter 13 bankruptcy primarily to strip a second mortgage. You may be able to accomplish the same result without filing bankruptcy now that banks are becoming somewhat more flexible to work out mortgage solutions on upside down property. I’ve heard of cases where a second mortgage company will substantially reduce a second mortgage balance and permit the debtor to pay off the settlement amount in installments. Here is one real example.

A couple had a first mortgage equal to or a little less than their house’s fair market value. They had a second mortgage of approximately $120,000. They were willing to let the house go if they had to pay both mortgages, but they wanted to keep the house if they could “strip” the second. They had about $15,000 of joint credit card debt. They wanted to avoid any bankruptcy if possible.

The couple stopped paying the second mortgage. They hired an attorney to defend any foreclosures and to negotiate with the second mortgage company. The att

Sharpen your pencils

Posted on Saturday, 16th April 2011 by Toby Duncan

I’ll be the first to admit, math is not my strong suit. Despite having a Tiger Mom and having taken years of Kumon I still have to reach for the calculator whenever I do math.

If you are mathematically challenged like me, you probably have no idea what your monthly payment is on a $10,000 credit card debt repaid over 5 year at 10% interest. How about 20%? 30%?

You may be surprised to learn that you would repay almost DOUBLE the amount you borrowed over 5 years at 30% interest.

Here’s the break down: Loan amount: $10,000 Repayment: 5 years

Interest rate/ Monthly payment/ Total amount repaid 10% $212.47 $12,748.23 20% $264.94 $15,896.33 30% $323.53 $19,412.04

To put these numbers into perspective, if you were to repay the same $323.53 at 5% interest, you would have repaid the ENTIRE loan after 34 months (that’s 2 years and 10 months). In another words, you would be done with debt 2 years and 2 months sooner just by a reduction in the interest rate.

This is the reason why credit card debt is so to toxic. You en

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Difference between prequalification and preapproval

Posted on Friday, 15th April 2011 by Lucy Hales

A mortgage prequalification is the very first step of home loan application process. Typical prequalification is issued by a loan officer and more than often based on ball park numbers which you provide, including salary and recurring expenses to estimate approximate maximum loan amount you may eventually be approved for. Your credit report is normally not pulled at this stage and no cost or obligation on behalf of either party is involved. So while a mortgage prequalification helps determine the dollar value of a potential loan, it is not by any stretch, a commitment to lend you money. A loan officer can’t make an approval in any shape or form, but give you a prequalification letter which you can use when making an offer on a property. Often such letters are called a conditional preapproval. It states something along these lines,

This letter is to prequalify Mr. and Mrs. Smith for a home loan not to exceed $200,000 at 5% mortgage interest rated based on 30-year amortization.

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Student Loan Debt Reaches All-Time High

Posted on Friday, 15th April 2011 by Eden Fryett

Education Loans Surpass Credit Card Debt as Top Financial Burden

Are you struggling to pay off student loans? Well, you’re not alone.

Student loan debt has surpassed credit card debt for the first time, as a growing number of Americans take out loans to go to school. According to the New York Times, the amount of student loan debt is well on its way to over one trillion dollars.

Student loans have often been described as good debt by some educators and economists. “When you think about what’s good debt and what’s bad debt, student loans fall into the realm of good debt, like mortgages,” Professor Sandy Dynarski, an education and public policy professor at the University of Michigan, told the Times. “It’s an investment that pays off over the whole life cycle.”

But with education costs rising every year and student aid cuts in the federal and state budgets, graduates are leaving school with drastically more debt than they did just ten years ago. In 2000, total

Joint Debtors Can Stack Their Chapter 13 Debt Ceilings In Some Cases

Posted on Friday, 15th April 2011 by Toby Duncan

Many people who wanted to file Chapter 13 found that they were ineligible because their debts exceeded the Chapter 13 debt limits of approximately $1 million of secured debt or approximately $360,000 of unsecured debt. The debt limits have affected more people in the past few years because inflated real estate values during the boom resulted in many debtors having large mortgages which exceeded the secured debt ceiling. I have had several clients who could not qualify for Chapter 7 and who were willing to pay their creditors what they could afford in Chapter 13, but who were excluded from Chapter 13 by the debt ceilings. These people either had to file an expensive Chapter 11 case or forgo bankruptcy protection completely.

One unresolved question about Chapter 13 debt ceiling is whether joint married debtors could stack their ceilings. For example, if stacking were permitted, joint married debtors could have up to $2 million joint debt in a Chapter 13. Joint Chapter 7 debtors can stack their exemptions.

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