Industry sign banking colorado forbearance agreement online
- Good morning. This is our weekly debt resolution and bankruptcy discussion. I'm Attorney Elizabeth
Domenico with Robinson & Henry. And for the last few weeks, we've have been having a live event where people can call or send in messages for
information about debt resolution, help with bankruptcy, questions about small businesses, sometimes specific to the
pandemic we're going through. Sometimes it's just specific to general life events that have happened. So I am here today to answer those. We also have the ability for you to view these after if you're not able to be viewing in with
us live here right now. We're gonna spend about 15 to 20 minutes taking those questions and giving you some answers. Some stuff we may have already touched on, but it's always good if
you're viewing in live here to be able to get that information. We also have our website that in addition to these live events and
the video recordings, we have a series of topics relevant to certain things that again,
people are interested about or that we have felt have come up that we've gotten quite a bit of feedback that sometimes are helpful. Also too as they're going through this, if there's something that
you can't get through or the time gets cut short, because we are doing
these typically weekly, we always can get those and prepare them for the week following if you aren't able to get them answered, or if you have a really pressing concern, we are offering free
consultations at the office. You can call in and make an appointment. That number is (303) 688-0944. I'll also repeat that at
the end of the appointment, live event, excuse me. And you can schedule an appointment. You also can go onto our
website, www.robinsonandhenry.com and feel free to schedule an appointment on available calendar
without having to call in. So I'm going to pull up the questions. It looks like we already
have a few here coming in. So the first question is from Terry. Terry asks if you have a
bankruptcy that you file if you could ever be denied. So when you file bankruptcy, you are tasked with giving
the court certain information so they can assess your financial means to make payments, what debts you have, what type of assets you have. So the first thing you need
to remember is you have to be truthful and honest. You are under penalty of perjury when you're filling out your paperwork, because you're asserting to the court that everything you present
is true and correct. So as long as you don't make
any material misstatements to the court, you will
typically meet the first hurdle. The single largest reason
for denial is for people who either don't follow some court rule or who for some reason are trying to hide things such as homes, cars, money or people they owe money to. So you can be denied
if you're not truthful. So that's the very first thing. So as long as you're truthful and honest in your disclosures, and that's why a lot
of times it's important to have an attorney or professional who can walk you through. 'Cause sometimes you don't know what information is being
asked for, or if it's relevant and that's an attorney's
job is to help you make that determination to make sure you're not
missing large things that the court is asking you to report. The second reason that it might be denied is if you fail to follow some court order, if you don't pay your filing fee, if you don't complete your
credit counseling courses, those are all reasons
that they could dismiss or deny your case. Specifically in chapter 13 bankruptcies, if you don't make your plan payments that you agree upon to the court, that could be an also another reason that your case is dismissed or you're denied a discharge. So there's a lot of different
things that could happen, which again is why we give
these free consultations and help for people so they can navigate this bankruptcy. And some instances can
be done on your own. It's really not recommended. It's really an idea where you
really wanna have an attorney or other person, a legal
professional helping you out so you can make sure all
the forms are filled out, you follow all the court procedures. Chapter sevens are somewhat
a little bit easier to do yourself. Chapter 13s and chapter 11s we absolutely do not recommend trying to do on your own. And sometimes judges can even require you to get an attorney depending
upon your circumstances. So that's why give us a
call, ask us questions. We can help you navigate through that. Next we have a question. If a bankruptcy can affect
a security clearance? That is a very common question I get. We have a lot of military
professionals as well as veterans or people in the financial industry, especially since there's a let down in the Colorado Springs
area where we have an office that definitely want to
know the answer to this. I will tell you that in the
time I've been practicing, which has been over a decade, that I've never seen anyone
denied a security clearance due to a bankruptcy. Now, there is a little bit
of work that typically has to be done most of the time. You should make your commanding officer or otherwise person in position if you're in the financial
industry aware of the bankruptcy. I have had instances where the officers or bosses have asked me to write a letter just stating the circumstance that this person is a bankruptcy, they're taking care of
either through repayment and in a chapter 13 or
liquidation in a chapter seven that their debt's gonna be taken care of. The background of why it could
potentially have an impact is because if you're in a position
where you have this clarence or you're in a fiduciary
capacity with people's finances and you have debt, there is a risk of bribery or something being able to be
done where you're deceitful with taking money due to
gambling or paying off debt. And they don't want that to be an issue. So there are work grounds. But my recommendation is you're
always upfront and honest and just ask if it's gonna be an issue. And if it is, then we can discuss other
alternatives to bankruptcy. But in reality, I've never seen it impact and prohibit someone from getting or renewing a security clearance. The only thing I will say
is if you're in the midst of getting a series seven
or a series nine licensure, and it's brand new, you probably want to
wait to file a bankruptcy until after you've received those, because it can put a halt
until the bankruptcy is done on the ability to obtain
those type of licensures. Next, Katie from Denver asks if there are any tax
implications to bankruptcy? I'm not quite sure the breadth and scope of what you're asking, but I can kind of tell you a little bit about what I've seen. So a lot of times when
you do debt settlement, you will have a tax implication because when you have debt,
that's what is called forgiven. You can have that lender
tax what you don't pay. So let's say you had $10,000
you owed on a credit card and your lender settled for
5,000 and you paid that, you would then likely get a 1099, especially if it's a credit
card or a loan from a bank that is sent to both the IRS and to you that says that $5,000 that you didn't pay that you had, quote,
forgiven is then taxable as if it were income to you. So if you have a large amount of debt and you are getting a
lot reduced and forgiven, you could put yourself
in a new tax bracket or result in tax liability. Now, unlike that scenario, a bankruptcy actually
discharges your debt. So if you're in a chapter seven and you're just getting rid of the debt and you're not paying any of it back, or in a chapter 13 and
you paid some of it back but not all of your unsecured debt back, you will get a discharge, meaning that the creditor
can't come back after you, they can't sue you if they don't get their
money through the bankruptcy. The discharge does not
have a tax consequence. Now, in reporting that you
have filed the bankruptcy, especially in periods of time
where you're in a chapter 13 for anywhere from three to five years, it is important to potentially
let the taxing authorities know that you have filed bankruptcy. There's a special form and
they've changed the form number. So you would wanna talk
to a tax professional about what form you would
need to file with your taxes that shows you are either
inactive bankruptcy, or you've received a discharge. Because sometimes these
lenders try to give you 1099s and not have it shown as a discharge. Or there's just some confusion where you didn't pay the
debt and they charged it off and issued you a 1099 instead
of you having paid it. And if you're in this limbo period with having filed a bankruptcy that stops them from being
able to tax you on it. So it's always important to make sure you let
your professional know when you're doing taxes and bankruptcy about either the discharge or the filing so they can find the appropriate forms. Casey, from Colorado asks, when is personal debt enough
to justify bankruptcy? Everybody's different. Some people have a lot of debt. Some people in the grand scheme of things don't have very much. What I will say is there's
really not an amount that would qualify or
disqualify you from bankruptcy. A lot of it has to do with
your individual circumstances. If you owe $5,000 on a credit card, and that's your only debt, but you are getting garnished and you have a very small
amount of pay coming in and they're taking 25% and
you can't afford for them to keep doing that for six
months on six months off, which they're allowed to do, and it's impeding your ability to make your rent payment
or other obligations, then maybe that's enough for you to wanna consider bankruptcy
because that would stop them from being able to garnish you. Some people say I've got
a million dollars in debt. Well then certainly it may make sense, but maybe they have a lot
in terms of real estate, or they have a business where
they may lose connections if they file bankruptcy. There's really no amount that would justify or not justify it. It's really your specific circumstances and how the debt is impacting
you on a day to day basis. That's why we don't just say
we're a bankruptcy attorney. We are a debt resolution attorney because everybody's different as I think I've mentioned before. And looking at your individual
circumstances to say what's the best option for
you is what we're here for. What we'll do is we'll sit
down, you fill out a form, we look at your assets,
look at your income, we look at the type and
amount of debt you have and say, here are your options. And then say, well, within these options, what is the best option? And sometimes bankruptcy
is the best option, and sometimes it's not. But it's important to get an idea of what all the options are and then discuss based upon your goals and your finances and
your certain circumstances what that looks like for you individually. Sherry from Colorado asks if you can make too much
money to file bankruptcy. The nice thing about bankruptcy is, is there's no cap on the amount of money you can make to file. Now, in certain circumstances, if you have very high income relative to what the state of Colorado has set as what we call median incomes, and there are guidelines as for qualification for chapter seven what you can and can't make. And if you exceed that, then the court would
probably say a chapter 13, or maybe even a chapter 11, which depends on the amount of debt, not really your income
would be looked at to say what if any of this debt
do you have to pay back? The more money you make over
those median income figures and your median income figures have to do with the amount of
people in our household, how many family members, and those are set out by the
United States Trustee's office. And they vary from state to state, which is another reason why it's good to talk to a legal professional to see what those standards are and where you fall within
those relative to your income. In some circumstances, the very worst case scenario
is if your income is very, very high relative to that number, you may end up paying all of
your debt back in chapter 13 and chapter 11 bankruptcy over
a period of up to five years. Now, one nice thing is, is that the interest and
penalties do stop occurring during that time and your
creditors cannot force you to have a garnishment or
liens put on your home. So bankruptcy may not always be where you're getting
rid of a lot of the debt and maybe more of a workout to make a more reasonable payment schedule of your debt over a period of time so that you can make better cash flow on your monthly budget. A very common question
I always get asked is do potential under his view
a chapter 13 more favorably than a chapter seven since
chapter 13 is a repayment plan? We have found no indication
from any clients that I've had that lenders view a chapter 13 or a chapter seven more favorably. Some instances where you would
have this difference looked at would be again in the
military or financial field. Some for whatever reason, employers in military look more
favorably upon a chapter 13 where you are trying to
repay and maintain your debt. I have people had experiences
where they've told me that. But by and large overall, there's really in terms of
getting a home in the future, getting credit lended to you
isn't gonna be a preference that you're going to be denied because you did a seven
versus a chapter 13. One question is how does
restitution play into bankruptcy? Can you include that in chapter 13? So if you are ordered to pay a fine to the court through restitution or any kind of criminal penalty, that's not gonna be something that you can discharge in bankruptcy. But just like child support, which is also non-dischargeable, you could look at using a chapter 13 which is a repayment of certain debts over a period of anywhere
from three to five years to become current or pay
your restitution obligation. You have to just talk to the entity that you are owing that money to and let them know that that's gonna happen because sometimes they have these payments set up
automatically through payroll or some other avenue. But the court does say you
can take that amount owed and you can pay it back over that period of time in
a chapter 13 bankruptcy. John from Colorado wants
to know if it's possible to refinance his house and
still fill for bankruptcy. They'd like to keep their house, but would like to reduce the payments, are there any options? So with refinances and bankruptcy, the big thing is timing. If you have the ability to
wait to file a bankruptcy because you don't have creditors
knocking down your door and you have decent credit, you probably want to try
to refinance the home if you can before you file bankruptcy. We don't recommend pulling money out of the property before filing, because then we have to look
at ways to protect that. Because if you take it out of your home, it loses its protected status if you just put it in a bank account. So not taking money out
is probably a good idea. But lowering your payments
through a refinance is definitely something if you
could do it before you file would be appropriate because
typically once you file, you're gonna take a negative
impact to your credit score and that there might preclude you from then being able to refinance. Once you file a bankruptcy, you probably, again, due to
that negative credit impact are going to have to wait a few
years to file for refinance. You probably won't have
a good enough credit right after ordering a filing. But if you can't, then again, that two year period is
kind of the mark we look at once you file a bankruptcy
that you should be looking to be able to get refinanced after that. And if you're in a chapter
13 and some people say, well, if I'm in the bankruptcy
for three to five years, how am I going to refinance? Again, it has to do
with your credit score. If you wanna refinance
with you in a chapter 13, that is definitely something
we have a lot of clients do. You do have to get permission from the chapter 13 trustee to do that. But again, it is
something that can be done about two years after you
file as the normal date. Couple more questions. If I file for business bankruptcy will my personal credit be affected? I have to assume they're connected, right? Well that all depends
on the actual liability that is owed on the business debt. If the business itself
files for bankruptcy and there are no personal guarantees or obligations on any of
the business debt, then no. It should not have an impact
on your personal credit score. If a bankruptcy is filed
for the business itself as a separate entity and you are also a debt holder
on that debt personally, and then you don't pay the debt, well certainly your impact
of credit can happen, but that's not due just to virtue of the business having filed bankruptcy, that has to do with nonpayment of debt. If the debt's being paid and you end up taking it on personally, then you're not gonna
have that negative impact. So just like one common question
is if I file bankruptcy, is my spouse gonna be impacted? Well, the only impact would
be is if the debt was joint with the spouse and they did not pay. Just because someone files bankruptcy and someone else's on the debt, it doesn't decrease your score. Now it will show in the section where the notation is
on your credit report that there was a bankruptcy
filed by an account holder. But it cannot show that you personally have filed
bankruptcy if you haven't, and it can't negatively
impact the credit score as long as that debt is being paid, even if the other person
or business or party who owed the debt has declared bankruptcy. Now, when we have joint debt, we always recommend whether
it's business and personal or spouse and filer to
always have the other person who may be obligated on the
debt to run a credit check. They're not supposed to, but sometimes the lenders do things that they're not supposed to
and they report it incorrectly and it does impact the
other party's score. At that point, you really probably want to take legal intervention
because that would be what we consider a violation of the Fair Credit Reporting Act, and that other person would have some legal recourse they
could take against that lender for detrimenting their credit score. Steven, from Boulder ask is
there a bankruptcy option that will let you improve
your credit faster? There's really no difference
in the credit impact from chapter seven,
chapter 13, or chapter 11. You're gonna take some
type of hit to your credit, regardless of whether it's
very low already or very high. Sometimes what I've found is depending upon the type of debt you have, that can impact how much your
credit score is affected. If you have credit card debt, but not a lot of debt, such as a car loan or a mortgage, we typically see a much faster recovery, but a much larger drop initially. One thing we do as part
of our representation for every bankruptcy client
is we run a credit report. It's gonna contain all three bureaus. So we make sure we can get as
much of the debt as reporting. And then it also tells us what your existing credit score is. And then particular to
this one, it tells us what 12 months after
bankruptcy your credit score will look like if you don't do anything other than let it sit. And within that first year,
it'll give us a good idea if it'll go up a lot on its own. If it doesn't, then what we like to do is depending upon the
goals of the individual, say someone says, "I wanna
be able to buy a new car. "Or in that two years, I
wanna be able to buy a house." We can help them with how to rebuild that credit faster through
some tailored, specific advice, whether it's getting a new car loan or getting secured credit cards that you pay off every month. There are different ways to rebuild it. But in terms of a specific
chapter of bankruptcy, seven or 13 isn't going
to mean faster recovery just by having done a certain chapter. Cameron from Denver asks if
there's a particular point where you can just cut your
losses and file for bankruptcy. Again, this is all specific
to everyone's circumstance. Right now, especially with
small business owners, people are wondering, how
long should I give this? Corona has been going on
for three months or so now, I maybe haven't seen a larger recovery, but maybe our summer
months are really good. And if their restrictions ease up, then I'll be able to recover. That's a question only
you can really answer is with small businesses
how far you're willing to go before looking at doing that. Another thing is how
willing are your creditors to work with you at this point? We know that a lot of mortgage
companies, car lenders, and even credit card companies right now, due to the pandemic, are
offering deferment forbearance or even more manageable
and reasonable options than they ever have before. How long they'll continue
to extend those and how long and how much relief that will give to people is a question I don't
think really anyone knows. So again, and I'm gonna be
beating a dead horse here say talk to a professional. What we can do is develop a
game plan of certain scenarios and say, okay, if this is your goal, maybe we give it this amount of time. And right now, here are the options. And worst case scenario go down the road, and if that doesn't happen, then maybe we look at bankruptcy
as the last alternative. Some people may say, "You know what? "I've got a house, I've got bank accounts, "I've got assets that I don't
wanna wait around for them "to try to garnish or attach. "I wanna look at filing bankruptcy now "while everything is somewhat slow "and then come out of this "in a much better financial position." And again, that's gonna be
on a case by case basis. Some people absolutely
don't wanna file bankruptcy. So we look at every alternative
besides that to help them. And some people say,
"I've done my research. "I already know bankruptcy
is a good option for me. "I just wanna get it done." Certainly I think if
you're in the position where you may be at risk of losing your home through foreclosure or a large wage garnishment, that's not going to allow you
to get any type of workout with a payment plan. And they're just gonna take your money. Then I think bankruptcy is something you really do wanna consider because it is the
quickest way to stop them from being able to foreclose, repossess and take garnishments
from your paycheck. I think we've got time
for one more question. Someone asked if, see, they keep hearing mixed things about mortgage forbearance that you will owe a lump sum at the end, but I've heard lump sum
payments depend on your loan. Can you help clear this up? There is a lot of stuff
that's going on right now that mortgage companies aren't
being very upfront about. For example, and this only
has to do with active clients that I have in bankruptcy. They call the mortgage lender. They are offered a
three month forbearance. They sign the paperwork, they don't have to pay for three months. Well, what the mortgage
company doesn't tell them and what we don't find out
until the actual agreement is filed with the bankruptcy court, is that in three or six months time, this individual is
going to have to come up with that money in a lump sum, or they will then be in default again. So some lenders are very clear
about this and some are not. And it does depend on the
lender and type of loan. But the ones I have seen probably about five in the last
month filed all carried that lump sum provision that says, oh, you need to call your lender
or work with your attorney to try to bring this current at the end of that forbearance period, because you're gonna owe
it all in a lump sum. Which doesn't really make
a whole lot of sense to me why they're doing it that way and whether or not being upfront about it. Because if most people saw that, they probably wouldn't agree to it. But that is just something you're going to very specifically
want to ask your lender before you enter into any kind of forbearance agreement with them. Again, if you would like
us to look things over and guide you on that, it is something we absolutely
are very happy to do. So I think that's all the time
that we have for this week. Thank you everyone for tuning in and for your questions that
are definitely I know ones that a lot of people
are sharing and having, because I haven't seen them
come up in my consultations. So remember, we are going to
be looking to do this weekly. You can pre-register and prescind in your
questions and concerns. You can also find us online to schedule a free consultation either through our website,
www.robinsonandhenry.com, or you can call our main office
(303) 688-0944 to do that. If you want to specifically
have that consultation, remember it's a free
30 minute consultation. If you're looking to have
things reviewed like a lease or things like that, you can
do paid consultations as well if you need a little bit of more time or need certain legal advice. Thanks for reviewing in and I'll see you.