Individuals who are considering filing for bankruptcy may wonder what will become of their personal property. Will things like their televisions, DVD players, and computers really be repossessed and sold to pay off creditors? The answer depends on the situation. When someone files for Chapter 7 bankruptcy, also known as liquidation bankruptcy, that individual’s assets are sold to pay their debts. In exchange, the person receives relief from certain debts and a fresh financial start. Filing for bankruptcy doesn’t mean the person will lose everything, however. There are a number of bankruptcy exemptions that may apply, meaning some assets will be exempt from liquidation. In many cases, these exempt assets are enough to meet the typical person’s needs. If a person has assets that are used as collateral to secure a loan, such as a car loan or a loan to buy jewelry, those assets are not protected and may be repossessed by the lender. Exemptions depend on the particular state law and generally apply only to items that are paid in full and owned outright. New York state exemptions include things like clothing, furniture, cookware, and other necessary household items worth up to $10,000. Anything over that amount arguably… Continue reading
For the first time in history, student loan delinquencies exceed credit card delinquencies, the Federal Reserve Bank of New York has reported. While the number of consumers falling behind in their credit card payments has decreased four years in a row, recent figures indicate that more than 11 percent of the nation’s student loans have not been paid in over 90 days. With $956 billion owed in student loans nationally, this is a problem of huge proportions. And it may be worse than it looks; when student loans in grace periods, deferment or forbearance are factored in, the real delinquency rate may exceed 20 percent. There are a number of reasons behind the exploding student loan debt. While banks and federal legislation have made it more difficult for high-risk borrowers to obtain credit cards, student loans remain easy to come by and are given to people who are least likely to pay back their debt. Defaults always have been high among college drop-outs, but now, even graduates are having difficulty paying back their student loans given the weak job market. Also, it is nearly impossible to discharge student loan debt in Chapter 7bankruptcy. There are options for someone with overwhelming… Continue reading
New York may be one of the best states for homeowners facing foreclosure because of legal protections against mortgage fraud. However, those protections are costly to lenders and may end up costing New York borrowers more money, too. The foreclosure process in New York is the longest in the nation, taking on average 1,089 days to complete. A backlog of foreclosures has stalled the state’s housing recovery and has kept housing prices low. Now, the Federal Housing Finance Authority is considering fee increases for New York borrowers to compensate Fannie Mae and Freddie Mac for costly foreclosure delays. The good news is that the state’s lengthy foreclosure process means New Yorkers in default of their mortgages have multiple opportunities to try to save their homes from foreclosure. These options include filing for Chapter 13 or other forms of bankruptcy, a mortgage loan modification or a short sale. Chapter 13 bankruptcy allows a homeowner to reorganize debts into a court-supervised repayment plan and make manageable payments over time. For individuals with a steady source of income, Chapter 13 can be an excellent option for eliminating some debt, reducing interest payments and making a fresh financial start. By sticking to the Chapter 13 repayment… Continue reading
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