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Paul K, Esq.
Paul K, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 141
Experience:  10 years Exp., Great customer service, Prompt responses.
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I am getting ready to file chapter13, I have gone to two consultations

Resolved Question:

I am getting ready to file chapter13, I have gone to two consultations and to this point they are are very different ends of the spectrum. I live in FL.

One attorney says the bank will foreclose on the house (process has started but I have not been served and bank is currently looking at remod) (at this point I do not want to keep the home). I have a boat I am still paying on and about 17000 in unsecured debt. the attorney said I can surrender the boat and the back will foreclose on the house all I will be left to pay is the 17000.00 in unsecured debt.

The other attorney said the bank I have my mortgage with will most likely file a defficiency claim and that the bank who financed the boat will likely do the same. so instead of paying 17000.00 back over 5 years it will be more likely that I will be paying back defficiencies of 60,000.00 + 17000.00 (I make 70,000 a yr gross) he said it will be more like 1000.00 a month for 5 yrs...

My question is... who is right?

Also... My mortgage is FHA

I have a FHA loan... they make you carry mortgage insurance which if in the event of a person defaulting.... the FHA mortgage insurance pays a claim to the lender/bank. So my question was... If they pay the bank a claim for the defficiency how can they come after me for deficiency??

this is what if found online... for FHA

Default
There is one exception to all of the other bankruptcy rules regarding an FHA mortgage loan. If you are behind on your FHA monthly mortgage payments at the time you file for bankruptcy, your mortgage lender will most likely choose to foreclose on your home. This means you would lose your home but, because of the discharge, you will not be personally responsible if there is a deficiency after the foreclosure sale.

Is this correct?

Thank you in advance,

Rob C
FLORIDA
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Paul K, Esq. replied 1 year ago.

Paul K, Esq. :

Hello, my name is XXXXX XXXXX I would love to assist you. Give me a moment to research your issue and I will answer promptly.

Paul K, Esq. :

First, how many people in your household?

Paul K, Esq. :

They are technically both right, but I would more lean to the first attorney.

Paul K, Esq. :

Banks can file deficiency claims, but they do not do it often.

Paul K, Esq. :

Part of the reason is that they only have a limited time to do so, and most either forget or let it slip by.

Paul K, Esq. :

The other reason is if they write off the full deficiency, they get a bigger tax break, rather than trying to come after you in the Ch 13 for the remainder.

Paul K, Esq. :

I would look closely on if you can file a Ch 7 though.

Paul K, Esq. :

Your income is high, but if you have a large household and alot of monthly expenses it may work

Paul K, Esq. :

I have had people who make $90k do a Chapter 7 because of family size and other monthly expenses.

Paul K, Esq. :

It may not work, but it is worth looking into. At that point, there is no deficiency and it is discharged, so win-win for you.

Paul K, Esq. :

Let me know if you have any more questions and I will do my best to continue to answer until you are fully satisfied.

Paul K, Esq. :

I will be on and off throughout the weekend, so check back and look for my response periodically.

Paul K, Esq. :

Have a great weekend!!!

Customer:

Hey Paul,Household-1 person

Customer:

only 1 person in household. So I make too much for chapter 7. I appreciate the answer.

Paul K, Esq. :

Ok

Paul K, Esq. :

That would be correct.

Paul K, Esq. :

So it is kind of a gamble, most likely there will be no deficiency

Paul K, Esq. :

Also, even though you owe $17,000

Paul K, Esq. :

Most often all of them dont file either

Paul K, Esq. :

I have had some people with $50k and only $20k worth of creditors filed

Paul K, Esq. :

so you can save alot of money that way.

Customer:

I think I will get another consultation. the first attorney was only going to be about 900.00 for chapter 13 and the 2nd was 3000.00. So do you think my boat will be an issue? I owe 20,000 it is prob only worth 13-14000 now. Do you think the bank will file defficiency claim for the difference on that? After my second consultation I was begining to feel like the only thing bankruptcy was going to do is eliminate the ineterest. I did not see the benefit... debt consolidation can do that. it did not make sense. Thanks

Paul K, Esq. :

Well to start

Paul K, Esq. :

Debt consolidation doesnt remove interest

Paul K, Esq. :

and in fact, most debt consolidation companies are scams

Paul K, Esq. :

a survey by the government just wrapped up

Paul K, Esq. :

and 1 out of 10 people in debt consolidation were actually helped by it

Paul K, Esq. :

so beware of that

Paul K, Esq. :

In a Ch 13, you will have no interest, no late fees, no penalties, and most likely not have to pay all of your debts.

Paul K, Esq. :

It is rare if all creditors file

Paul K, Esq. :

Most likely neither creditor, boat or house, will file for a deficiency

Paul K, Esq. :

Also a Chapter 13 keeps them from all suing and garnishing your wages

Paul K, Esq. :

in a 13, you have more power to determine how much is paid

Paul K, Esq. :

rather than them taking 20% of your paycheck

Paul K, Esq. :

As for fees, they are usually $800-$1000 or so up front, and then the rest are built into the Plan payment

Paul K, Esq. :

Usually $3-$4000 total

Paul K, Esq. :

but they allow you to pay most through the plan

Paul K, Esq. :

to make it easier for you.

Paul K, Esq. :

If you have any other questions, please let me know!

Paul K, Esq. :

And be sure to provide a positive rating so we get credit for our effort and time!

Paul K, Esq. :

Have a great weekend!!!!

Customer:

Thanks for your help today. have a good weekend

Paul K, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 141
Experience: 10 years Exp., Great customer service, Prompt responses.
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