As many of our clients have learned the hard way, the HAMP and HARP loan modification and refinance programs created by the Obama administration during the early years of the recession required a lot of paperwork.  A LOT of paperwork: proof of income, hardship documentation, tax returns, and other documents.  The programs have helped millions of Americans afford to stay in their homes, but the fact was that the banks simply did not have enough employees to competently handle all of the paperwork.  I cannot tell you how many times I have sat with struggling homeowners at our office in Mobile, Alabama and heard that despite their best efforts at providing all of the documentation, the mortgage companies would repeatedly ask for the same paperwork several times, and finally deny the modification because they were "missing documentation" that the clients had sent to them 3 times. 

The administration seems to finally be catching wind of this and has decided to set up a new program that will hopefully solve the problem by not requiring such stringent documentation.  If your loan is backed by Fannie Mae or Freddie Mac, then you can qualify for a modification if your loan is between 3 and 24 months delinquent.  Your mortgage servicer should send you a letter in July 2013 offering you the chance to apply for a modification.  This will require you to make three timely trial payments, and if you do, then you can qualify for a permanent modification.  The new loan would have an interest rate at or below the market rate (which is the lowest in history now, and won't change any time soon).  If your home is underwater, then you will not have to pay interest on a portion of your balance until you have had some time to build up equity in your home.

So check back with us in July for an update on this new program.  Hopefully thousands of our clients in Mobile and Baldwin County, Alabama will get some help staying in their homes.

alabama-titleMost Americans who own a car have some sort of lien on the vehicle - either you bought it on credit or you got a title loan against it at some point.  If you have filed a Chapter 13 bankruptcy, your bankruptcy plan deals with these vehicle loans.  Your plan dictates how these debts are treated in bankruptcy, and after the court confirrms the plan, that is the law between you and the bank that has title to the vehicle.  Once you have completed your bankruptcy payments, you have paid off your vehicle, whether or not the payment terms were the same as those originally offered by the bank.  

When your discharge is entered by the court, the bank is SUPPOSED to send you your title.  But sometimes they don't.  So what do you do?

The first thing you do is send them a written Title Request.  It need not be complicated.  Here is an example:

"To Whom it May Concern:

I write to request the title to my vehicle. I successfully completed my Chapter 13 plan (S.D. Ala. Case No. 06-12000), and on March 26, 2012, his debts were discharged –including all of his debts to you.

Statistics provided by the US Census Bureau recently show that today, there are less Americans in debt than there were in 2000: 69% of Americans were debt free in 2011, compared to 74% in 2000.  But things have gotten worse in some ways as well: the median debt load of the average American today is $70,000, compared to only $51,000 in 2000.  Most alarming is the fact that among our senior citizens, the average debt load has risen from $12,100 in 2000 to $26,000 in 2011.  Those of us who are most vulnerable to financial problems - the elderly - are the very ones experiencing the most negative changes.  

But are the statistics as straightforward as they seem?  The Recession led to record numbers of personal bankruptcy filings in Alabama between 2008 and 2011, and this trend was uniform across the nation.  Since the purpose of bankruptcy is to allow a debtor to shed debt and unneeded assets and emerge debt-free, the wave of bankruptcies could have very much to do with the increase in the number of debt-free Americans.  And most who go through bankruptcy are leery of getting back into debt, having learned the first time around the danger of easy credit and high interest rates.  It could be that those of us who have filed bankruptcy have learned our lesson and are living more modestly than before.  Furthermore, the consumer price index increased between 2000 and 2011, so a portion of the debt load increase is simply due to inflation.

USA Today published an article about it here:

south-mapLiving in the South means that you were more likely to file bankruptcy in 2012.  Statistics lately compiled by the folks at BestCase Bankruptcy found that three of the top five states with the most bankruptcy filings per capita were in the South.  Tennessee had the most bankrputcies per capita, followed by Nevada, Georgia, Alabama, and Utah.  So Alabama has a higher rate of consumer bankruptcy filings than 46 states in the country.  

Overall, the number of personal bankruptcies fell by 14% from 2011 to 2012, and as the economy slowly recovers, bankruptcies in 2013 are projected to decline nationally by 7%.

People don't file Chapter 13 for fun.  They do it because they aren't making enough money to pay everyone they owe and they need a break.  Unfortunately, the confirmation of a Chapter 13 plan does not always end the financial problems that forced debtors into bankrutpcy in the first place.  What do you do when you have filed and confirmed a Chapter 13 bankruptcy plan but experience reduced income or other financial problems you did not expect?  Can you reduce your Chapter 13 payments?  

Yes, but only in certain circumstances.  The most common way to reduce your Chapter 13 bankruptcy monthly payment amount is to give an automobile or house back to the creditor that owns it.  Secured debts in bankruptcy must be paid in full, so getting rid of a secured debt will reduce your monthly payment.  If you cannot afford your Chapter 13 payment and have a car in the bankruptcy that you don't absolutely need, then you should contact your attorney to file a motion to amend your plan to surrender the vehicle.  If the plan has not yet been confirmed, then you can surrender a vehicle without penalty.  If the case has been confirmed, then the creditor may object and demand that their deficiency claim (the amount they are owed after they sell the vehicle) be paid in full.