Category: Bankruptcy Information

Information about bankruptcy, the process, and some of the basics one should to be aware of

Los Angeles county median home price

Los Angeles County Median Home Price (2021)

Los Angeles County Median Home Price (2021)

The Los Angeles County median home price in 2021 can be tricky to determine. There are different sources that say different things. It’s not clear as of this writing in early 2021 which of the many options will be relied upon by courts and trustees.

This is provided as information only, and is not legal advice. If you are thinking of filing bankruptcy, do not rely upon this information. You are assuming all risk and are literally gambling with your home. You will have only yourself to blame if you use the wrong numbers for the Los Angeles County median home value.

See a bankruptcy attorney for more updated information before you file.

Average is not Median

los angeles county median home value
The Los Angeles County median home value is not the mean

Before we can determine what the Los Angeles County median home price is, we’ll need to know what it’s not. A median is not the same as the average. This takes us back to high school math, but a quick couple of definitions:

  • Average (or mean): this is where you add up the data, and then divide by the number of data points
  • Median: this is where you list all the data, and then take the number which is at the midpoint

So, as you can see, the median is not the same as the L.A. County average home value.

The Median Changes Over Time

Because the median is the midpoint of all the data, each time there’s another home sale, the median changes and moves. You may figure with a random distribution of data, there would be an equal likelihood that future sales will be about half above and half below the median, keeping the median the same. But home prices change over time and are not static, and particularly during a virus pandemic like the COVID-19 coronavirus we had last year in 2020.

For example, you might find some data sources that list the median home prices for last year, but only through December. In December, there were a new round of stay-at-home orders, as the number of COVID cases, hospitalizations, and deaths increased.

What impact does a government order to shelter-in-place have on home sales? Can you assume that houses would sell for the same prices in December around the holidays as they do during the summer when people move a lot and kids are usually out of school?

The Los Angeles County median home price is not the same as that for the L.A. area

Los Angeles County is one of the largest counties in the United States, with over 4,000 square miles. While you may find data for the metropolitan area, that’s very different than the numbers for Los Angeles County. Why? Because L.A County goes from South Bay all the way up to the Antelope Valley and Lancaster. The Los Angeles County median home price is pulling together data from all these.

Los Angeles County is home to about 10,000,000 people, while the city of L.A. has “only” 4,000,000. If you use only city data, you’re missing out on home values in remote areas in LA County like Littlerock and Pearblossom on the 138 and on the way to Vegas.

The Median Home Value is not the same as Median Home Sales Price

You can find some sites which average the values of the homes in the L.A. area, or even Los Angeles County. The problem with that is this: you’re using their own estimate about the Los Angeles county median home values, even those that didn’t sell, when what you’re really needing is the sales price of homes that actually sold.

After reviewing all the above, you can see that we’re looking for a very specific thing here, and no one website reports the Los Angeles County median home price, or has information that in 2021 is depended upon reliably as the “go to” source for Los Angeles County median home value information. Over time, maybe one place will emerge, but for now there’s just a few “almost there” entries.

Some Data Sources Which are Close

which data source can provide the los angeles county median home price
Which of the various data sources is the right one?

With all that being said, you can understand the challenge of finding the Los Angeles County median home price.  Most websites are using averages, some have only the L.A. area, and none of them let you have access to the data of all the home sales so you can calculate the median yourself.

 

Zillow: this company is famous for using its proprietary “Zestimate” to approximate home values. For example, if you go here, you can find what Zillow calls “the typical home value of homes in Los Angeles.”

But that number isn’t clear…. What does “typical” mean – average or median? Remember, they’re different.  Home value or home price? There’s no indication this is relying on sales data. And for what time period? Now, at this snapshot in time, last month, this year, or last year?

The website doesn’t say what the Los Angeles County median home price is. It also doesn’t say if it includes single-family homes, is only single-family homes, or something else.

Realtor: This website features real estate, but if you dig down deep enough, you can find market data, research, and trends. It provides data by month, not year, and appears to be providing listing prices, not sales prices.

Redfin: Redfin is another national real estate website, which tracks listings and sales, and helps connect home buyers to realtors. It has market data and trends, but seems to be restricted to only Los Angeles city, not all of Los Angeles county median home price info.

CAR: The California Association of Realtors also has some market data. But it cautions that the data which it is using comes from over 90 associations and counts “single family detached homes only” and “median price changes may exhibit unusual fluctuation.”

Trulia: Similarly, Trulia is a real estate website that tracks home sales and house prices. It has a way to filter for L.A. and show market information at the bottom of the page, but doesn’t show Los Angeles county median home price or value info.  It appears to list home values the way Zillow does, but it doesn’t appear to be relying on sales data.

News reports: You may find news reports from Los Angeles-based newspapers that report data on home sales prices.

Note: you may find some websites that provide spreadsheets of Los Angeles County median home price data, and lists medians by month. Taking the median of the medians isn’t the same as the median of all the sales data. It’s just creating garbage data. To find the true Los Angeles County median, you’d have to have access to all the sales data. This is something very few people have.

And that’s the problem:  no one person has the data, and different places which are close report different numbers for the Los Angeles county median home value.

While some of these are close, none of these seem to provide “the” number. Not one can be relied upon, especially for something which involves risking your home.

Summing up Los Angeles County median home price

Is there one bottom line source? No, and honestly, a lot of us are trying to sift through all this information to make sense of it. Maybe in the months ahead, one choice will crystalize as the one we all rely upon.

This will likely be after litigation and people guess wrong. Sadly, they will lose their homes in some cases because they guessed wrong on home value.  Currently, there is not one number that we can reliably “bet the house” is the median home price in Los Angeles County.

Be very cautious, use this at your own risk, and best of luck to you in your future.

Contact us

If you’re in Los Angeles County, request a case evaluation, which we can set up by Zoom.


    2021 median income limits

    2021 Median Income Limits to Nail the Bankruptcy Means Test in California

    2021 Median Income Limits to Nail the Bankruptcy Means Test in California

    The government recently updated the 2021 median income limits numbers. Using median household income, it again got easier to qualify for bankruptcy Chapter 7, because of another means test adjustment.

    The means test for bankruptcy decides who qualifies for Chapter 7 bankruptcy eligibility. The first step of this process is comparing your median household income against the California median income limits set by the Department Of Justice guidelines to see if you earn less than bankruptcy median income limits.

    The means test limits adjusts over time.  So, someone may not qualify according to the bankruptcy means test in one month but after the changes they do, or vice-verse. The last updates were in November 2020, and are likely changing again in 2021. Here are the 2021 bankruptcy median income figures to determine who can file Chapter 7 bankruptcy.

    Means Test: 2021 Median Income Adjustments

    2021 median income limits
    2021 median income numbers are much higher than in years past

    Every now and then, the government updates the bankruptcy median income limits. They last did it in November 2020. Good news: the California 2021 median income numbers are now even higher, increasing household income for bankruptcy means test qualifying. This means that more people could qualify for Chapter 7 bankruptcy using the California median income numbers below.

    2021 Median Income for California Households

    Because the California median income changes maybe once or twice a year, these recent changes late last year will be the first numbers used for 2021 median income. You’ll see below there’s talk about household size. Notice also that larger families also get a break, as the amount for each additional member after 4 increases another $9,000. This is helpful for households of five people or more.

    What is Median Household Income

    When reviewing median household income, we start splitting hairs, since not every home is a traditional household. So, things start getting kind of cloudy on what is or isn’t a household. It isn’t always clear who counts in a household. There may be a difference if you have a roommate who pays rent. What if you’re married? Or have kids but they’re adults. Do you live with your significant other, who has their own finances? Would the answer be different if you had kids together, but weren’t married? Maybe they’d all be considered by the government to be in your household. Or, maybe they’re not. Call and let’s meet to talk about it.

    But below are the California median income limits for the various household sizes.

    California household size and California median income for Bankruptcy
    • 1-person household: $62,171
    • 2-person household: $82,418
    • 3-person household: $91,605
    • 4-person household: $105,232
    • Each additional person: $9,000

    These are the California median income numbers as of early 2021. If it’s later in the year or you’re looking for the median household income for a different state, please review the DOJ link above.

    Read Our Means Test Guide.

     

     

    Over the Line? 2021 Median Income Isn’t Everything

    If you’re over the bankruptcy median, there’s still hope

    The means test and 2021 median income isn’t the “end all be all.” It’s just a starting point. A person can still file Chapter 7 bankruptcy, in some cases, even if they earn more than the median income. The bankruptcy means test would just need to be filled out completely. It’s still possible to qualify.

    Over the years, this Los Angeles bankruptcy attorney has helped people who earn over the California median income limits still qualify for Chapter 7. In one case, we even helped a family whose annual income was almost double the median household income. They were earning around $150,000 a year, and we helped them get a Chapter 7 discharge (your mileage may vary). However, even if someone isn’t eligible, there is still a way out of debt in Chapter 13.

    Being Under the Bankruptcy Median Income Doesn’t Guarantee Success

    On the other hand, just because someone is earning less than the California median income, it’s possible that they’re not eligible for Chapter 7 bankruptcy.  Bankruptcy is all about whether someone can afford to repay their debt or not, and the means test is just one factor.

    Note: the median income numbers are not to be confused with the Los Angeles County median home price figures, and each has a different place in evaluating Chapter 7.

    Finally, as the economy is always changing, so does California median household income. We don’t know the next time changes to the median income limits will happen again. So, be sure to check before relying on these California median income limits in the future.

    Contact Us and Let’s Find out If you Qualify


      california median income

      California Median Income Reaches Historic Milestones

      California Median Income Reaches Historic Milestones

      The California median income is a good guide to how well residents in the Golden State are doing financially. The California economy (until this week’s Coronavirus outbreak) was sitting pretty, and its citizens are earning income. The numbers used to qualify for a “straight bankruptcy” have broken some very notable milestones.

      Recent California Median Income

      Starting on April 1, 2020, median income for a household of one in Calif has broken the $60,000 threshold. The median income for a household of one in the Golden State is now $60,360.

      Even more amazing, a family of four has a California median income of $101,315. This is the first time in recent memory, if ever, that a median household of four in Calif has earned six figures.

      The significance of these numbers — $60,000 and $100,000 — applies to bankruptcy. The Department of Justice uses numbers from the Census as a preliminary measuring stick. They’re used to assess whether a debtor or debtors qualify for Chapter 7 bankruptcy. Not everyone is eligible, with the alternative being debt repayment with high income.  In theory, people earning $60,000 and $100,000 would ave a relatively easy time doing a bankruptcy and not repaying their debt.

      See our median income article for a more thorough explanation. Also, you’ll find updated numbers, and the median income amounts used for other household sizes. The values change frequently, and by the time you read this page may have gone down due to COVID-19’s impact on the economy, so check that link for the latest amounts.

      chapter 13 debt limits

      Chapter 13 Debt Limits Eligibility: One Factor to be Free of Debt

      Chapter 13 Debt Limits: One Factor to be Free of Debt

      Why Debt Limits in Chapter 13?

      There are Chapter 13 debt limits. These figures are set by law and are adjusted regularly, and restrict which cases can be in Chapter 13 bankruptcy. As you might know, Chapter 13 bankruptcy involves repaying some or all of your debt. People will sometimes ask, “do I qualify for chapter 13?” The answer, like to many legal questions is, “it depends.”

      The purpose is so that the Chapter 13 trustee doesn’t administer cases that are too large and burdensome. At some point, the line is drawn, and let’s face it, in Southern California where this Los Angeles bankruptcy attorney practices, the secured Chapter 13 debt limit is inadequate. If someone has a rental property, they’re probably over the line and don’t qualify, which is hardly fair.

      To qualify for Chapter 13, which is officially called a reorganization bankruptcy, a few things have to be looked at. First, a good Los Angeles bankruptcy attorney will examine your cash flow. That is, can you afford to repay your debts? Or are you struggling to keep your lights on?

      Unsecured and Secured: the Chapter 13 Debt Limits

      Second, you have to compare your debts against the debt limits. These numbers constantly change. And to be honest, we bankruptcy lawyers have to look them up, since in most cases they’re not a factor. And just when we learn them, they change again.

      So, as of 2020, the Chapter 13 debt limits are

      • Unsecured debt: $419,275
      • Secured debt: $1,257,850

      These values took effect on 4/1/2019, and seem to be still be the most current. Normally, you’d check a government website for updated values. However, as of this writing, even the courts are still listing the chapter 13 debt limits that are from before 2019.

      Some Blurred Line Examples

      Even this is oversimplifying things, because where do lawsuits fall? That is, if someone has taken you to court, is it a secured debt or an unsecured one? What if you think you’ll win: does it count as a debt at all?

      Another issue arises with student loans, particularly if you cosigned as a parent plus loan and it’s not really your debt. Or is it?

      Further, tax debt is another tricky one. Is it unsecured, secured  or both? And what if it’s priority, can it also count against the unsecured debt?

      There are a lot more issues that can arise, so you’ll want to consult with a skilled Los Angeles bankruptcy attorney who specializes in Chapter 13 bankruptcy.

      California bankruptcy exemptions can save your house.

      California Homestead Exemption to Save Your Home (2021 update)

      California Homestead Exemption – 2021 update

      The California homestead exemption can help you save your home from creditors. Chapter 7 bankruptcy is liquidation; the bankruptcy trustee can take your stuff. They don’t take the shirt off your back, but at some point they draw the line regarding what you can keep. These are the bankruptcy exemptions, and each state has its own. The California exemptions include a way to protect some home equity.

      There are two sets of California bankruptcy exemptions. Bankruptcy attorneys call these the 703s and 704s. The California homestead exemption is found in the 704s, at California Code of Civil Procedure 704.730.

      The California Homestead Exemption 2021

      In 2021, California homestead exemption increased dramatically. What this means to the person contemplating filing bankruptcy is that more of their home equity can be protected. They really do take houses in Chapter 7 bankruptcy. Previously (see below), the amount of home equity which could be protected was inadequate and hardly kept up with the inflated Calif real estate.

      But then in 2020, COVID-19 struck, and people were suddenly unable to pay their rent and mortgages. Partially in response to the pandemic, the state legislature passed and the governor signed a dramatic increase to the California homestead exemption.

      The result is a system which depends upon the location where the house is, and has nothing to do with marital status or age. And this makes sense, as a homeowner in Ventura County probably has a higher home value than someone who owns a home in Barstow.  So, now homeowners who’ve lived at a home for 4 years or more get a minimum of $300,000 of home equity protection, and a maximum of $600,000 of California homestead exemption.

      Some guidance on the Los Angeles County median home price 2020


      Spoiler alert on the above link: The trick is no one knows for sure what the data source for county median is. And if you haven’t lived at the property long enough, you don’t get the above protections. So you will want to consult with a qualified bankruptcy attorney before you risk your house.

       

      The Three Homestead Exemptions in California Before 2021

      The California homestead exemption can save your house.
      Don’t risk losing your house in Chapter 7. Talk to a experienced bankruptcy attorney about the bankruptcy exemptions and homestead exemption in California.

      Firstly, there’s the bankruptcy exemption that a single homeowner gets. This is in subsection (a)(1). In 2020, a single person who lives in a house gets to protect $75,000 of home equity under the California exemptions.

      Secondly, there’s a higher exemption for a married person’s residence. This is in (a)(2). The California homestead exemption for a married person is $100,000.

      Finally, if you can tick one of three boxes, you get the superduper $175,000 homestead exemption in California’s bankruptcy exemptions. To level-up and qualify for this, you have to either be:

      • 65 years old;
      • have a disability that prevents gainful employment; or,
      • 55 years old, and make below a certain income level that changes from time to time

      This may seem simple, but what is “disabled?” What is “as a result of?” What is the income level, and which time period is measured? You’ll want to speak to a qualified bankruptcy attorney in your area. But in the right circumstances, someone filing consumer bankruptcy can protect a lot more house equity under this third option.

      Spouses Sometimes Count

      A final note: a good thing about, in particular, the $175,000 California homestead exemption is that it extends to the spouse of the person filing Chapter 7. So if the debtor is, say, 63 years old, but their husband is 67 but really doesn’t want to file bankruptcy, the 63 year old who does file Chapter 7 bankruptcy gets the $175,000 homestead exemption in California anyway.

      Be careful in Chapter 7 bankruptcy.  It’s not always the best type of bankruptcies.

      Learn the differences between Chapter 7 bankruptcy vs 11 vs 13.

       

       

      You really should talk to a qualified Los Angeles bankruptcy lawyer, as you get what you pay for, and it’s not worth risking your home. If you don’t do this right, you’re literally gambling with your house.

      credit after bankruptcy

      Study from LendingTree Says Credit After Bankruptcy Discharge Doable

      Study from LendingTree Says Credit After Bankruptcy Discharge Doable

      A bankruptcy study recently debunked a myth. You know the one, that bankruptcy will ruin your credit forever. Last week, LendingTree, the largest online lender, released study results about credit after bankruptcy discharge. It followed people after their case was completed. This is consistent with my article asserting that there is indeed credit after bankruptcy discharge.

      READ MORE: Credit after bankruptcy

      credit after bankruptcy
      Yes, Virginia, there is credit after bankruptcy.

      The researchers learned that a credit score of 640 or more was achievable after bankruptcy:

      • one year after bankruptcy for 43 percent of borrowers
      • two years after bankruptcy for 65 percent of borrowers

      In fact, the researchers concluded:

       

      People recovering from a bankruptcy are in a similar position to anyone who needs to repair their credit standings. The study finds no indication that people in the aftermath of a bankruptcy will have a harder time accessing credit than their peers who did not file for bankruptcy (except for potential mortgage loan embargos caused by the Fannie Mae policy discussed above).  Some people may even find themselves in a much better position to recover, thanks to a reset of their debt-to-income ratios.

      See also LendingTree’s pointers for how to rebuild credit after bankruptcy discharge. This validates everything we’ve been teaching people, and shows that even if you feel trapped by bad credit, a bankruptcy can provide the fresh start you need.

       

      bankruptcy debt limits

      Is There a Debt Limit to Chapter 7

      Is there a debt limit to Chapter 7?

      One question people ask is, “How much do you have to be in debt to file Chapter 7.” Unlike Chapter 13 bankruptcy, there is no debt limit to Chapter 7. It just becomes a matter of practicality. There are financial benefits to file Chapter 7 bankruptcy, but these must be weighed against the costs, monetary and otherwise..

      Too little debt for Chapter 7

      The Bankruptcy Code has no lower limit to file bankruptcy under Chapter 7. The only limit is common sense. One the one hand, if you owed someone a dollar, and the Chapter 7 filing fee is $335, most people would just pay the dollar. No brainer. Another example: if you owed someone $1000, the debt is greater than the filing fee, but now there are other costs you’d weigh, like the hit on your credit. Is it worth it to discharge $1,000 of debt but have a bankruptcy on your credit report? Most would say no. Each individual weighs their own personal limit line differently. Many people would agree that $20,000 or $30,000 of debt is a lot to ditch in a bankruptcy discharge. A debt amount that high may outweigh the cost of the bankruptcy filing fee, paying a bankruptcy attorney, and the credit report ding. While there’s no debt limit to Chapter 7, we bankruptcy lawyers do see a typical range of debt.

      Too much debt for Chapter 7?

      On the other hand, there’s nothing written in the law that has a specific dollar amount that becomes too much debt to file a Chapter 7 bankruptcy (note: this is in contrast to Chapter 13 bankruptcy, which has a maximum debt limit set by law in 11 USC 109(e), which periodically adjusts, so check current chapter 13 debt limits).

      There are other factors though that can stop a bankruptcy with too much debt. Firstly, the government looks at whether the debt was obtained in good faith. If someone unemployed for years has $250,000 of credit card debt, were they really intending to pay it back? Secondly, they look at the nature of the debts: were they luxuries like travel? Another factor is if the debts or discharge was obtained by fraud. Too much debt is situation specific. It may make sense for a business owner to have a lot of debt, but maybe not so much for a retired grandma.

      Summing up the Debt Limit for Chapter 7

      In short, there is no debt limit to file Chapter 7. Common sense factors would make it not worthwhile to file Chapter 7 bankruptcy for some. There is an upper limit that will get you on the trustee’s radar, though it’s not sure exactly what that number is. Like most things, if it’s reasonable it should work, though your mileage may vary.

      modern debtors prison

      Modern Debtors’ Prison

      Modern Debtors’ Prison

      2021 update: There’s a student loan bankruptcy bill active in the Senate which would provide student loan forgiveness, and meaningful student loan reform.


      A long time ago, in the days of Charles Dickens and chimney sweeps, people were incarcerated until they satisfied their debts. These debtors’ prisons resulted in a Catch-22. You can’t get out of jail until you paid your debts. And you can’t pay your debts until you get out of jail. There’s now a new modern debtors’ prison.

      The New York Times recently had a piece describing a new program to enforce debt. If someone falls behind on their student loan payments, they can lose their professional license and their job. Without income, this guarantees only one thing: debtors for sure won’t be able to pay their student loans.

       [I]n 19 states, government agencies can seize state-issued professional licenses from residents who default on their educational debts. Another state, South Dakota, suspends driver’s licenses, making it nearly impossible for people to get to work.

      Student Loans are the Problem, not Debtors

      debtors prison
      We’ll set you free once you pay your debt.

      It’s bad enough that student loans are the second highest kind of household debt, after mortgages. There are a lot of reasons for this. Firstly, the federal government subsidizes the Big School industry. The government encourages high tuition costs by guaranteeing them with programs like Direct Loans. If payments aren’t made, Uncle Sam can seize a tax refund, bank accounts, garnish wages, and seize other assets. And bankruptcy court isn’t a safe haven for the graduate with unaffordable student loans, as education debt isn’t dischargeable.

      Big Education is an Overpriced Service Churning Out Poor Product

      Overpriced

      Because tuition costs are subsidized by government and a loan industry, there are disincentives for schools to compete in the open market. Let’s face it, if you knew you could sell a glass of lemonade for $1000, that you could get people to go into hock for it, and get Uncle Sam to use his muscle to help collect, why would you ever settle for only get 25 cents a glass? Especially if your competition had the same guarantees?

      Colleges are not encouraged to compete with each other in the market to be the most affordable. Since there’re no market forces in play. The average student leaves school owing almost $40,000. Schools get the tuition paid from the government. The government can get it from you. As a result, very few can pay their way through school. Over 70% of graduates leave college with debt, starting their new career with a burden on their back.

      More Competition for Jobs

      Because everyone is encouraged to go to college, standards for getting into college are getting lower. Schools have an incentive to admit as many people as possible. Students are sold a bill of goods and pot of gold on the other side of graduation. As a result, more and more people are getting into college, leading to more competition for jobs once they graduate.

      The Student Loan Bubble

      Consequently, there is a student loan bubble, or student loan crisis. More and more graduates are in the job market leading to a saturation, some settling for lower-paying jobs, causing more and more unable to pay for their student loans.

      The schools aren’t lowering the costs; why should they? Universities win, because they can charge whatever they want, independent of market forces. The government wins because it knows it can collect this debt because the graduate can’t ever escape from it.

      The optimistic incoming student isn’t comparing costs as much as they look at school prestige, or maybe how well-known its sports programs are. They think they win. That is, until they graduate. Then they realize that maybe they can’t find a good-paying job as easily as hoped, or the job they could find pays much less than needed to make ends meet.

      Faced with a choice between paying the student loan or paying rent and food, they choose the necessities. So they let the student loans go.

      A solution is to reduce the payments for the student loans, and (cut future tuition costs). Another idea is to get the government out of student loan business. Yet another fix is to do all they can to bring the wayward sheep back into the fold. To increase forgiveness programs that waive interest and penalties to get the student loan out of default.

      We Need Bankruptcy Reform on Student Loan Debt

      Under 11 U.S.C. 523(a)(8) of the Bankruptcy Code, student loan debt is not discharged in bankruptcy. There are rare instances where it can be discharged, but the exception is so narrow as to hardly exist.  “Undue hardship” requires a showing that the debtor is mostly dead, and even that isn’t always good enough.

      We need student loan reform of the bankruptcy code. Student debt reform is needed in bankruptcy so that more people can discharge their school debt.  What good is bankruptcy to the consumer debtor is the second largest form of debt is untouched by bankruptcy? Lower the bar a bit, so that after, say, five years after graduation if the student isn’t earning the median income, the schools don’t get paid the tuition. Imagine what that would do to admission rates.

      License-Pulling Makes Repayment Less Likely, Not More

      The government should be enacting change that makes it more likely the defaulting graduate can pay their student loans. It should not cutting the source of income. We’re through the looking glass to believe that if you don’t pay your bills we’ll take away your job so you can’t pay your bills. The license-pulling job-killing measure that’s spreading only ensures the jobless graduate earns less income. It makes it more likely they’re dependent on government programs. Finally, it puts defaulting graduates in a modern debtors’ prison that says they’ll get their license to earn money back as soon as they give enough money to pay their debt.

      save home

      Chapter 13 can Stop House Foreclosure

      Chapter 13 bankruptcy can Stop  House Foreclosure

      Save your Home and Catch up on the Mortgage

      by Hale Andrew Antico, Esq.

      In August 2005, just before the bankruptcy laws changed, I wrote in this space that there was a perfect storm brewing for the average consumer.  Since then, the bankruptcy laws have changes (in the name of reform), and indeed, it is harder — but not impossible — to get a fresh start.

      One area where we can get into debt trouble and feel a financial squeeze is with regard to mortgage payments.  The past few years, property values have been soaring here in Southern California.  This has led to many people to refinance their homes and take “cash out” — in essence using their house as an ATM.  The result of this is that it leads to less equity and a higher mortgage payment.

      What happens if these homes with tapped out equity drop in value?  We’re conditioned to believe that property values only go up Up UP! in Southern California.  However, in 1989-1991, the real estate market peaked, leading to dropping property values.  The result is that many people were “upside down” in their homes, meaning that that they owed more than it was worth.  We expect this from a car loan since a car almost always depreciates faster than we can pay it off.  But with a house?  Yikes.

      Some experts believe that history may be repeating itself. Recently, economics experts are looking at reliable benchmarks like Price-to-Income Ratios and Price-to-Rent ratios and noting that home value are much higher than normal levels.  Even houses in your neighborhood are no longer selling within the same week they’re listed with someone offering $10,000 over the listing price.  Instead, we’re seeing “Reduced!” signs nailed onto those For Sale signs, and reading advice like that in the Los Angeles Daily News suggesting that you list your home in the lower 25% as related to the comparable homes in the neighborhood.  Is there a real estate bubble which will shortly burst, or is the housing market temporarily resting before it continues upwards and onwards?  No one knows for sure.

      If you find yourself in the awful situation where you fall one or two payments behind on the mortgage, there is still hope to stop foreclosure.  A Chapter 13 bankruptcy might be the solution.  This option allows you to get some “breathing room,” stop the collection calls and headaches, and even stop a foreclosure.  People can fall a few months behind, they want to catch up but the lender won’t accept anything but a massive lump sum payment that the troubled homeowner doesn’t have.  A Chapter 13 case can allow you to catch your breath as you demonstrate how you will catch up on your past due mortgage payments, but on a schedule you can actually stick to and afford.  This very helpful type of bankruptcy allows you to reorganize your debt and save your house in Southern California and stop foreclosure.

      Even for people who don’t have a home, a Chapter 13 bankruptcy can provide a light at the end of the tunnel.  It can provide a way to pay what you can afford, and in return, stop lawsuits, wage garnishments, collection headaches and yes, even foreclosures. And then, yes, you can be debt-free in three or five years.  That time will tick off the calendar either way… why not be out of debt in that span?

      So, just because you’re a payment or three behind on that car or home and don’t think you can stop the house foreclosure, don’t lose faith.  There is a way to get some space and time to catch your breath.  You can be out of debt and most importantly, save your home.  Sometimes, bad things happen to good people.  We don’t intend for things to work out the way they do.  But when “life happens” and there is an unanticipated debt problem, when you’re ready to solve it then a Chapter 13 bankruptcy can be the solution to your problem.

      CONTACT US FOR A CONSULT NOW

      Hale Andrew Antico (aka Attorney Antico) is an attorney who specializes in consumer finance.