Kentucky Bankruptcy Lawyers Blog

Two Georgia lawmakers have proposed bills that would allow homeowners to take out money from their retirement accounts, penalty-free, to pay for mortgages, The Atlanta Journal-Constitution reports.

While the lawmakers believe this could help cut into the country's real estate and foreclosure mess, this would simply ruin a person's finances in order to save their house, which has likely taken a large hit in value.

Louisville bankruptcy lawyers would advise a consumer struggling with foreclosure to set up an appointment today and consider the benefits of bankruptcy in Louisville rather than spill their retirement into a house saddled with an upside down mortgage.

Louisville has been hit hard with foreclosures, as foreclosure tracking company Realtytrac reports that on average 1 in 259 housing units is in foreclosure citywide. This puts most of the city in a "high" foreclosure rate, while only three zip codes are in a "low" foreclosure rate. Those areas see 1 in 1,627 housing units in foreclosure.

This city certainly isn't an exception to the housing woes that have hurt our country. But that is no reason for a person to toss away their life savings for a house. Many people who want to keep their house can go through bankruptcy and come through the process in much better financial shape. Under Chapter 13 bankruptcy in Louisville, consumers can set up payment plans over a 3 to 5 year period to payback most of their debt and still keep their houses.

Under this new law, homeowners would have the option of taking money from their retirement portfolios and rather than pay a 10-percent penalty on what they withdraw, they could take it out without penalty to make a housing payment.

The bill sponsors -- Sen. Johnny Isakson and Rep. Tom Graves, both from Georgia -- believe that the bills would allow for a recovery in the real estate market while keeping people in their homes.

Louisville bankruptcy lawyers hope that Americans are smarter than that. Why would a person ruin their future savings -- which are meant to provide food, shelter and medical care -- for a house that has plummeted in value? People would be much wiser to keep their savings, declare bankruptcy. Whether or not they decide to keep the home.

Isakson said he believes that the only way the economy will recover is when the real estate market bounces back. And he thinks that the bill he has proposed will contribute to that by reducing foreclosures and stabilizing home values.

Graves said the bill allows people who have been responsible enough to save in the past, but who have lost their jobs, to not be punished by the tax laws and still pay their mortgages. The tax law now, he said, punishes those who want to put their retirement savings into their home.

Retirement funds are designed to help those who get to an age where they can't work anymore. And if they can't work, they can't earn money. Having a house to live in is critical, but there are alternate housing options available. Retirement savings is required to sustain a bright future even if the present is bleak.

Continue reading "Proposed Law Would Open Retirement Savings To Pay Mortgages, But Louisville Bankruptcy Is Wiser" »

Deficiency judgments are on the rise, as banks continue to look for ways to make up the millions of dollars lost through the glut of foreclosures nationwide, The Wall Street Journal is reporting.

A deficiency judgment is when the bank takes a home through foreclosure and then sells it at auction for less than the loan amount and goes after the original homeowner for the difference. In many cases, this can mean a borrower is saddled with a judgment of $100,000 or more, depending on market value.

Luckily, there is a solution and it's filing for bankruptcy in Louisville. If a person is hit with a big deficiency judgment, they likely can't pay it off if their house just went into foreclosure. Therefore, consulting with an experienced Louisville bankruptcy lawyer can help consumers get out from under not only that debt, but other forms of debt, such as credit card bills, medical bills and other money owed. In other cases, it can protect a consumer from dealing with a bank or a deficiency judgment in the future -- once they have gotten back on their feet financially.

As The Wall Street Journal states, banks are making that more and more difficult these days. As they struggle to generate revenue after the downturn in the real estate market, banks are now going after homeowners with a vengeance.

The news article highlights the case of a man who lost his job and stopped making payments on a vacation house he owned in Florida. After the foreclosure went through last year, he thought it was over.Then he got a call telling him a deficiency judgment had gone through and he owes $193,000 to the bank. The man said he never considered the bank would go after him, but he said he'll be contacting a bankruptcy lawyer to seek protection.

There are 41 states, including Kentucky, that allow deficiency judgments. In Kentucky and Indiana, judgments are allowed after the homeowner fails to answer a foreclosure lawsuit within 20 days after they are served in-hand or by certified mail with the paperwork. Once a deficiency judgment is awarded, the mortgage lender can seize assets like bank accounts to satisfy the balance of the debt and garnish up to 25% of your wages. Only a Chapter 7 or Chapter 13 Bankruptcy filing can stop that from happening.

While lenders don't say which homeowners they target for deficiency judgments, analysts believe they are going after homeowners they believe have the funds to make the payments, but choose not to. Many people have considered a strategic default, meaning they stop making payments because of a decline in value.

Many states, however, allow lenders up to 20 years to go after a homeowner for a deficiency judgment, which gives banks a lot of time.

Attorneys who handle foreclosure defense told the newspaper they have seen a drastic increase in judgments as banks have been urged by shareholders to try to make back the money that has been lost. There is also a secondary market for debt, as investors attempt to get the judgments so they can go after borrowers through debt collection agencies or bankruptcy court.

Continue reading "Kentucky Deficiency Judgments on the Rise, But Louisville Bankruptcy Stops Them" »

The Chicago Sun-Times and other major media outlets are reporting this week that household income has dropped faster since the end of the recession.

Louisville bankruptcy attorneys continue to help consumers deal with the fallout of the middle-class squeeze. Really, it's no wonder protestors have taken to Wall Street. The AFL-CIO recently reported the average annual CEO pay at a S&P 500 company is $11.4 million. The pay of these few hundred executives totaled $3.4 billion and would have paid the median salaries of more than 100,000 workers.

During the recession, the median household income fell by 3.2 percent to $53,518. From June 2009 to June 2010, it fell by 6.7 percent to $49,909. Self employed households suffered an 8.4 percent decline. African-American household income fell nearly 10 percent to $31,784. The youngest (25 to 34) and the oldest (62 to 64) fell by the largest percentage, 9.8 percent and 10.7 percent, respectively.

Too often, consumers don't know where to turn when medical bills, bad mortgage debt and credit card debt have them backed into a financial corner. Chapter 7 or Chapter 13 bankruptcy in Kentucky can offer a fresh start. Bankruptcy remains the most powerful consumer protection law on the books; families that have been squeezed to the breaking point should seek the advice of an experienced bankruptcy law firm.

Bankruptcy will stop foreclosure and collection efforts, including garnishment of wages. It will immediately stop creditors from harassing you. Together with your attorney you can review your financial situation and decide upon the best course of action. For about three-quarters of those who file, Chapter 7 is the best option. This filing will eliminate most unsecured debt. Consumers may even be able to keep their home or car if it makes financial sense. Retirement accounts are protected.

For those who need a financial breather and time to regroup, Chapter 13 will establish a payment plan over 3-5 years. It will keep creditors off your back and permit you to prioritize your debt. It may also be used by consumers who do not qualify for Chapter 7. Those filing for Chapter 13 can keep large assets while making arrangements to satisfy debts.

In either case, filing for bankruptcy has become a primary weapon in the middle-class fight to stay afloat. We encourage you to be proactive. If bad debts are preventing you from saving for college or retirement, of if bill collectors are impacting your quality of life, please pick up the phone and get the legal help you need to secure a brighter financial future.

Continue reading "Median Household Income Plummets; Bankruptcy a Powerful Weapon for Kentucky Families" »