A homestead exemption is a statute that protects a debtor’s home from being seized by creditors. Every state has a homestead exemption of some sort, but Texas has a very generous homestead exemption. It allows for an individual to protect their home during bankruptcy up to the maximum value of the property. There is no cap on the value of the homestead exemption in Texas. However, in order to be eligible to receive this protection, you must have lived in Texas for at least two years. Homestead exemptions only protect the debtor’s equity in their home. The home can still be foreclosed if a mortgage secured by the home isn’t paid.
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DON’T USE HOME EQUITY LOANS TO PAY OFF YOUR CREDIT CARDS!
DON’T USE HOME EQUITY LOANS TO PAY OFF YOUR CREDIT CARDS!
I have to admit, that I am a little behind the times technologically. I still have basic cable at home and I don’t have a DVR. So while many Americans can simply fast forward through television commercials, I actually watch them. One common theme in television commercials these days is the benefits of taking a home equity loan to pay down your credit cards. But sometimes taking home equity loans to pay off credit card debt is a very bad idea.
When considering whether or not to take out a home equity loan, I suggest you crunch the numbers and consider your situation in this way. If you are not struggling to make your credit card payments each month, but would like to pay off your credit card balances in order to get rid of those high interest loans, then a home equity loan may be a good idea. But if you are struggling to make the minimum payment on your credit cards, then you will probably struggle to make your second mortgage payment after receiving a home equity loan and in that situation a home equity loan could end up costing you your house.
When you take out a home equity loan to pay off your credit cards, you are reducing your interest rate but you are also turning an unsecured debt into a secured debt. When you default on a credit card debt, you risk being sued. However many people that default on their credit cards never get sued, and after four years the statute of limitations will bar the credit card company from recovering on the debt. Even if you get sued most of your property is probably exempt from being taken by your creditors, and you may be able to stop the lawsuit by filing bankruptcy. When you take out a home equity loan to pay off your credit cards, you are turning your unsecured debt into secured debt. Now if you can’t make your payments and you default on the loan you will lose your house.
Dallas Bankruptcy Attorney: FORECLOSURES ON THE DECLINE IN TEXAS
Dallas Bankruptcy Attorney: FORECLOSURES ON THE DECLINE IN TEXAS.
In the month of July, a total of 10,571 foreclosure postings were filed in the state of Texas. This figure represents a 10 percent decline compared to the number of filings recorded in July 2010. Nationwide the decline in the number of postings is even greater, having dropped 35 percent from the same month a year ago. But this isn’t necessarily a sign of an improving economy or recovery in the housing market.
“The downward trend in foreclosure activity has now taken on a life of its own,” says RealtyTrac CEO James J. Saccacio. “The foreclosure processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts — including loan modifications, lender-borrower mediations and mortgage payment assistance for the unemployed — may be allowing more distressed homeowners to stave off foreclosure.”
The problem there: These are short-term fixes that do not provide any real traction for a recovery of the country’s housing sector, Saccacio adds.
“The falloff in foreclosures is not based on a robust recovery in the housing market but on short-term interventions and delays that will extend the current housing market woes into 2012 and beyond,” Saccacio says. “A stabilizing economy and improving job market are the long-term keys to a housing market recovery.”
Faced with the prospect of losing their home, many homeowners will do whatever it takes to hang onto their home, even when it isn’t in their best interest. Many people know they can’t afford their home, but can’t accept that reality. Homeowners having difficulty with paying their mortgage should seek help from someone with experience in managing debt. A bankruptcy attorney may be able to offer a better long-term solution to protecting a home from foreclosure than can be had through a loan modification or other similar program.
(Source: bizjournals.com)
NORTH TEXAS BANKRUPTCY: WHAT HAPPENS TO MY TAX REFUND?
Tax refunds are treated differently depending on whether you file Chapter 7 or Chapter 13 bankruptcy. In a Chapter 7 case, if a debtor files a tax return before filing bankruptcy but receives a refund after their bankruptcy case is filed, they may have to turn the refund over to the bankruptcy trustee so that the funds can be paid to the creditors in the case. In general, the best strategy for protecting your tax refund in a Chapter 7 bankruptcy case is to file the case after you have already received the refund. Once you have the refund in hand, check with your attorney to see if the money can be exempted from the bankruptcy estate and if it cannot be exempted spend it on reasonable and necessary expenses before the bankruptcy case is filed.
Chapter 13 bankruptcy cases last from three to five years, so in these types of cases it is less about the timing of when you receive the refund and more about how much is received. The Chapter 13 Trustees in Fort Worth, Dallas, and in Plano, which preside over Chapter 13 cases for nearly all residents in the Dallas/Fort Worth area, will allow you to keep the first $2000 of a tax refund. Any additional amount is retained by the Trustee and applied toward claims filed by unsecured creditors in the bankruptcy case. In some cases this means that the debtor will finish their bankruptcy case sooner.
BAD CREDIT SCORES CAN PROLONG UNEMPLOYMENT
Many employers are now checking credit scores of applicants prior to making offers of employment. For many unemployed Americans, this practice is unfair. Consider people who have great credit and payment histories until they lose their jobs. But once their income stops they fall behind on their payments, causing negative marks on their credit report and a reduction in their credit score. This reduction in credit score keeps them from finding future employment which would allow them to pay their bills and improve their credit score. It’s a Catch-22. Unfortunately, these applicants are usually weeded out before making it to the interview process so they don’t get an opportunity to explain their poor credit score.
In some states politicians are taking steps to “prohibit the use of credit information in most employment decisions.” In Tennessee, a bill has been proposed to prohibit consideration of credit score in employment decisions, and Hawaii and Washington already have similar laws in place.
(Source: MSN.com)