Is Bankruptcy really the "peaches and cream" that some have made it out to be, or is there much more to it than what we know? Bankruptcy is a somewhat complex procedure, and even more now so with the new Bankruptcy laws in effect, making it harder for people to abuse filing for Bankruptcy. Many people look at Bankruptcy as a "get out of jail free" card. That could not be any farther from the truth.
There are two basic types of Bankruptcy proceedings. The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. Of the two common forms of bankruptcy, one is a reorganization bankruptcy and the other is a liquidation bankruptcy. Individuals may enter a reorganization bankruptcy in order to retain assets and pay off reduced creditor claims out of the individual's income. Reorganization is most commonly known as Chapter 13 Bankruptcy. In the US, liquidation is known as Chapter 7 Bankruptcy, which refers to the chapter of the bankruptcy law that allows your assets to be sold off (liquidated) to pay creditors.
In Chapter 7, a debtor surrenders his or her non-exempt property to a bankruptcy trustee who then liquidates the property and distributes the proceeds to the debtor's unsecured creditors. If a debtor does not qualify for relief under Chapter 7 of the Bankruptcy Code, either because of the "means test" or because Chapter 7 does not provide a permanent solution to delinquent payments for secured debts, such as mortgages or vehicle loans, the debtor may still seek relief under Chapter 13 of the Code. Falsifications on bankruptcy forms often constitutes perjury.
Recently there have been some major changes made to the bankruptcy laws. Under the old rules, most filers could choose the type of bankruptcy that seemed best for them, and most chose Chapter 7 (liquidation) over Chapter 13 (repayment).The new law makes it considerably more difficult for individuals to file for bankruptcy under Chapter 7, under which most of their debts are forgiven (or discharged), as opposed to Chapter 13, under which no debts are forgiven. The new law will also make it more difficult for serial filers to abuse the most generous bankruptcy protections. Under the old law, filers generally filed under Chapter 7, with the final determination made by bankruptcy judges, who evaluated the specific nature of each bankruptcy. The new law adds a number of new requirements for bankruptcy filers making the filing process more difficult and costly. All potential bankruptcy filers must now undergo credit counseling via an "approved nonprofit budget and credit counseling agency" prior to filing for bankruptcy. The new bankruptcy law brings some unwelcome changes for those who are considering bankruptcy. All debtors will have to get credit counseling before they can file a bankruptcy case.
There is more to filing bankruptcy than simply thinking you will just go see an attorney and all of your debts will be wiped away. It is a myth to think, I'll just file bankruptcy and start over; it seems so easy. The truth of the matter is that Bankruptcy is a gut-wrenching, life-changing event that can cause lifelong damage to a person's mental well-being along with their personal finances for a long time. Therefore, think long and hard and make sure you have exhausted all of your other options before deciding that you want or need to file bankruptcy. Bankruptcy is rated up there with some of the most traumatic life altering events such as loss of a loved one, serious illness, divorce and disability. Truly weigh your options before committing to filing for bankruptcy protection.
Thursday, July 26, 2007
Tuesday, July 24, 2007
Fees, Fees - Are They All Needed?
Whether you are buying or selling your home fees are an inevitable part of the closing process. What do they all mean though and are they all really necessary?
Unfortunately when you are dealing with real estate there are always going to be fees and closing costs involved in the process. Even if you are not obtaining a mortgage on the property, there will still be fees associated with the real estate transfer, such as a recording fee, transfer fee, title/attorney fees, notary fees, doc stamp, etc... Even if you are obtaining a mortgage on the property and you are using a lender that is advertising no closing costs or no fees, chances are you will still have to pay for items such as an appraisal fee, your 1st year of homeowners insurance, your tax and insurance impound account deposit, and quite possibly an application fee.But how can these lenders avoid all of the other fees that you have heard about or noticed in prior real estate transactions. The answer is very simple, they "jack up" your interest rate on your mortgage loan to account, for the amount of money you would have had in fees, and then some. Many of these lenders advertising no closing costs or fees will even add a pre-payment penalty to your loan to make sure that you stay in it for at least a few years so that they can recover the money that they paid for your closing costs.
So what are all of these fees for and what do they do for you? We will not discuss every individual fee in this article, but we will focus on the main fees and charges. First, we have the appraisal fee. This one is pretty self explanatory, as you want to make sure the home is worth what you are going to pay. Next, we have your lender fees such as underwriting and such. These fees compensate the lender for reviewing the file, making sure the file adheres to the lending institutions guidelines and policies and normally to FNMA and FHLMC's guidelines as well. Third, we have origination fees and/or broker fees. Usually, you will have these fees if you work with a mortgage broker or a mortgage banker. A mortgage broker will shop your loan around and will almost always find you a considerably lower rate than what you would be able to qualify for on your own with the same lender. Therefore, they charge a fee for this service. Fourth, we have your title company fees. Many times the total fees here for the title company will be the largest chunk of fees charged. The title company fees guarantee that you receive a clear title, insure the title, insure the loan is properly recorded and notarized, and make sure all of the money is properly disbursed accordingly. Finally, you have your miscellaneous fees such as survey, endorsements, doc stamps, wire fees, etc... that are not always necessary but depend on the type of loan and the lender's policies. For more detailed information about closing costs, please visit: http://www.nomoneydown123.com/Florida/understanding_a_good_faith_estimate.htm
Therefore, even though sometimes the fees can seem a bit much, mainly they are all there for your benefit and protection. Anytime you are considering a no cost or no fee mortgage, make sure that you have no intention to keep that loan more than a few years. If you decide to go with a no fee loan and keep it longer than that, you will end up paying much more over the life of the loan than had you just paid the closing costs. If you are planning to stay in the home for a number of years, then paying the closing costs and taking the lowest possible rate will probably be in your best interest and will save you the most money in the long run. Also, some of your closing costs may be tax deductible. You can also have the seller of the home you are buying pay your closing costs by negotiating that into the price. There are many options that surround you when dealing with fees and real estate, just make sure you understand your options and you make the best decision for your finances.
Unfortunately when you are dealing with real estate there are always going to be fees and closing costs involved in the process. Even if you are not obtaining a mortgage on the property, there will still be fees associated with the real estate transfer, such as a recording fee, transfer fee, title/attorney fees, notary fees, doc stamp, etc... Even if you are obtaining a mortgage on the property and you are using a lender that is advertising no closing costs or no fees, chances are you will still have to pay for items such as an appraisal fee, your 1st year of homeowners insurance, your tax and insurance impound account deposit, and quite possibly an application fee.But how can these lenders avoid all of the other fees that you have heard about or noticed in prior real estate transactions. The answer is very simple, they "jack up" your interest rate on your mortgage loan to account, for the amount of money you would have had in fees, and then some. Many of these lenders advertising no closing costs or fees will even add a pre-payment penalty to your loan to make sure that you stay in it for at least a few years so that they can recover the money that they paid for your closing costs.
So what are all of these fees for and what do they do for you? We will not discuss every individual fee in this article, but we will focus on the main fees and charges. First, we have the appraisal fee. This one is pretty self explanatory, as you want to make sure the home is worth what you are going to pay. Next, we have your lender fees such as underwriting and such. These fees compensate the lender for reviewing the file, making sure the file adheres to the lending institutions guidelines and policies and normally to FNMA and FHLMC's guidelines as well. Third, we have origination fees and/or broker fees. Usually, you will have these fees if you work with a mortgage broker or a mortgage banker. A mortgage broker will shop your loan around and will almost always find you a considerably lower rate than what you would be able to qualify for on your own with the same lender. Therefore, they charge a fee for this service. Fourth, we have your title company fees. Many times the total fees here for the title company will be the largest chunk of fees charged. The title company fees guarantee that you receive a clear title, insure the title, insure the loan is properly recorded and notarized, and make sure all of the money is properly disbursed accordingly. Finally, you have your miscellaneous fees such as survey, endorsements, doc stamps, wire fees, etc... that are not always necessary but depend on the type of loan and the lender's policies. For more detailed information about closing costs, please visit: http://www.nomoneydown123.com/Florida/understanding_a_good_faith_estimate.htm
Therefore, even though sometimes the fees can seem a bit much, mainly they are all there for your benefit and protection. Anytime you are considering a no cost or no fee mortgage, make sure that you have no intention to keep that loan more than a few years. If you decide to go with a no fee loan and keep it longer than that, you will end up paying much more over the life of the loan than had you just paid the closing costs. If you are planning to stay in the home for a number of years, then paying the closing costs and taking the lowest possible rate will probably be in your best interest and will save you the most money in the long run. Also, some of your closing costs may be tax deductible. You can also have the seller of the home you are buying pay your closing costs by negotiating that into the price. There are many options that surround you when dealing with fees and real estate, just make sure you understand your options and you make the best decision for your finances.
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