Redemption – Refinancing Personal Vehicles During Bankruptcy

When considering Chapter 7 Bankruptcy people always want to know whether they can keep financed vehicles.  If payments to the lender are current, the answer is almost always ‘yes’.  Additionally, Chapter 7 bankruptcy, provides the opportunity to refinance loans on personal vehicles to the fair market value of the vehicle by “…paying the holder of such lien the amount of the allowed secured claim of such holder that is secured by such lien in full a the time of redemption.”  U.S. Code: Title 11 Section 722.  This means a car lender is entitled to receive fair market value of the property, which is often much less then the loan balance.  Financed vehicles with ‘negative equity’ are especially common when the loan involved: balance roll-over from a previous loan; unethical car dealers; steep depreciation; zero down payments financing; lenders cross-collateralization; and excessively long loan terms.

The Bankruptcy Code’s basis for allowing redemption is that Chapter 7 bankruptcy also lets people simply surrender property back to the lender.  When surrender happens, the lender gets the property back and recoups the fair market value of the property upon resale.  Redemption puts lenders in essentially the same position as if the property were surrendered.

Although redemption put lenders in the same position as if the property were surrendered, redemption can provide substantial benefit to someone with an upside down car loan. For example, if $20,000 is owed while the vehicle’s fair market value is $10,000, reducing the vehicle balance to $10,000 may be possible with a new post-bankruptcy redemption loan.  At the same time all debt associated with the old loan is eliminated by the bankruptcy.

The apparent difficulty of getting financed for a lump sum payment is mitigated by the presence of lenders who specialize in bankruptcy redemption/refinance loans.  They include:

722 Redemption Funding, Inc:     https://www.722redemption.com/

Fresh Start Auto Loan Affiliates: http://www.freshstartloans.com/fslc/home.asp

Redemption Funding Inc at:         http://www.manta.com/c/mmd27cd/redemption-funding-inc

Redemption loans typically have a high interest rate, which must be considered before entering the loan.  If the interest rate or other loan terms negate the benefit of principal reduction you should review other options with your attorney.

In summary, there are multiple ways to keep a financed personal vehicle while filing Chapter 7 bankruptcy.  One possible option is redemption, which not only allows retention of the vehicle but also reduces the amount to be paid for the vehicle.  A bankruptcy attorney at Bellah Perez, PLLC can help you determine the best way to keep your financed vehicle while at the same time getting the bankruptcy relief you need.

-Jeffrey Wolfe, Bankruptcy Attorney

More information about Bellah Perez, PLLC can be found on our website,http://bellahperez.com. For a free consultation, call 602-252-9937 or e-mail us.

Adoption Answers

We are frequently asked the same questions when dealing with an adoption. Today we will explore a few of the answers to these questions.

1. Any adult, whether single, married or legally separated can qualify to adopt a child. A married couple can jointly adopt a child.

2. Non-blood related adoptive parents must be certified as acceptable to adopt a child prior to the Petition for Adoption being filed with the Superior Court. The Certification will be issued only after an investigation is conducted by the court and facts dealing with the prospective parents such as social history, financial ability, moral fitness, physical and mental health are evaluated. If the investigation proves favorable, then the perspective parents will be Certified. If the investigation proves negative, they will not be certified and a Petition for Adoption will not be granted.

3. No adoption can be granted unless Consent to Adopt has been obtained from the natural parents or the rights of the natural parents have been severed by court order.

4. If the child to be adopted is at least 12 years of age or older, that child must consent to the adoption or the adoption will not be granted.

5. In the Adoptive Order, the name of the child can be changed to that of the adoptive parent.

More information about Bellah Perez, PLLC can be found on our website, http://bellahperez.com. For a free consultation, call 602-252-9937 or e-mail us.

Should I keep my home if I am filing for bankruptcy?

Whether you decide to keep your home or surrender the home through your bankruptcy depends on different factors.  Some factors to consider are the current value of your home, the amount of the lien securing your home, and your current income and living expenses as well as other current housing options.

Often clients come into our office with at least two liens on their homes: their primary mortgage and a second mortgage, a home equity loan, and/or a lien as a result of a renovation or addition such as a pool loan.  These loans are secured against the property and are non-dischargeable.  In many cases the total amount of loans against the property cause the home to be underwater and more expensive to keep the home than to temporarily rent.

We recommend looking and exploring your options in order to make an informed decision.  Filing bankruptcy will allow you the fresh start that you need and part of that may be walking away from your home. Additionally, if you want to keep your home, you can  talk with an attorney about possibly attempting to remove your second and third liens secured by your residence through a Chapter 13.

More information about Bellah Perez, PLLC can be found on our website, http://bellahperez.com. For a free consultation, call 602-252-9937 or e-mail us.

Did Dr. McDreamy Unfairly Charm Auctioneers?

It is time for a guest blog from our law clerk:

A company owned by Grey’s Anatomy star, Patrick Dempsey, aka Dr. McDreamy, won a bankruptcy auction to purchase Tully’s Coffee, a Seattle-based coffee chain.  The chain filed for Chapter 11 bankruptcy in October 2012.  Dempsey pushed for the purchase of the company in order to keep an alternative to Starbucks and also to save over 500 jobs.  There were a total of six companies bidding for ownership of Tully’s, including Starbucks Corp.  Starbucks offered to buy Tully’s for $10.6 million.  This bid was higher than Dempsey’s winning bid of 9.15 million.   Continue reading

21 Questions

We always conduct an initial consultation with prospective clients.  This offers us the opportunity to determine whether an individual actually needs to file bankruptcy, and, if they do, what chapter they should file and if there would there be any issues in with their case.  Time and again, I find myself asking my potential clients numerous questions, but I am rarely asked many questions.  This amazes me.  Filing for bankruptcy is a legal process, and I would imagine that someone not familiar with that process would have many questions.  Maybe the problem is that people are unsure of what questions to ask.   Continue reading

The Politics of Adoption

The adoption of a child should be a happy and joyous time for a family as parents see their dreams of having a child become a reality.  The Russian government, however, has just passed legislation that will most likely harm many American families who were interested in adopting Russian children, or who are already in the process of adopting a child from that country.

The new bill puts a total ban on Americans adopting Russian children and is believed to be the response of growing tension between the two countries.  The adoption legislation follows the heels of a highly controversial law signed by President Obama last month.  The US law is in honor of Sergei Magnitsky, a lawyer who uncovered political corruption among several Russian tax officials.  Magnitsky was arrested and detained.  While in detention, he died.  It is strongly believed that his death was the result of the actions of prison officials.  The United States’ bill imposes a ban on the entrance into the US by several of the Russian officials involved in the Magnitsky case and prohibits them from using the US banking system.  Russia touts its adoption ban as its own human rights’ measure because the bill is named after a Russian child who was adopted by Americans and died in 2008 from neglect.  Continue reading

The Color Purple

Today I am digressing from legal analysis and legal questions to talk about the color purple.  When I say “the color purple”, I am not referencing that movie starring Oprah.  Although, it was a great movie.  I am talking about the national symbol for domestic violence awareness.  I was introduced to this color at a luncheon on Wednesday for Eve’s Place, a shelter for victims of domestic violence, which is located in Arizona.  The luncheon was a fashion show fundraiser designed to be lighthearted and to encourage attendees to donate to Eve’s Place.  Despite the fun atmosphere, the luncheon presented some serious themes.

Continue reading

The Scarlett Letter “B”

Many people hold off on filing for bankruptcy because they feel ashamed that they were not able to manage their debt on their own and for not being able to pay their creditors.  They also worry that if they seek bankruptcy relief, the world will know that they have committed this “shameful” act, and that they will  somehow be branded with a scarlet letter “B.”

First of all, I do not believe that filing for bankruptcy should be viewed as shameful or embarrassing.  Now, I know that I am a bankruptcy attorney and that people will think this is a biased opinion.  But, I really do believe this.  We all experience tough times and sometimes it is harder to pull ourselves out of those tough times than usual.  We need help, and there is nothing wrong with needing help.  Continue reading

I’ve Decided to Take the Plunge. What Do I Need to Do Next?

You’ve had your consultation with an experienced bankruptcy attorney.  You’ve listened to what he/she has said, and you have decided to take the plunge.  Get ready.  You’re about to jump into the bankruptcy water and file a bankruptcy case.  The question is what do you next?

First and foremost, if you are trying to pay your creditors, STOP now.  I know it’s hard, and for many people it is pretty scary.  A lot of our clients are people who have been trying to do the right thing and have been making on-time payments to their credit cards.  Once you have decided to retain an attorney and file bankruptcy, you no longer have to make payments to your unsecured creditors.  Unsecured credit includes credit cards, medical bills, past due utilities, or any other debt that is not tied to some form of collateral.  There are two reasons that you do not want to pay any of these creditors.  The first is a practical one.  Once your bankruptcy is filed, your unsecured accounts are going to be closed.  Why would you want to take money that you need for other things and put it towards an account that is just going to be closed in a few months?  Continue reading

I’ve Been Sued, Now What?

It is more common than not for us to see a client who has been pushed into filing for bankruptcy because a creditor has literally come knocking on the door, and the client is now facing a lawsuit. It is extremely understandable that, when faced with many debts, that an individual would rather hide his/her head in the sand than start to tackle the situation. I know that when I am faced with mountains of work, it can often be easier to check out my favorite blog or TMZ news to avoid the work rather than getting down to managing my pile of of papers. The risk an individual runs in hiding his/her head in the sand, however, is that one of those creditors that he/she is hiding from will decide to go a step further and will actually file a lawsuit to collect on the debt. In Arizona, if an individual is served with a lawsuit he/she will most likely will be personally served with the Summons and Complaint. Once this occurs, there is a twenty day time period to answer the allegations in the Complaint. If the defendant does nothing, which is the most likely outcome, the creditor can petition the Court for a default judgment. It will usually take another twenty to twenty-five days for the default judgment to be entered, and the creditor to begin to collect on its judgment. Continue reading