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Transcript:
Steve:
Welcome back. I’m your host Attorney Steven Leahy and this is the IRS Radio Hour on AM 560 the answer.
Jim:
I was going to say before I was interrupted by the commercial, have you put my picture on Facebook Page?
Do we have a Facebook page?
Steve:
I have not put your picture on our Facebook page. I want to save our listeners from that –
Jim:
That awful mess. I’m like the unknown..
Steve:
You’re on the videos Jim. Remember, we have videos of all the shows you can go and watch the show in full, you can listen to the podcast you can, we have different clips of different sections.
Jim:
How will they know it’s me?
Steve:
You’re the other guy. We have clips from each, from the blog post
Jim:
Like us on Facebook is what I’m saying. Please like us on Facebook, Like us.
Steve:
This is the blog post segment.
Jim:
So, what is the blog post segment for this week Steve:
Steve:
So recently I’ve been writing articles about The Illinois Mortgage Foreclosure Law and how it effects people and what kind of strategies you can take to try to save your home. I’ve talked about litigation I’ve talked about trying to do some discovery, I’ve talked about I’m loan modifications and this week I want to talk about how to use chapter 13 to save your home. Chapter 13 is in the bankruptcy law. Remember if you think the bankruptcy code a book, like every other book it is divided into chapters
Jim:
Chapter 13 comes right after chapter 12.
Steve:
it does come before Chapter 12
Jim:
And right before chapter 14
Steve:
I don’t believe there is a chapter 14. But hey, who is counting. Anyway, So this is how Chapter 13 works. If you’re in, If they file a foreclosure action against you, you can use Chapter 13 to save your home. And one of the reasons why i want to talk about chapter 13 in order to save your home is because, I think sometimes people overlook it. And because we hear so much about these loan modifications and remember I talked about loan modifications last week. So, if you have questions about it you can go to the blog. You can read the the article that I
wrote you can watch the the video segment about that about loan modifications and I explain and we’re going to talk a little bit more about loan modifications in the listener question
Jim:
There is no listener question any more. We changed that to Doctor Fader’s Question. Dr. Fader is going to ask a question.
Steve:
That’s right. So. we are going to talk a little bit about loan modifications there. But this, I want to talk about Chapter 13. Again because I think what happens is people start talking to their mortgage company and looking for a loan modification, and sometimes that loan modification takes a lot longer than most people think. And sometimes if you get it early and you’re not that far behind, then Chapter 13 might be a very good option for you to try to save your home. So, I’, going to talk about how that works. OK
so again title or chapter 13 is Adjustment of Debt For Individuals With Regular Income.
And what happens under chapter 13 is you devise a plan
to repay your creditors over a period of time. Now, because your mortgage is a secured debt, that means that they have a lien on your home, and if you don’t pay them they can foreclose on your home. And that’s what we’re talking about if you’re in foreclosure. And bankruptcy won’t stop that. They still have the lien, they can still foreclose. You can protect yourself from a deficiency, and we’re gonna get into that in the next couple of weeks about protecting yourself from a deficiency. If in fact you can’t save your home through loan modifications and these
other things that we’ve been talking about.
So in chapter 13, again, it’s adjustment of debt – so what happens is I have to pay my all the arrears back to the mortgage company. So what happens, here is a typical situation: a gentleman may be has a mortgage of $1700 dollars a month, and he’s laid off. So he misses three or four months or five months in mortgage payments. And then the mortgage payments – now he goes back to work. But he can’t, the mortgage company
Jim:
He’ll never catch up
Steve:
The mortgage company won’t allow him to start making mortgage payments again, even though he can, unless he pays the full amount due. So, now I owe, whatever it is. Say he owes $12,000.00 dollars. So, he owes $12,000.00, the mortgage company will not let him make mortgage payments again until he pays them the $12,000.00 dollars. Or, until they do a loan modification.
But again, every month now, I’m going owe more, and more. Another $1700.00, another $1700.00, another $1700.00, and eventually that number is going to get very big. But early on,
Jim:
$12,000.00 is pretty big
Steve:
That’s true. But early on if its $12,000 for instance, if I can do a chapter 13 chapter, Chapter 13 will allow me to pay back that $12,000 over a period of five years. So,if I paid $100.00 dollars per month for five years, that would be $6,000.00 dollars – 60 months. if I paid $200.00 dollars
Jim:
Did you do that in your head?
Steve:
If I paid $200.00 dollars a month, that would be $12,000.00 dollars, that’s enough for me to reinstate my mortgage.
So, in the meantime, as I’m paying that $200.00 hundred dollars a month the mortgage company is obligated to accept my regular monthly mortgage payments again. So I’m not falling farther and farther behind.
Again if I wait too long in the loan modification process and maybe that number grows to be $30,000.00 dollars, well now it’s $500.00 dollars a month. And if I have credit cards, for instance maybe I have a credit cards that total $30,000.00 dollars. Well under chapter 13, I may be able to pay my unsecured creditors as little as 10 cents on the dollar. So, that only three thousand dollars. So, if I spread on our own room over 60 months that’s $50.00 dollars a month so the my in my example …
Jim:
He doesn’t even have calculator here ladies and gentlemen.
Steve:
So, in my example if I have, if I owe $12,000.00 dollars to my mortgage company and I have $30,000.00 dollars in unsecured debt. I could pay $250 dollars a month. Plus I have to pay a portion to the trustee. So let’s say it’s $275.00 dollars month. And I could and I can pay my regular monthly mortgage payment again of $1700.00.
So that might be something I can do. If that number goes to $500 or $600 dollars, now it becomes a lot less possible for me to do to me do a chapter 13. To get into a chapter 13 and save my house. So the longer I wait the bigger that number gets, the more likely it is that chapter 13 won’t help me save my home.
And that’s why it’s so important to see somebody early. OK, so when you you know you’re going to be in foreclosure, or right after you get served, get some help. Talk to me, or talk to somebody. But talk to somebody about how to try to save your home. If that your biggest goal. Oftentimes that is people’s goal Their first goal is “I wanna save my home.”
Jim:
That’s their biggest investment. That’s where their money is.
Steve:
But sometimes we you look at the numbers and then they turn around and say “you know what, I don’t want to save my home.” because the numbers just get so big that you’re going to be giving all your money to your mortgage company for the next five years and maybe that won’t work for you. And again, we’re going to talk about if you can’t save your home, we’re going to talk about that in
in next couple weeks.
We’ll talk about trying to protect yourself from a deficiency. And there are ways to do that. And, again you have to go in this with a strategy. What if. What if this happens, what am I going to do. What if that happens, what am I going to do. So you have to kinda lay it out early. I always say to get where you want to go, you have to have a map. So you have to sit down early, and then come up with a map to get where you want to go. If where you want to go is save your home. Well then we have to figure out what kind of strategy is going to allow you to do that, and save your home.
Jim:
So, you are like a map maker.
Steve:
That’s right. Coming up with a strategy – is a map maker. That’s correct. Now, one thing that I want to mention also is that, even though you file a chapter 13 bankruptcy. See, when I file chapter 13 bankruptcy, I haven’t changed my mortgage. So that means my mortgage payments are going to be exactly what they were before.
OK. So it is the same agreement. But, just because I file a Chapter 13, doesn’t mean I still can’t get a loan modification. So, I’ve seen people go in a chapter 13 and then apply. So now I can start making my regular monthly mortgage payments again. So, I’m not falling farther and farther and farther behind. And I’m not risking losing my home. Because even if they don’t give me a loan modification – it may be difficult but I have this remedy in Chapter 13 to save my house.
But again, I have seen people go in a Chapter 13 and then get a loan modification too. So you could do both. Again if your biggest goal is saving your home, you don’t want to go down that road where there’s a sale date and now you’re scrambling to try to save your house. So, start early, get some help and get some good advice. And get somebody that understands not only foreclosure law,
but also bankruptcy and loan modifications.
Jim:
You understand all that Steve. So why shouldn’t they call you?
Steve:
That’s right and I always like to think myself more as a financial, I come up with financial remedies. OK. So.
Jim:
I think of you differently.
Steve:
Yeah. So, again, if you’re having some trouble and you need help you should call me. And you should call me at (312) 664-6649. We will sit down and we will draw a map to get you to where you want to go.
Jim:
You know you forgot to tell them – you are an author too, aren’t you?
Steve:
I am. I wrote a book it’s called Deal With Your IRS Problem Today. And you can find that book, and all of my articles on ChicagoTaxTeam.com.
Jim:
He will even sign the book and send it to you if you call.
Steve:
If you call and ask 312 664-6649.
Jim:
Don’t go anywhere. We will be right there