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Financial Foreclosure Workshop

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Financial Foreclosure Workshop

  1. 1. Introduction<br />Our Contact Information<br />Vulcan Legal Group<br />111 19th Street North<br />Birmingham, AL 35203<br />Phone: 205.202.5190<br />Fax: 1.877.383.6053<br />Email:<br />Website: <br />
  2. 2. Credit Scores<br /><ul><li>ORIGINAL INTENT</li></ul> Credit scores were originally designed as a tool to figure out how likely a borrower was to repay a loan. That’s it. It is NOT designed to paint a picture of your financial life (even though that’s what a lot of companies are doing now).<br /><ul><li>Even though credit scores are the ‘be all end all’ it is important to keep in mind that they are a relatively new tool. The FICO score wasn’t created until 1988</li></li></ul><li>What Goes Into Your Credit Score?<br />
  3. 3. Why Your Credit Score Is So Important<br />Credit Score<br />675<br />Credit Score<br />674<br />Let’s take a look at an example of what a one point difference can make<br />Marva<br />Keisha<br />
  4. 4. Why Your Credit Score Is So Important<br />Mortgage Payment<br />$500,000<br />Credit Score<br />674<br />Keisha<br />$1,900/month<br />Credit Score<br />675<br />$1,500/month<br />Marva<br />
  5. 5. Why Your Credit Score Is So Important<br />Credit Score<br />675<br />Credit Score<br />674<br />Marva<br />Keisha<br />SAVED<br />$150,000!<br />
  6. 6. Ways Companies Try to Separate You From Your Money<br /><ul><li>Payday Loans
  7. 7. Title Loans
  8. 8. 401K Loans
  9. 9. Debt Consolidation Companies
  10. 10. Credit Repair
  11. 11. Credit Cards
  12. 12. Banks </li></li></ul><li>DEBT CONSOLIDATION COMPANIES<br />“…We can negotiate with your creditor to lower your payments”<br />“…Just pay us a small monthly fee and we can consolidate your debt”<br />“…Consolidating your debt improves your credit”<br />“…We can help you rebuild your credit.”<br />DEBT CONSOLIDATION COMPANIES<br />BEWARE! IF YOU HEAR…<br />
  13. 13. Title Loans<br />$4000<br />How Title Loans Generally Work: <br />1. You take your car to a Title Loan Shop and they give you a check for half of the cars value.<br />$2000<br />2.They get the title to your car, and even though you are still driving it, they own it. If you miss even one payment, the title loan company can and will repossess your car.<br />
  14. 14. Title Loans<br />Let’s say that you don’t miss a single payment, then are the loans okay?<br />NO! And Here’s Why…<br /><ul><li>If you borrow $1000
  15. 15. Your payments will likely be $250/month
  16. 16. Of that, only $50 is going towards the original $1000 that you borrowed. The rest is interest and fees
  17. 17. At that rate it will take you 20 months to repay your loan.
  18. 18. Remember, this was a $1000 loan that you end up paying back $4000.</li></li></ul><li>PAYDAY LOANS<br />First,<br /> Let’s Address Some of the Myths About <br />PAYDAY LOANS<br />
  19. 19. PAYDAY LOANS<br />Myth: “Consumers appreciate this service and oppose any limits on payday lending”<br />Fact: Consumers want (and deserve) non-predatory small consumer loans, not "business as usual."<br />
  20. 20. PAYDAY LOANS<br />Myth: "Payday loans provide needed credit to consumers for emergency needs"<br />Getting a payday loan usually causes MORE financial problems for a consumer, not fewer.<br />
  21. 21. PAYDAY LOANS<br />Myth: "Payday loans are cheaper than bounced check charges and other alternatives"<br />The typical payday loan is more than twice as expensive as a credit card late fee, and much more costly than paying bills late. Payday lenders routinely collect bounced checked fees and late fees as well. <br />
  22. 22. PAYDAY LOANS<br /><ul><li>So let’s get rid of the idea that you are helping yourself at all with a payday loan.
  23. 23. The average payday loan has an annual interest rate of 400%.</li></li></ul><li>PAYDAY LOANS<br />I know what you’re thinking. … <br />Everybody knows that payday loans are bad, but what are you supposed to do when you need cash?<br />
  24. 24. Hold on to as much cash as you can for things like groceries, gas etc.<br />Negotiate with creditors<br />Ask for an extended grace period<br />Offer to pay a penalty<br />Pay your bills late<br />Even a late charge won’t add up to 400%<br />PAYDAY LOANS<br />
  25. 25. 401(k) Loans<br />DON’T DO IT!<br />
  26. 26. Credit Repair Companies<br />
  27. 27. Credit RepairCompanies<br />You are entitled to a free – No Strings Attached – credit report every year.<br />Visit<br /><br />Here you can get reports from all three credit agencies.<br />
  28. 28. Credit Repair Companies<br />There is nothing wrong with credit repair companies <br />BUT keep in mind…<br /><ul><li>ANYTHING A CREDIT REPAIR COMPANY CAN DO FOR YOU, YOU CAN DO FOR YOURSELF.</li></li></ul><li>Credit Repair Companies<br />
  29. 29. Credit RepairCompanies<br />
  30. 30. Credit Repair Companies<br />
  31. 31. Foreclosure<br />Separating the myths from the facts<br />
  32. 32. The bank started this process. They can't expect me to pay legal fees. <br />They do and you will if you want to keep the house. The amount will vary depending on what is contained in your mortgage agreement.<br />ForeclosureMyths<br />
  33. 33. They get to keep all my stuff once they take the house. <br />The rule of thumb here is if you can carry it away it's yours. You keep your personal property, but permanent attachments to the house should stay. Don't turn it into an issue by taking everything from floor to ceiling. That will just insure trouble.<br />ForeclosureMyths<br />
  34. 34. Foreclosure<br />
  35. 35. Foreclosure<br />Every homeowner’s situation is different. What is most important is that you present all of the facts to a qualified professional and come up with a strategy to save your home<br />
  36. 36. ForeclosuresIf you decide to go it alone…<br />
  37. 37. Bankruptcy<br />Again let’s separate<br /> the Myths <br />from <br />the Facts<br />
  38. 38. Bankruptcy<br />MYTH<br />You can only file for bankruptcy once<br />FACT<br />The truth is, you can only file for Chapter 7 bankruptcy once every six years. <br />For Chapter 13 reorganization, you can file more often than that, but you can't have more than one case open at the same time. <br />
  39. 39. Bankruptcy<br />MYTH<br />I can max out all my credit cards, file for bankruptcy, and never pay for the things I bought. <br />FACT<br />That's called fraud, and bankruptcy judges can get really cranky about it. The trustee in your case will review all your purchases right before your filing. He knows what to look for.<br />
  40. 40. Bankruptcy<br />MYTH<br />FACT<br />Even If I File For Bankruptcy Creditors Will Still Harass Me and My Family.<br />This is absolutely false. Bankruptcy law provides for an automatic stay. Simply, as soon as you file for bankruptcy, a hold is put on all your outstanding debts and any creditor attempting to collect those debts. The law prohibits a debtor to attempt to collect, possess, or even contact the debtor in regard to the debt. If a creditor does not follow the rules, the debtor may have an action in the form of punitivedamages. Basically, punitive damages are meant to punish a creditor for not following the procedures set out in the bankruptcy code. Whether a debtor has a cause of action against a creditor should be left to an attorney to answer. However what you need to know is this: once you file for bankruptcy, creditors must leave you alone or suffer the consequences. <br />
  41. 41. Bankruptcy<br />MYTH<br />Medical bills can't be discharged in bankruptcy<br />FACT<br />A variation on this myth is that "you can't discharge credit card debt in bankruptcy." This has the sound of the law-as-described-by-bill-collectors. Almost all unsecured contract debt, like credit cards, personal loans, and medical bills, remain dischargeable in bankruptcy.<br />
  42. 42. Bankruptcy<br />MYTH<br />Chapter 13 plans require repayment in full of debt <br />FACT<br />Chapter 13 plans range from plans that pay general unsecured creditors nothing to plans that pay 100%, with every variation calculable in between. How much you must pay in 13 is driven by the interplay between your disposable income, the value of your non exempt assets, and the total of priority debts you have.<br />
  43. 43. Bankruptcy<br />MYTH<br />There is a minimum amount of debt required to file bankruptcy<br />FACT<br />Bankruptcy law does not set any minimum amount of debt necessary to file. If the debt appears to be beyond your ability to pay, you can elect to file bankruptcy if it represents a smart choice in your personal and financial situation.<br />
  44. 44. Bankruptcy<br />MYTH<br />I'll never be able to buy a home if I file bankruptcy<br />FACT<br />Wrong. Can you buy one now? Probably not. Bankruptcy will give you the ability to save for a down payment. Also, you will have the income to qualify for a mortgage, something you probably can't do now because your debts take up all of your disposable income. Most people can qualify for a mortgage within about 2 years after their bankruptcy<br />
  45. 45. Bankruptcy<br />A quick word about houses and bankruptcy…<br />
  46. 46. Bankruptcy<br />MYTH<br />MYTH: Everyone will know I've filed for bankruptcy<br />FACT<br />Unless you're a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors. While it's true that bankruptcy is a public legal proceeding, the numbers of people filing are so massive, very few publications have the space, the manpower or the inclination to run all of them.<br />
  47. 47. Bankruptcy<br />MYTH<br />I'll lose everything I have. <br />FACT<br />This is the misconception that keeps people who really should file for bankruptcy from doing it<br />
  48. 48. Bankruptcy<br />MYTH<br />I'll never get credit again<br />FACT<br />Quite the contrary. It won't be long before you're getting credit card offers again. They'll just be from subprime lenders that will charge very high interest rates. <br />
  49. 49. Bankruptcy<br />MYTH<br />If you're married, both spouses have to file for bankruptcy<br />FACT<br />Not necessarily. "It's not uncommon for one spouse to have a significant amount of debt in their name only.<br />However, if spouses have debts they want to discharge that they're both liable for, they should file together. Otherwise, the creditor will simply demand payment for the entire amount from the spouse who didn't file. <br />
  50. 50. Bankruptcy<br />MYTH<br />Only deadbeats file for bankruptcy<br />FACT<br />Most people file for bankruptcy after a life-changing experience, such as a divorce, the loss of a job or a serious illness. They've struggled to pay their bills for months and just keep falling further behind.<br />
  51. 51. Bankruptcy<br />MYTH<br />You can't get rid of back taxes through bankruptcy. <br />FACT<br />Generally speaking, this is true. However, there is such a thing as tax bankruptcy. <br />To get a shot at it, you have to file all your returns and the taxes owed need to be at least three years old.<br />