From the point of view of a Massachusetts & Cape bankruptcy attorney, the zero money down pledge is an interesting proposition. We’ve all heard of different chapters, 11, 13 and 7. That “zero down” commercial was intended to snare you into thinking you can get a bankruptcy for free.
Up front the idea doesn’t mean anything, it’s a catch phrase, because you’ll have a filing fee for one. Yeah, an attorney can see you for free. But number one they’re not likely to get your fee waived, and number two they’re going to be taking payments from your payment plan.
Sometimes clients come in to our office and want to get one or two questions answered. The most common question from our Massachusetts clients is “how is bankruptcy going to affect my credit.” But that’s not most important. People need to think in reverse and instead ask “What effects if any will bankruptcy have on my ability to get new credit?” But creditors are primarily concerned with whether or not you have an income.
If you go buy a car, for example, the financial department will ask first what is your down payment. Second, they will want to know your income level. Third, they will look to whether you have a good history in making installment payments, e.g. credit history. And then last, they will look at your score.
So if bankruptcy is only one factor in your credit score, you can see how important the filing actually is in your ability to get new credit. The credit score is made up of three parts: public records, installment history, and revolving history (the credit card stuff).
Think about the bankruptcy as a big brick of ice on your credit report. That is, over time, the weight of this bankruptcy will carry less weight. The way this plays out in practice is that people are able to purchase a home within 3 years of filing based on the policies of the lenders themselves! If you have income, a good down payment, and a good payment history, those lenders will be calling.
A bankruptcy in chapter 7 can be over within 3 months, so people can often buy a car as soon as 3 months post filing.
Real Estate Considerations – What is the Short Sale?
People often think this means a “quick sale,” but it actually means you sell the home for less than you owe. That takes a long time, more than a year some times. The short sale is not something to fix, but a strategy that people use to get out from under their home. It is an option in lieu of foreclosure. Oftentimes the debtor can be forgiven of the debt.
In addition, the realtors are happy with this resolution since they can get the commission. Otherwise the property will go up on the auction block. Many times, also, the debtor can get financing again from lenders two years post-short sale, whereas the timeline is more like 3 years post-foreclosure. But there is no guarantee on that option.
But a few questions need to be asked, like, is this residence your primary residence, is it your only debt, and how many lenders have an interest in the property. While there are not guarantees, the short sale is a good option short of foreclosure and bankruptcy. Contacting our Cape Cod office for any questions regarding bankruptcy in Massachusetts is a good start: www.mabankruptcylawyers.com. There we pledge to get back to answer all questions within 24 hours.