What A Reverse Mortgage Is All About?

Most of us now hear about reverse mortgage from our friends, family members or other elders. You might have also heard about it in T.V. commercials or in news papers that there are lot of reverse mortgage companies in the market. But despite of all these takings, many of us are still not aware of the exact meaning of reverse mortgage.

The reverse mortgage is specially for those homeowners who are aged equal or more than 62 years. through this process you can get loan money as a line of credit or as a lump from your home. And when you sell your house or pass away, this money will be repaid automatically to your creditors.

The trend of reverse mortgage is now getting more and more popular nowadays. And the prime reason behind it is, these revers mortgage loans are not taxable and most importantly it does not affect your social security. You can have your home as long as you want and along with the title and you don’t even need to make any repayments to your creditors. The loan is subject to repayment only when the owner of the house is dead or sells it or permanently moves somewhere else from there. It is totally irrelevant to a regular mortgage loan.

Types of reverse mortgages:

1. Single-purpose reverse mortgages: This one is offered by some nonprofit organizations and the State and Local Government Agencies.

2. Federally-insured reverse mortgages: This one is protected by (HUD) Department of Housing and Urban Development.

3. Proprietary reverse mortgages: This service is provided by those companies which develop them. These are private loans.

This type of reverse mortgage loans are very cheap compared to the other loans in the market. Bu the problem is they are not available everywhere. There are some terms and conditions are there for one to qualify for this loan. The home owners must have low or moderate monthly income to qualify for this reverse mortgage loan.

Debt Settlement Scams

As the American economy is going from bad to worse, most of the Americans who are in debt; looking to get out of the debt as fast as possible. And as well as most of them are turning to debt settlement services.

These Debt Settlement Programs were actually inaugurated to aid those peoples who had very little amount of debt and wanted to settle their debt fast with their creditors. Only those clients who have a debt amount under $1,000 and the debt settlement companies used to offer the creditors only 0.50 cents on a dollar. That plan worked very well for all the people because most of them could manage that small amount of money very quickly and the creditors were also very happy to get their money back though it was partially.

And since that time, the debt settlement companies have become something very different. Most of the debt settlement companies are regarded as scam. If you have a very little amount of debt, only then you should go for a debt settlement program.

Generally a Debt Settlement Programs offers you a settlement between you and your debtor and also asks you to compromise between your filing bankruptcy and your current hardship. But that is incorrect. Debt settlement companies ask you to stop the payment to your creditors and pay that amount to the debt settlement company but then they keep that money as their fees. This process continues for next six months. After that when you start saving money to pay your creditors you find that you have already spent four months of non payment to your creditors. You have become a defaulter and now your creditor can take legal steps against you and they can sue you. You will not be able to sue your creditors because you are a defaulter.

The limitations for the creditors to sue their debtors vary in different - different states, but in most cases it is somewhere around two - four years.

Avoid Creditor Harassment

Debtors are often harassed by their creditors. they make their life a hell. So, here are some tips for you to keep those irritating creditors away from you.

You need to make your monthly payments on time to avoid creditor harassment. If you can not do so then the best way to avoid the upcoming harassment is that you need to inform your creditors that you have some financial difficulties this time and also assure them that you will pay your obligations within a certain period of time. You can also tell them about the source from where you are going to get your money. Then they won’t disturb you while you’re trying to make the things settled.

If you find that you are not in a condition where you can pay your debts, then you need to file for the bankruptcy immediately. Then your creditors will not be able to call or send the collection letters because they will also receive a notice from the court that you have filed for bankruptcy. When some one really sinks into the debt and can not make the monthly bill payments on time then it is often seen that he is getting a collection call his creditors. In so many cases, it has been seen that explaining the situation and looking for some tips on how to continue the payment is enough.

Here is one thing to be noticed that the creditors have the right to contact their debtors on due bills, but they are not allowed to harass any debtor for non payment. Calling a debtor constantly or using unprofessional language to irritate the debtor to make the payments is regarded as harassment according to the law. If they call you at working hours or odd hours in spite you have asked them not make calls, is also considered as harassment.

In case your attempts of making all the things settled with debt settlement companies gets failed and your filing for the bankruptcy also gets failed, then the creditors must stop making all the the attempts of collection according to the Fair Debt Collection Practice Act. (FDCP). If despite of this, if they continue to make calls and harass you, they will be penalise. When a debtor is being represented by an attorney then it means that all the contacts are subject to go through the attorney.

Proceedings of Bankruptcy

There are two types of bankruptcy proceedings on which the bankruptcy attorneys work. The first one is the liquidation process under the Chapter-7 Bankruptcy and the second one is a court approved plan of repayment of debt under Chapter-9, Chapter-11, Chapter-12, Chapter-13. Here is how a debtor can file for his bankruptcy:

Chapter-7(Straight Bankruptcy): It is a liquidation processing of bankruptcy. In this scenario, a debtor may change all his non-exempt assets to the trustees of bankruptcy such as the cash of the debtor’s savings account, his car, any other valuable assets. Then they converts it into cash and distribute among the creditors. Once the proceedings are over, the debtor receives a discharge notice from the court. And then he becomes free from all the debts.

Chapter-9(Adjustment of Debts for a Municipality): It was passed by Congress near about sixty years ago. It is a resolution of municipal by the federal mechanism. It is very similar to Chapter-11. But it is available to the municipalities only. And this includes counties, villages, municipal utilities, taxing districts, schools and as well as towns and cities.

Chapter-11(Reorganization): Under this chapter only commercial companies or their lawyers file for the bankruptcy. In this scenario, the companies are allowed to continue with their business while they are repaying their creditors according to the court approved plan.

Chapter-12(Adjustment of Debts of a Family Farmer with Regular Annual Income): This debt relief facility is for the farmers. this one is almost similar to Chapter-13 where courts allow them to repay their debt in a certain period, up to three years. It may be extended up to five years if court allow.

Chapter-13(Adjustment of Debts of an Individual with Regular Annual Income): This debt relief facility is for the individuals, specially for those who do not qualify for Chapter-7 Bankruptcy filing. This one is quite different from the Chapter-7. Under this category, the debtors do not need to sell their valuable property to repay their debt. Rather court approve a certain period of time for them to repay their debt. The period of time can be up to three years. It can be extended up to five years with a special permission from the court. The Attorneys go through the financial condition of the debtor such as his monthly income, his financial condition etc. then they set a monthly amount to repay the debt.

Eliminate Your Tax Debts

You often see in TV commercials offering you the hope of eliminating your tax debts. But you need to remember that this might not be as simple as it seems because in most cases, the tax debts in bankruptcy can not be eliminated. You will have to bear then till the end of the chapter 7 bankruptcy case or you might have to repay the full tax debts under the chapter 13 plan. So, here chapter 7 bankruptcy program will be the best option for you if you really want to get rid off the tax debt. But for that, you must qualify under the chapter 7 eligibility test.

Now you have to know when you can wipe out your debt of federal income tax according to chapter 7. And the following are the conditions whom you need to fulfill:

1. The taxes must be Income tax: All those taxes which are not income tax, can not be eliminated. Such as Fraud Penalties and payroll taxes can not be eliminated.

2. You must have filed a tax return two years ago: To eliminate the debt for which you have filed, has to be filed at least two years ago.

3. Your tax debt should be at least three years old: Your tax return must be due for at least three years old when you are filling for a bankruptcy to wipe out your tax debt.

4. You got to make sure that you have not engaged in any fraudulent case: If you have tried to evade tax payment or you had filed a fraudulent tax return then you can’t be helped due to such fraudulent attempts.

5. You must be qualified in the 240 Day Rule: The income tax credit has to be assessed at least 240 days before filing your bankruptcy petition by the IRS, or have not yet been evaluated.
Though this limit of time can be expanded by the IRS in some cases.