Avoid Lawsuits from Your Creditors by Scheduling a Free Consultation Now
Relief has finally arrived for many homeowners looking to get out of debt. In April 2022, Colorado broadened its homestead exemption, allowing those who own a home worth up to $250,000 to protect this asset in bankruptcy. For the elderly (60 or older), disabled homeowners, or homeowners with elderly or disabled dependents in the home, that exemption extends to $350,000. This makes bankruptcy much more feasible for homeowners who want to get out of debt while protecting their homes. Prior to this change in Colorado’s homestead exemption, the amount which could be protected was only $75,000.
With this is a big win, many homeowners cannot get out of their debt in bankruptcy without losing their home or having to repay creditors because of their home equity. Additionally, Colorado’s generous homestead exemption also enables many more homeowners to remove judgment liens from their home in bankruptcy. A judgment lien comes about after a creditor sues you and obtains a judgment against you. At that point, the judgment creditor will typically file the judgment with the Clerk and Recorder in your county, which effectively becomes a lien on your home. Fortunately, bankruptcy law allows removal of judgment liens if they impair your exemption. The lien impairs your exemption if the value of your home minus the balance of voluntary liens (e.g., mortgage, HELOC) is less than the homestead exemption.
Let’s say your home in Colorado is worth $500,000 and you owe $250,000 or more on the mortgage. In this scenario, your equity in the home is less than or equal to the homestead exemption and any judgment lien on your home impairs the exemption and can be removed in bankruptcy. If your mortgage balance is less than $250,000, then you have more equity than your homestead exemption and you will not be able remove a judgment lien in its entirety in bankruptcy even though you could possibly limit the amount of the lien to the amount it doesn’t impair an exemption. In any case, simply filing bankruptcy and obtaining a discharge will not remove a judgment lien from your home. It must be done by a separate motion within your bankruptcy.
The complexities of judgment lien removal are a good reason to hire an expert bankruptcy attorney, such as those at Wink & Wink. We order lien searches for all of our bankruptcy clients who own homes, so they know if there are liens when they file. If your attorney isn’t ordering a lien search on your home as part of representing you in bankruptcy, they are not being thorough in representing your interests and you should consider a change.
Despite the Increase in the Homestead Exemptions, Homeowners Looking to Get Out of Debt Face New Challenges
The appeal of bankruptcy to homeowners is as strong as ever, not just because of Colorado’s generous homestead exemption. Higher interest rates make taking cash out of your home through a refinance or HELOC a very costly proposition. The interest rates on refinancing are significantly higher than when they bought their home – even if that was only a year ago. The last thing anyone needs is a lawsuit from a creditor – but what solutions exist if interest rates are too high for refinancing?
Fortunately, our debt relief attorneys always have plans for debt relief. If you’re wondering how to get out of debt, a free consultation from the expert lawyers at Wink & Wink will put you on a path toward a brighter financial future.
For many Colorado homeowners in debt, the solution to debt is to embrace bankruptcy. While most do not want to file bankruptcy, the increase in the homestead exemption is a legal means to get out of debt while protecting your family nest egg. At Wink & Wink, we encourage everyone to take advantage of the law to further your family’s financial future.
For other homeowners, filing bankruptcy may not be practical for other reasons. For example, many homeowners in Colorado still have more equity than the homestead exemption protects. Others make too much money to qualify for a property-based bankruptcy in Chapter 7 and will have to repay creditors based on their income in bankruptcy. While it may have been feasible in the past to refinance their mortgage or take out a second mortgage to pay or settle their debt previously, 30-year fixed mortgage interest rates have almost doubled since early 2022. This means that homeowners who could typically settle debt with these solutions have discovered that this practice is no longer cost-effective.
When mortgage rates are much lower, Wink & Wink’s team of debt relief lawyers typically recommended that homeowners who made too much or had too much home equity for cost-effective bankruptcy either pull money out of their home to fund settlements with creditors or to fund a lump-sum payment in a Chapter 13 bankruptcy.
However, now that interest rates are significantly higher, refinancing might not make sense because of the increase in mortgage payments a new mortgage may pose. But many homeowners don’t know there are other options to get out of debt. For example, while Chapter 13 bankruptcy is typically more expensive than Chapter 7 bankruptcy, it can be a very effective means of getting out of debt while protecting your home equity.
Similarly, homeowners who are relocating to the Denver area may find that mortgages are far too expensive, given the interest rates. This, coupled with rising costs on nearly everything, are making their credit card payments unaffordable. A homeowner who may have been able to afford a large credit card payment previously is now worried about how to get out of debt and avoid a lawsuit.
The solution? Consult with a debt relief attorney to provide cost-effective smart options informed by current economic conditions. Instead of browsing the internet for financial advice, you can schedule a free consultation with Wink & Wink’s team of bankruptcy and debt settlement attorneys in Denver.
During this meeting, you’ll collaborate with our debt relief experts on a solution that actually makes sense. It’s always better to work with a lawyer who understands how to help you benefit from a legal strategy. At Wink & Wink, we understand the challenges homeowners are facing today.
Interest Rates and Inflation Squeezing Your Finances? Wink & Wink Has a Solution to Help You Get Out of Debt
When refinancing your home loan doesn’t seem to make sense – or if you’re recognizing that you need debt relief now that life is far more expensive – Wink & Wink has a solution for you.
Each situation is different and deserves uninterrupted attention from a premier debt relief attorney. This is what you get when you schedule a free consultation with Wink & Wink. We spend time listening to your story, so we can devise a customized solution that benefits you the most.
If you’re considering debt settlement – a solution that can cut bills from your creditors to about 50% of what you owe – Wink & Wink always recommends securing the cash to pay within 24 months.
If you owe back taxes or debt from medical bills and credit cards (or other forms of unsecured debt), you may be considering Chapter 13 bankruptcy. The good news is that you can have your unsecured debt discharged, though it is important to note that you may end up paying a portion of your taxes. Nevertheless, you will need cash on hand – much like in debt settlement – to make payments on those taxes. In the past, debt settlement or tax debt could be resolved by refinancing your home. Now, other options may make more sense, given current interest rates.
When refinancing is cost-prohibitive, borrowing from your 401K or making a withdrawal from this account could also be useful – even if it is a last resort. While no one wants to draw on their retirement savings to pay off debt, this may be a more cost-effective solution than mortgage refinancing at this time.
If you’re trying to figure out how to get out of debt and stop your creditors from suing you for unpaid bills – the options can be overwhelming. Ensure that you’re making the right decision by seeking legal counsel from Wink & Wink’s debt relief attorneys. Every situation is different, and you want to be sure you understand all of the options in front of you, so you can determine the best fit for you – and for your future.
Schedule a Free Consultation Now to Get Out of Debt with Wink & Wink
Schedule a free consultation with Wink & Wink today to find a debt relief solution that will resolve your financial challenges.
Our free consultation includes advice on the next best step forward. After this call, the ball is in your court to take action. When you’re ready, Wink & Wink’s debt relief attorneys will be there to guide you through the process of getting out of debt, every step of the way. This includes stopping potential lawsuits from your creditors.
We look forward to helping you figure out how to get out of debt. Financially, it’s a difficult time for Denver residents. That’s why Wink & Wink can devise a customized legal strategy to help you fend off inflation and rising interest rates.