If you are considering filling for bankruptcy for personal consumer debt, you have likely looked into your options of filing for Chapter 7 or Chapter 13 bankruptcy.  The primary difference between the two is that Chapter 7 bankruptcy discharges most debts, while Chapter 13 initiates a repayment plan to pay back the debts.  And while Chapter 13 is a better option for those who wish to retain any property holdings, strained personal finances may make Chapter 7 discharge the preferred bankruptcy route.

However, not everyone is eligible to file for Chapter 7 bankruptcy.  To find out if you are, you will first have to clear the Chapter 7 bankruptcy means test.

As a follow-up to an earlier post on the lawsuit filed against Annie Leibovitz to collect on a $24 million loan the famed photographer took out from a high-end loan lending firm, it is reported that the parties have come to an agreement and the lawsuit has been dropped.

The loan made to Leibovitz by Art Capital Group had more than money at stake.  It contracted to assume rights to all of Leibovitz's photographs in the case of default.  It came due earlier this week on September 8th 2009 without fanfare, or payment.  Just days after, Art Capital Group announced that it has granted Leibovitz a reprieve to pay back the loan. 

No, it's not the latest taebo-pilates-zumba routine.  But if you're weighed down by foreclosure, a loan workout may be just what the debt doctor ordered to help put your loan back on track.

A loan workout is plan of how to restructure debt in the face of foreclosure.  It is also called loan modification or mortgage modification.  In loan workouts, the home owner sits down with the lender to discuss modification of terms to the loan in order to make monthly payment minimums and sidestep foreclosure.  The parties must mutually agree on modified loan terms for the loan workout to be successful. 

What does the lender look for?

Home foreclosures for July 2009 numbered 360,149, a 7% increase from June and 32% increase from July 2008.  The report comes from RealtyTrac, an online marketplace for foreclosure properties.  The report also showed that one out of every 355 housing units in the U.S. was on the receiving end of a foreclosure filing in July.

Which states topped the home foreclosure list?

Foreclosure worries cramping your style?  Consider applying to President Obama's Home Affordable Modification Program (HAMP), which is part of his larger initiative to make waves in home affordability.  Though it's off to slow start--which could mean long wait times--it could allow you to keep your home and live in it too.  

So, what is HAMP anyway? 

The government program makes available $75 billion in funding to help 3-4 million homeowners at risk for foreclosure stay in their homes.

HAMP allows eligible mortgagees lower their monthly payments to 31% of their pre-tax income, or lower, through a loan modification.  Modifying the home loan must equal net more value than foreclosing would.

The adjustments are introduced on a temporary basis but are made permanent after the homeowner makes three on-time payments.  Why would lenders go for it?  The Obama administration is offering up thousands of dollars in incentive payments not only to lenders but to homeowners and mortgage investors as well.

Do I qualify for a HAMP loan modification?

Foreclosure prevention is off to a slow start.  The $75 billion White House initiative to save up to four million homeowners from foreclosure woes over the next three years through various programs, including incentivizing mortgage modification, is well behind its projected goals and Washington is on the case.

An initial progress report of the "Home Affordable Modification Program" (HAMP) revealed that only 9% of delinquent borrowers-- or just over 235,000 loans-- are in trial loan modifications thus far.  With President Obama's goal of having 500,000 loan modifications in the pipes by November 2009, administrators have their work cut out for them.

So it was back to the board room last week when lawmakers met with loan modification servicers in D.C. to discuss the plan and ways to improve implementation.  The Obama camp wants to speed things up and has heard earfuls from borrowers complaining that loan servicers have been sluggish to process applications.  Foreclosures are up by 15% from last year, with 1.5 million foreclosures processed in the first half of 2009 alone.  

Good help is on the way, according to the White House, as Treasury officials are collaborating with lenders to streamline processing.

Annie Leibovitz has reached superstar status for her work behind a camera lens, but after defaulting on repaying a $24 million loan, she has become the latest subject of bright lights, big headlines, and a lawsuit to boot.  Art Capital Group brought a breach of contract claim against her last week to recover the loan amount and associated fees which come due on September 8th. 

On the line is more than money and reputation-- having leveraged her entire life's work she stands to lose rights to all of her photographs if a judgment is found against her.

New York City Mayor Michael Bloomberg initiated a program in 2007 that provides one-way tickets to homeless Big Apple city dwellers back to their original hometowns.  Is it a quick fix to improve the City's abysmal homelessness stats or a viable logical solution?

Over the course of two years the City has sponsored bus, train, and air fares for over 560 families spanning 24 states and five continents.  Common destinations are Florida, Georgia, North and South Carolina, and Puerto Rico, but the list also includes Paris, South Africa, Haiti, Peru, and Trinidad and Tobago.

Surprised? 

Can You Answer These 5 Basic Questions About Your Finances?  Analyzing the Black Box of Personal Finance.

What is a subprime mortgage? What is a FICO score and what role does it play in getting a loan? What is 1% of $50,000? When you need quick cash, do you overdraft a check, wire money, get a credit card advance or apply for a short-term payday loan? How much time would it take to pay off your credit cards by only making minimum payments?

If you had trouble answering these questions you join over half of Americans surveyed by The Center for Economic and Entrepreneurial Literacy (CEEL) who could not correctly identify these much-discussed financial topics.  Whether it is fear of the unknown or a 'don't fix it unless it's broken' mentality, not knowing basics of personal finance can put you in a tough spot it in this tough economy.