Does bankruptcy affect your home mortgage loan approval?

Bankruptcy is deemed to be a credit-killer during times of credit crunch. When you’re going through a credit crunch and you’re worried about paying your debt obligations on time, you often think of filing bankruptcy as this is perhaps the best way to start afresh. But do you have a slight inkling of the fact that bankruptcy can kill your credit score and make you unworthy of getting new lines of credit in the future? If you want to take out a mortgage loan when you’ve already filed bankruptcy, you have to be very careful about taking out your mortgage loan as the rates that will be charged will be very high. Taking out a mortgage loan within your means is very important lest you need to go for loan modification in the long run. Have a look at some steps that you need to take in order to get a home loan post bankruptcy.

  • Pull out a copy of your credit report: The first step that you need to take is to pull out a copy of your credit report so that you may get to know what the credit bureaus are saying about you. As you’re entitled to a free copy of your credit report, you should get one so as to check your credit score. Check the negative listings, dispute them and try to improve your credit score in the long run.
  • Repay your unsecured debt obligations: Unsecured debt obligations not only raise your credit score but also lower your DTI ratio. When you go to a lender to take out a mortgage loan, he will check your DTI ratio so as to check the total amount of debt obligations that you pay in a month and whether or not you can pay the monthly mortgage obligations on time. If you want to take out a home loan at an affordable interest rate, you should lower your DTI ratio.
  • Get multiple quotes from multiple lenders: As you already have a bad credit scoreyou should get multiple quotes from multiple lenders so that you get the opportunity to take out the best mortgage loan in the market. Get at least 5-6 quotes so that you can easily compare and contrast the terms and conditions in order to make the best choice. The term of the loan, the monthly payments, the interest rates and the closing costs should all be taken into consideration while choosing the loan.
  • Save enough money for down payment: When you have a poor credit score and you want to take out a mortgage loan within your means, you need to save enough money so that you’re able to make the required down payment on the loan. The lenders usually ask for a down payment of at least 20% of the loan amount and if you’re not able to pay this amount, you may be subject to PMI or Private Mortgage Insurance that will unnecessarily increase the monthly installments.

Therefore, if you’ve filed bankruptcy, don’t be scared about the prospects of taking out a mortgage loan. Follow the above mentioned steps in order to be sure about the chances of getting a mortgage loan that may be suitable to your wallet and to your affordability. However, getting a loan above your means may make you opt for mortgage modification in the long run.

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Can You Make Monthly Payments on a Debt in Collections?

This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “Will a collection agency or the original creditor accept monthly payments to pay off a debt that is in collections?”

Most creditors in today’s world specialize in credit loans or provide you with credit in order for you to purchase their products. Very few have collections departments like in days long since past.

Once a lending institution sends the debt for collections, technically, they will no longer deal with you about the matter, and you are not suppose to talk to them about settling the issue. Contracts for collections and the Fair Debt Collection Practices Act makes it hard for a company to deal with a debtor even if they are one of the few who still may have a collection’s department.

Therefore, if the debt has been sent to collections, you will have to make any negotiations for payments with either a collection agency or department. Whether or not you can negotiate a payment plan depends on basically two things- who now owns the debt and how much they know about your current financial situation.

Lending institutions today are much more likely to sell their debt to others specializing in the art of debt collections rather than try to collect from you themselves through their collection’s department. Most large lending institutions selling debt write off the debt for tax purposes and sell the debt for pennies on the dollar.

What this means to you is that most collection agencies are anxious to work with you in getting the debt paid in full, and many will normally allow you to make monthly payments to pay off the debt. What you should know before you agree to any kind of payoff is that a collection agency that has bought your debt is much more likely to negotiate with you than the original creditor.

Most debtors find it is often hard to negotiate with original creditors who do not always know whether you have the means to fully pay your debt, and their current perception of you stiffing them is still fresh on their minds. By this time, the original creditor will have reported your default to all the major credit reporting agencies. If it was easy to settle with them at this stage, everyone would be trying to talk them down.

If you are nearing bankruptcy, a collection agency is more likely to negotiate favorable conditions on a payout. If you have assets and the agency learns of this, they are more likely to make larger demands including interest and penalties. Before they learn what the score really is, they will most always ask for the full amount, interest and penalties. In any case, their biggest tool for collections is the threat of a judgment from a lawsuit.

After a successful judgment has been obtained by a collection agency, your only recourse is to pay them or file bankruptcy. Bankruptcy laws can be complicated, and common sense indicates you might need a bankruptcy lawyer in order to help you understand how these complex laws may apply in your particular situation.



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Will Your Credit Score Go Up After the 10 Year Mark of Bankruptcy Passes?

Filing for bankruptcy protection can be a breath of financial fresh air if you financially need a fresh new start, but a bankruptcy will be reported and remain on credit reports for up to 10 years. So, does the credit staleness remain the first ten years after bankruptcy, or will your credit score go up after your chapter 7 bankruptcy passes the 10 year mark?

Strangely enough, the reporting of a bankruptcy changes your credit scores very little. FICO scores range from 300, the least creditworthy, to 850, the most creditworthy. Credit scores change for a multitude of reasons. By the time you file for bankruptcy, your credit score has most likely fallen to a less creditworthy rating. Here, you rarely will go below 300 as long as you have some type of credit. Only those people with no credit history have less than a 300 score. So, filing a bankruptcy drops your score just so far.

After you have filed for bankruptcy, your score has been effected only to the point of your next credit action. If you start making positive actions towards your credit, like making timely payments on rent or utilities, your credit will begin to rise despite having the bankruptcy on your report.

What this basically means is filing for bankruptcy protection can eventually have a positive effect on your credit scores. If you file a Chapter 7 bankruptcy, commonly called liquidation of your assets, the discharging of bad debts can have a positive effect on your scores because these transactions will no longer count against you since you no longer legally owe the debts. Technically, although the debts have not been paid, they have been satisfied by the law by being legally discharged.

Filing a Chapter 13 bankruptcy can also have an eventual positive influence on your credit scores. A Chapter 13 bankruptcy, commonly called a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their unsecured debts over three or five years.

Making timely payments to a bankruptcy trustee in a Chapter 13 plan can have the positive effect of raising your credit score. Again, if you arer paying your rent, utilities, secured loans, and phone services on time during the plan, these positive actions will have a positive effect on your credit report.

Will your credit score go up after your Chapter 7 bankruptcy passes the 10 year mark? After 10 years, your bankruptcy should be removed from your credit report, but it may not necessarily cause your credit scores to significantly rise. Your credit score may have been rising during the ten year period due to the positive credit actions of paying your bills on time. If this is the case, your score may improve only slightly after the bankruptcy is removed, and if you have a history of negative actions during the 10 year period, removing the bankruptcy will do little to negate your history.

If you live in or around the metropolitan area of Knoxville, Tennessee, contact us here today at www.bankruptcy7-13.com . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.

 



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A Special Circumstance While Surrendering Your Home in a Chapter 7 Bankruptcy

Sometimes, there are special circumstances that can occur after you have surrendered your home in a Chapter 7 bankruptcy. One such circumstance prompted a debtor to ask this question on a bankruptcy forum site, “When you file a Chapter 7 bankruptcy and surrender your home, are the judgment and liens removed from the home for the next owner if they were in Chapter 7?”

Any time you surrender property in a bankruptcy proceeding, it means you are giving up your interests to the secured property. This allows the one holding the lien to be able to repossess or foreclose on the property, depending what type of property it is.

In the case of a mortgage on a home, the holder of the lien has the opportunity to foreclose and sell the property to try and satisfy the debt owed when you surrender the home. What you should not forget is that surrendering a home does not necessarily negate the mortgage contract. Surrendering a home gives the lien holder the opportunity to foreclose, but if he selects not to, you as the homeowner still have financial responsibilities to the mortgage arrangement. The financial responsibilities could include taxes, insurance, and homeowner’s association fees.

If a lien holder does foreclose on the home and sells it, the good news is that filing a Chapter 7 bankruptcy will prevent a mortgage company from coming after you for any deficiencies on the sale of the home.

So, how do these potential circumstances affect the original question, “When you file a Chapter 7 bankruptcy and surrender your home, are the judgment and liens removed from the home for the next owner if they were in Chapter 7?”

You are still the owner of a house until the deed of title has been transferred. Most of your financial responsibilities toward the home can be discharged by bankruptcy. One exception is homeowner association fees. If the house foreclosure process is not complete before your bankruptcy closes, you will be responsible for paying the fees that occur after the discharge.

The title of deed can be transferred through the foreclosure process once the house has been sold either by a sheriff’s auction or by the mortgage company. Your responsibility toward the home can be legally satisfied only when the deed of title has been transferred. Most judgments and liens you caused will be removed from the home by the bankruptcy, but if a homeowner association attached a lien against the property, the lien may have to be satisfied at the sale and closing of the property.

A person who has filed a Chapter 7 themselves and is buying a home that has been surrendered during a Chapter 7 is of little consequence. The only liens and judgments that will survive to such a mortgage closing are those, like homeowner association fees, exempt from the bankruptcy process.

Bankruptcy laws can be complicated, and common sense indicates you might need a bankruptcy lawyer in order to help you understand how these complex laws may apply in your particular situation.

 



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How Does Being a Part of a Debt Repayment Plan Affect Your Ability to Rent?

This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “How does being part of a debt repayment plan affect your ability to rent?”

A Chapter 13 bankruptcy, commonly called a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their unsecured debts over three or five years. The plan is designed to use the disposable monthly income of the debtor filing bankruptcy to pay off the unsecured debts. Disposable monthly income is the income left over after allowable living expenses are paid on a monthly basis.

In a Chapter 13, if the debtor’s current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period “for cause.” If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years.

When you first file for a Chapter 13 bankruptcy, you will be asked to list all of your living expenses including rent expense. The reason they have you list your expenses is because allowable expenses are determined by bankruptcy laws, and you have to use these laws to determine your disposable monthly income. The allowable expenses will include your rent expense at the time of filing.

If you move during the payment period of a Chapter 13, and your new rent is different than what the old rent was, the difference can affect the payment plan of the bankruptcy. In this case you would have to petition the bankruptcy court to adjust the payment plan. Until that happens, you might experience a shortfall of being able to pay your rent or the bankruptcy payments if the new rent payments are higher.

When you file for bankruptcy, the bankruptcy is reported to the credit bureaus and remains on your credit for up to 10 years. Most rental agencies check your credit history before they will rent to you. If they see a bankruptcy on the report, they may ask you for a higher deposit before they will rent to you, or they might not rent to you at all. In the case they ask you to pay a higher deposit, that might also affect your ability to pay your bankruptcy plan.

Other than these minor difficulties that may occur when you are in a Chapter 13 bankruptcy plan, there is really no reason filing a Chapter 13 will significantly affect your ability to rent.

Bankruptcy laws can be complicated, and common sense indicates you might need a bankruptcy lawyer in order to help you understand how these complex laws may apply in your particular situation.

If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan area of Syracuse, New York, contact us here today at www.bankruptcy7-13.com . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.



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Refinancing Your Home During a Chapter 13 Bankruptcy

A Chapter 13 bankruptcy, commonly called a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their unsecured debts over three or five years. During the plan payment period, you are required to make payments on your secured loans also. One of the questions that ultimately is raised by many homeowners is, “How do you find a mortgage company to refinance you if you are in a Chapter 13 bankruptcy, so that you can come out of the bankruptcy?”

There are many mortgage finance companies that specialize in refinancing, and under certain conditions, they will refinance your home even if you are in the bankruptcy process. To do so is a process within itself.

First of all, it would be wise to let the bankruptcy court trustee know of your intentions to refinance. Some states require you to file a motion for post petition refinancing when you are in the bankruptcy process. To refinance without letting the bankruptcy court know might be construed as a violation of state laws, and that might frustrate the refinancing process in the long run.

Most mortgage companies specializing in such refinancing will tell you there are basically two things involved in being guaranteed you will be considered for refinancing. Your home should have equity in it, and you should have a history of making timely payments to your Chapter 13 trustee for your bankruptcy plan. The good news is that you will not be expected to have low FICO scores.

You do not necessarily have to have paid all your payments on time to the bankruptcy trustee in order to get refinanced on your mortgage. You will still have to have equity in your home, but there are some mortgage companies that will give you loans with up to 75% of loan to value documentation after a dismissed Chapter 13. Someone who has never missed a payment to a trustee will have about a 90% loan to value cap. Someone who has missed payments to a trustee will have an 80% loan to value cap. So, a company who is authorized to make loans at 75% can refinance your home even if you have missed some of your payments in a Chapter 13 plan.

The one thing you must remember in refinancing your home is that the more problems you have with payment history, the more likely it is that you are going to have to pay higher interest rates to get the loan. Therefore, a borrower with a lower loan to value documentation will pay higher rates.

Once you have gotten approval from the bankruptcy court to refinance, the process usually takes from 4 to 6 weeks to process the information and get your loan. Ask your bankruptcy lawyer to find out more about the process.

If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan area of Tuscon, Arizona, contact us here today at www.bankruptcy7-13.com . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.



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What are the Responsibilities of Co-debtors in Bankruptcy?

This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “If you are listed on your partner’s credit cards could you be held responsible for her debt if she declares bankruptcy?”

The answer to the question depends on what type of bankruptcy your partner is going to file and whether or not you are an authorized user or co-owner of the credit card. In a business partnership, most likely, you will have joint ownership responsibilities if the card is used in your business. That means the creditors might be able to come after you, depending on the type of bankruptcy your partner files.

There are basically two types of bankruptcies most individuals can file- a Chapter 7 or a Chapter 13.

A Chapter 7 bankruptcy, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. It is available to individuals, married couples, corporations, and partnerships. A trustee that is appointed by the court will gather and sell your non-exempt property, and he will use the proceeds from the sale in order to pay your creditors.

If your partner files this type of bankruptcy as an individual, and you both do not agree to file it as a partnership, you may very well be responsible for paying the debt owed to the creditors if it is established you are a co-debtor or owner of the credit cards. There is no built in protection for you if your partner files a Chapter 7 bankruptcy as an individual.

The moment a debtor files a bankruptcy, a judge will order all collecting actions to cease, an important feature called the automatic stay. The automatic stay, applicable to all types of bankruptcy filings, means that the mere request for bankruptcy protection automatically stops and brings to a cessation certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment.

The automatic stay in a Chapter 7 is applicable only to those who actively are filing the bankruptcy. In this case, you as a co-debtor would not be protected by the stay if you did not file with your partner.

A Chapter 13 bankruptcy, commonly called a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their unsecured debts over three or five years. One of the advantages of filing a Chapter 13 bankruptcy is that the bankruptcy stay provides protection for all co-debtors. Therefore, if your partner filed a Chapter 13, you could not be held responsible for the credit card debt as long as the partner maintained the payment plan in the bankruptcy.

Bankruptcy laws can be complicated, and common sense indicates you might need a bankruptcy lawyer in order to help you understand how these complex laws may apply in your particular situation.

If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan area of Honolulu, Hawaii, contact us here today at www.bankruptcy7-13.com . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.



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How Soon Can You Buy a New Home After Filing a Chapter 7 Bankruptcy?

Many first time filers want to know how soon they can buy a new home after filing for a Chapter 7 bankruptcy. When you file for bankruptcy, the bankruptcy will go on your credit reports for up to 10 years. Often, the poor credit report resulting in a bankruptcy makes it hard for those who have filed to get new loans to buy a house.

A Chapter 7 bankruptcy, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. A trustee that is appointed by the court will gather and sell your non-exempt property, and he will use the proceeds from the sale in order to pay your creditors. Those qualifying for a Chapter 7 bankruptcy usually are less likely to have as many assets to protect or have the income they might need to quickly recover from a bankruptcy.

Regardless of whether or not you file for bankruptcy protection, there are still two things you absolutely need in order to get a loan for buying a new home. You need a cash down payment, something you are not as likely to have if you just filed a Chapter 7 bankruptcy, and you need to be able to afford a loan. Your income will determine how much you can afford to borrow.

Getting a loan for a home after bankruptcy is not as hard as some may think, especially if you meet the criteria of a cash down payment and have a steady income. You may have to pay higher interest rates on the home, but the possibility exists you can get a home loan right away. The general rule for getting a loan after bankruptcy is usually between 18-24 months. Some lenders will see you as a better risk after bankruptcy because you will be debt free and vulnerable to collections for up to eight years after filing.

The Housing Urban Development (HUD) department of the federal government has programs for people who have filed bankruptcy. They cannot discriminate against you because you have filed. Many of the government programs have low down payments and reasonable interest rates, despite the fact you may not have a good credit score.

There are a couple of things you might do in order to help your chances of getting a new home after bankruptcy. First of all, Keep a couple of accounts current when going through the bankruptcy process, like a car payment or a payment on a department store product.

Secondly, it is very important to keep your rent history current during the bankruptcy process. Rent is one of the new areas that influence your overall credit scores today. Having a perfect rent history is a surefire way of raising your credit scores faster. Paying your utilities on time is another.

How soon can you buy a new home after filing a Chapter 7 bankruptcy? As fast as you can get some down payment cash together and establish a little bit of new credit potential.

Bankruptcy laws can be complicated. Allow us to help you find a bankruptcy lawyer to help you understand how the laws might apply in your particular situation. If you live in or around the metropolitan areas of Dayton or Springfield, Ohio, contact us here today at www.bankruptcy7-13.com . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.

 



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The Importance of Correctly Listing a Recorded Judgment in Bankruptcy

This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “If a recorded judgment against a debtor is listed incorrectly, is it exempt from that bankruptcy proceeding?”

To fully answer the question, there are different situations that may arise to affect the outcome in answering the question. The nature of the judgment and what type of bankruptcy you are filing would both play important roles in answering the question.

The US Bankruptcy Code says that a debt can be discharged only if it has been properly listed when the bankruptcy is filed or if the creditor has been given notice or actual knowledge of the bankruptcy filing in time to act to protect their rights.

The actual code covering this question is found in 11 U.S.C. 523 and states:

(a) A discharge under section 727, 1141, 1228 (a), 1228 (b), or 1328 (b) of this title does not discharge an individual debtor from any debt— (3) neither listed nor scheduled under section 521 (1) of this title, with the name, if known to the debtor, of the creditor to whom such debt is owed, in time to permit— (A) if such debt is not of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim, unless such creditor had notice or actual knowledge of the case in time for such timely filing; or (B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim and timely request for a determination of discharge ability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request…

The key to a successful filing is to correctly list the debt in the beginning. If the judgment has been incorrectly listed, and the creditor has been given notice or it can be proven had actual knowledge of the bankruptcy in time to act before the bankruptcy case has been closed, the judgment in this case will most likely still be discharged.

In a Chapter 7 bankruptcy where there are no assets, case law suggests that when a debt has been inadvertently not listed or incorrectly listed and it would have been discharged had it been listed, some courts will discharge the debt anyway. Also, a filing debtor may file a motion to reopen their case to add creditors they missed or listed incorrectly. They simply have to pay court fees for doing so.

In a Chapter 13 bankruptcy, the situation is handled a little differently. A a debt inadvertently not listed will not be discharged because the opportunity to file a Proof of Claim most likely would not have been extended to the creditor in a timely manner. Not being able to file a Proof of Claim would mean the creditor was not given the opportunity to get some or all of their money back during the payment plan of a Chapter 13.

You can avoid most of these problems by correctly listing your creditors and debts in the first place. That is one of the reasons you might want to consider consulting with a bankruptcy lawyer to help answer in questions you may have about bankruptcy laws and how they might apply in your particular situation.



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How Does Filing for Bankruptcy Protection Really Help You in the Long Run?

Filing for bankruptcy is a legal proceeding designed to protect both creditor and debtor and to allow the honest person or business to work their way out of a bad financial situation, or in some cases, to completely start fresh. How does filing for bankruptcy protection really help you in the long run?

To understand the answer to this question, you really need to understand the reasons you filed for bankruptcy in the first place. Most all of you will file for bankruptcy protection to escape the stress of debt collections and/or to protect what assets you have from debt collections.

In either case, there are simply two types of bankruptcies most individuals can file for protection- a Chapter 7 or a Chapter 13 bankruptcy.

A Chapter 7 bankruptcy, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. A trustee that is appointed by the court will gather and sell your non-exempt property, and he will use the proceeds from the sale in order to pay your creditors. All debts not paid off by the liquidation, except those exempt from the bankruptcy process, will be discharged by the bankruptcy court. The debtor will not have future financial responsibilities to pay any discharged debt.

There are some debts that cannot be legally discharged in bankruptcy proceedings. The most common types of debts exempt from bankruptcy discharge are certain types of tax claims, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans, debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated, debts owed to certain tax-advantaged retirement plans, and debts for certain condominium or cooperative housing fees.

A Chapter 13 bankruptcy, commonly called a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their unsecured debts over three or five years.

Under a Chapter 13 plan, much of the unsecured debt will be paid for during the plan, but what unsecured debt is not paid for under the plan and is not exempt from bankruptcy filings will be discharged at the end of the bankruptcy.

How does filing for bankruptcy protection really help you in the long run? Filing for bankruptcy can legally protect what assets you own by exempting them from the liquidation process or while repaying all of part of your unsecured debts. Filing can provide immediate relief from the stress of debt collections through the use of the automatic stay of the bankruptcy court, and it can provide you with the long term effects of the complete forgiveness of certain debts.

In the long run, filing for bankruptcy protection can give you a chance to completely start financially over.

If you determine you are in need of relief from the stress associated with debt, and you live in or around the metropolitan area of Louisville, Kentucky, contact us here today at www.bankruptcy7-13.com . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.

 

 

 

 



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