Bankruptcy & Foreclosure

Running into financial difficulties happens to people in all walks of life.  Perhaps you or your spouse lost a job, you had unexpected bills, possibly uninsured medical expenses, or you used savings to keep a small business afloat.  Bankruptcy is a legitimate solution to prevent foreclosure of a home, repossession of a vehicle, stop garnishments, and most important, stop creditor harassment. 

Many are misinformed that they cannot file for bankruptcy protection after the law change in October 2005, but this simply is not the truth.  Bankruptcy is still available to almost everyone.  The two most common forms of bankruptcy are Chapters 7 and 13.

Chapter 7 bankruptcy is a straight bankruptcy, or liquidation.  It wipes away most of your unsecured debt and allows you to keep exempt property.  It is important to consult with me to determine your eligibility for Chapter 7 based on your assets, income level, and number of people in your household.  The whole process can be completed in as few as four months.  Chapter 7 can be of great benefit for people who are drowning in credit card debt and payments.

Chapter 13 bankruptcy is considered a wage earner plan.  It is most often used to cure back due mortgage or automobile payments.  Chapter 13 is also used when someone has non-exempt assets that they wish to keep.  The wage earner plan allows you to pay creditors over time (usually 36 or 60 months) with payments based on your disposable income.

A Chapter 7 is best when:

• You do not have assets you would have to surrender
• You are not behind on payments for your mortgage or automobile (unless you want to surrender them)
• You are below median income levels for your size family

A Chapter 13 is best when:

• You need time to catch up on mortgage or automobile payments
• If you earn enough money to pay your creditors over time (usually at amounts less than what you owe)

Many people who have fallen on difficult times often become prey to offers of “assistance” and outright scams.  In the case of your home, if you are not too far behind, sometimes it is best to contact your mortgage holder directly and work out an affordable repayment plan.  Many homeowners do not realize this option is available. 

I can review short sale contracts or loss mitigation and forbearance agreements from your mortgage lender.  These various contracts and agreements need to be carefully reviewed to make sure you are fully protected from any liability or tax consequences.

If you have fallen into foreclosure, you will definitely receive countless letters, phone calls, or even people at your door offering help.  Be extremely suspicious.  Most of these offers are scams in one form or another.  I have helped many people who did not realize they signed over the deed to their house, lost their equity, or paid for “assistance” they never received.

Bankruptcy may be your best option if it will take you more than five years to pay off your debts.  It is also a powerful tool if you need to save a home from foreclosure.  It is also important to note that it is not impossible to get credit after a bankruptcy discharge.  In some cases, you are considered a good credit risk after a completed bankruptcy.

There are many factors to consider in determining whether bankruptcy is your best option.  It is important to discuss your financial situation with me to determine your eligibility for bankruptcy, your options, and best course of action.

*Lewis Roberts, P.C. is a debt relief agency.  I help people file for Bankruptcy Relief under the Bankruptcy Code.

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