A June 28 article in the Los Angeles Times confirmed what our Riverside bankruptcy attorneys have been seeing for months: More and more people in Southern California are driven into bankruptcy by the threat of foreclosure or other mortgage loan problems. According to the Times, consumer bankruptcies nearly doubled between 2007 and 2008, giving our region the nation's highest jump in bankruptcy filings. The jump continued this year, with filings between January and April up 75% compared the same period last year. And legal experts, California consumer bankruptcy lawyers and bankruptcy filers all attributed the growth to the housing bust.
The article cited several reasons for this. Southern California has been walloped particularly hard by the foreclosure crisis, with home values taking an especially severe nosedive in the Inland Empire. A consumer bankruptcy filing instantly stops a foreclosure sale -- and for some filers, though not all, it can also eventually save the home. And some homeowners compounded their mortgage problems by funneling all of their incomes toward mortgage payments and depending on credit cards to pay other bills. When they reached their limits -- or had their credit yanked -- they ended up with more debt than they could pay off. Others likely got into debt because of medical problems, which a recent study says are responsible for 60% of bankruptcies.
As Palmdale bankruptcy lawyers, we'd like to go into greater depth about how and when bankruptcy can stop a foreclosure. For most people, there are two kinds of bankruptcy available: liquidation (Chapter 7) and reorganization/payment plan (Chapter 13). Because a Chapter 13 bankruptcy protects homes and forces creditors to accept a payment plan, it is generally considered the best choice for folks trying to stay in their homes and repay their mortgages. A Chapter 7 bankruptcy generally takes less time, but could result in losing your home. However, either filing can stop a foreclosure in the short term, giving our Fontana bankruptcy attorneys time to negotiate changes with loan servicers or reduce clients' debt obligations in other areas, freeing up income for mortgage payments.
If you're in this position and you'd like to learn more about whether bankruptcy can save your home, you should call Howard Law LLP. Based in Anaheim, our consumer bankruptcy law firm helps people throughout California who are facing the devastating financial choices that come with overwhelming debt. Because bankruptcy is not right for everyone, we start every client's case by reviewing income, debts and assets and counseling the client about the best next steps. If you choose to file bankruptcy, we will be there to follow through with advice on everything from tax consequences to child support. If appropriate, we can also resolve debts without bankruptcy through our debt settlement and mortgage loan modification practices.
If you are considering bankruptcy and you'd like to learn more about your options, you can call Howard Law for a free, confidential consultation. You can reach us online or call toll-free at 1-800-872-5925.