Our Perris personal bankruptcy attorneys also work with homeowners who are seeking to avoid preventable foreclosures, so we were very interested in a recent CNNMoney.com article on using bankruptcy to stop a foreclosure. The July 21 article explained that it's true that bankruptcy can allow some people to keep their homes. And even if a bankruptcy can't save the home, the article noted, it may be able to prevent a huge tax bill if the home is foreclosed and the remaining debt is forgiven. But bankruptcy won't allow everyone facing foreclosure to keep their homes, the article said -- only those who have a steady income with which to make payments.
Anyone who files for bankruptcy gets an automatic legal order stopping collection on all debts, including foreclosure for non-payment of a mortgage. However, the article said, it's important to have a steady income if you wish to keep the home, because bankruptcy can't stop mortgage payments for good. Typically, homeowners file for Chapter 13 bankruptcy, which rearranges their debts and puts them on a long-term payment plan, rather than Chapter 7, in which filers sell most of their assets. The article noted that bankruptcy judges can't "cram down" the mortgage to the current value of the home, but they can remove second mortgages if the home's value is below the amount owed on the first mortgage, which can shrink the total owed significantly. And because the IRS considers forgiven debt a form of income, bankruptcy can protect homeowners from owing taxes on the "income" from a mortgage debt that was written off after walking away.
As Fullerton individual bankruptcy lawyers, we're glad to see major news outlets discussing these issues in detail, because we know more and more homeowners are having to think seriously about them. The article notes that bankruptcy has major disadvantages, including a black mark on your credit for ten years as well as sale of your assets or handing over control of your finances to a trustee. We believe the advantages for people with serious financial problems may outweigh the disadvantages -- but this is a very personal decision, based on each person's individual financial circumstances as well as personal feelings. Individuals and married couples who are considering a bankruptcy as a way to avoid foreclosure should speak with an experienced attorney who can explain their options before taking any legal actions.
People in California who need this type of consultation should talk to Howard Law PC. We are an experienced bankruptcy law firm, and we have also helped clients negotiate loan modifications throughout the housing crisis. Our Cerritos consumer bankruptcy attorneys can help clients review their finances, line by line, to see if filing for bankruptcy will help them save their homes from foreclosure. If you decide bankruptcy is your best option, we will help determine which type of bankruptcy best meets your needs and financial goals. We stand by your side throughout the process, guiding you through the financial and credit implications of the bankruptcy as well as the legal procedures. When appropriate, we can also step in to protect you from overzealous creditors who violate the automatic stay by continuing to harass you.
Howard Law offers free, confidential consultations, so you can talk to us at no further risk or obligation. To set up a meeting, call us today at 1-800-872-5926 or send us a message through the Internet.