At the end of the day there's just not enough money! The cost of gas, food, everyday living expenses and the mortgage are beyond manageable. You just can't keep up with the bills. Your always trying to play catch up, sometimes getting by with what seems like smoke and mirrors, until one day you receive the inevitable bad news. Your lender has filed a "Notice of Default" or "Lis Pendens", initiating a foreclosure action against you.
Now the wheels start turning. What to do? How can I stop the foreclosure? How can I keep the house? How can I get relief?
Should you decide to file personal bankruptcy there are a couple of bankruptcy filings that you'll become familiar with. Chapter 7 bankruptcy places an automatic stay on your creditors including your mortgage lender. The stay is temporary however and the lender can continue to solicit the court for relief from the stay. At anytime the court may grant that relief and the foreclosure than proceeds. At best a Chapter 7 may help buy time to sell or reestablish yourself with your creditors. It never stops a foreclosure.
Before filing for personal bankruptcy you will need to complete an approved credit counseling briefing. This can be purchased online at:
For a Chapter 7 filing you'll have to qualify through a Bankruptcy Means Test. Not to worry though, some statistics claim that 96% of all petitioners qualify. The means test is a 2 step process. Your monthly income compared to the median income in your state for a family of your size. If your below the median you qualify. If not you go to step 2 , calculating disposable income over the next 5 years. If it's less than $100 a month, you qualify.
In the unlikely event that you didn't pass the Chapter 7 means test you may still be able to file for Chapter 13. Many people looking to avoid foreclosure choose Chapter 13. It can give you the breathing room you need to get you back on track by combining the automatic stay with a payment plan over the next 3-5 years. Chapter 13 allows you to sit down with your creditors and arrange a payment plan. Once agreed and accepted your creditors, including your lender must abide by the plan. If all payments are made as scheduled, any unsecured debts may be discharge at the end of the plan. This type of filing is intended to help people keep keep their property while they catch up. Of course there will be court and attorney fees that the homeowner will need to pay as well.
In order to qualify for Chapter 13 you must have a regular scource of income and have enough disposable income to cover normal living expenses as well as pay the creditors. There are also preset limits for secured and unsecured debt which fluctuate periodically. i.e. the limit for unsecured debt may be several hundred thousand dollars and secured debt limits may be over a million dollars.
In the end there is no one right solution when it comes to financial difficulties. Whether or not someone chooses personal bankruptcy over another viable alternative depends on that person and the circumstances surrounding them. Call it a workout plan or financial reorganization. Anyway you look at it, avoiding a foreclosure may be the most important thing that anyone can do to save their financial lives.
For more on avoiding foreclosure call me directly at 561-306-6736 or email me at rebuygeorge@yahoo.com or visit my website at http://www.ges-realty.com/ for more answers.
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