Not Too Good to Be True: Bankruptcy Can Save You From Foreclosure Says CNNMoney.com
A July 21 article at CNNMoney.com says that all those ads telling consumer they can save their homes from foreclosure by filing personal bankruptcy are NOT too good to be true. They’re true!
The article notes, however, that if you do not have sufficient ongoing income to continue to pay on your mortgage – even if you obtain a modification from your lender – then filing personal bankruptcy will not save your home from foreclosure.
As the report states, filing bankruptcy will stop foreclosure in its tracks. The court not only forbids lenders from continuing the foreclosure process, it also forbids them from even contacting you to try to collect.
So which do you file, Chapter 7 or Chapter 13?
Most experts believe that Chapter 13 is more effective in helping debtors keep their homes because the 3-5 year timeline usually provides enough time to repair broken finances. Chapter 13 bankruptcy may even allow a debtor to “strip away” second and third mortgages, especially if the home is worth less than you owe.
Chapter 7 bankruptcy may be a solution if discharging all your unsecured debt will free up enough income to allow you to make your mortgage payments. However, Chapter 7 bankruptcy usually results in the liquidation of all of a debtor’s assets, including a home. Your Florida bankruptcy attorney can provide you with guidance.
Greg Gilbert
Keith Maynard
