How To Lose Your Shirt To Bankruptcy Without Losing Your Home

By Subodh / September 20, 2013

English novelist Jane Austen once wrote, “There is nothing like staying at home for real comfort.” But if you are facing bankruptcy and unsure how it will affect the home you own, then staying at home is just a reminder of all the uncertainty surrounding the situation.

For some people bankruptcy is a way to start over financially with a relatively clean slate. However other people put off filing for some kind of bankruptcy claim because they automatically assume that they will lose everything they own, including their home!

There are ways to keep your home even if you file for bankruptcy. However it is not easy, and it could cost you in other ways. The best thing to do is get help from a professional. One such professional would be an attorney who specializes in these types of bankruptcy cases.

Are You Eligible for Bankruptcy?

Before you file for bankruptcy, you will need to know if you are even eligible for it. This is another situation where an attorney is useful. A attorney can also help dispel the myths and truths about bankruptcy, as well as offer information about the most recent changes to bankruptcy law.

Bankruptcy

For example, some people believe the myth that bankruptcy is a way to completely wipe the slate clean and start over with zero debt. Another myth is that if you file bankruptcy, then you will lose everything right down to your wife’s pet cat! Fortunately neither of these are true.

How an Attorney Can Help Save Your Home

Once you choose an attorney, you may not realize there are certain things that this person can do to help you make the most of a bad financial situation. No two people have the exact same circumstances. Here are some tips for helping your attorney work to help save your home.

  • INFORM – The first thing you need to do is inform your attorney that you plan to keep your home. He can help you find out if that is possible, and if so what is the best course of action to take to help you achieve that goal.
  • FILING – There are different ways you can file bankruptcy. Do you know if it is best if you file Chapter 7 or Chapter 13? Will it matter if you have built up any equity in your home? Which chapter is best to file if you just want to wipe out unsecured debts? An attorney can answer all of these questions and advise you accordingly.
  • SHARE – Collect and share all pertinent information with your attorney. This could include all documentation related to both your past and present income, lists of your debts, and how much equity you have in your home. You will also need to provide a list of creditors to whom you owe money, along with the contact information for each one.
  • REAFFIRMATION – If the equity in your home is not substantial, then typically you can go on making mortgage payments. Lenders offer an agreement called a reaffirmation because they know that after bankruptcy, you will have more income to pay your mortgage on time.

Errors can add a substantial delay to the bankruptcy process. When compiling information, take extra time to ensure that the documents about your income, debts and creditors, and home equity is correct. And then double check it again to make sure it is correct.

This might sound like a petty step, but courts have dismissed cases in the past when errors cause a substantial delay in the bankruptcy process. If this happens, then you have not only wasted your time as well as the court’s and your attorney’s, but you could have just put yourself in danger of losing your home.

Bankruptcy Doesn’t Rule Out Hope for the Future

It is true that time heals all wounds, even with the government. The U.S. Department of Housing and Urban Development website reports that in some cases, a prior bankruptcy does not disqualify you from purchasing a new home, as long as you meet certain conditions.

However the only sure way to know your rights is to consult with a bankruptcy attorney from a reputable firm. An attorney knows the most up-to-date laws and can advise you on how losing your shirt doesn’t have to mean losing your home as well.

Texas freelancer Melissa Cameron knows a little about everything. She is like a walking infomercial! But she always uses sites like www.travisblacklaw.com to double check facts for the legal articles she writes. When Melissa is not spending time with her husband Dave and their two children, you can find her exercising, knitting, or planning her family’s next Disneyland vacation.