How Filing For Bankruptcy Can Lighten Foreclosure Woes

A spike in default notices from July to August signals a housing market in crisis as a greater number of foreclosures loom on the horizon

. According to a recent study conducted by RealtyTrac Inc., a foreclosure listing firm, banks have initiated a new wave of foreclosures and mortgage defaults in order to wipe clean their backlogs after allegations of questionable mortgage paperwork filings. This renewed effort to push through foreclosures will hit poor and middle-class homeowners the hardest as they struggle to keep up with mortgage payments despite increasing unemployment rates.

Unemployment can easily lead a family into financial hardship, whether or not they have planned ahead for such a situation. Even those homeowners who are not confronted with unemployment are feeling the pressure of home foreclosures, which are affecting ordinary workers the most. State and federal programs to stave off foreclosure have been too little, too late for many Americans. Now that default notices are being sent out, foreclosure can feel like a foregone conclusion.

An alternative that homeowners should look into is the possibility of filing for bankruptcy. Often, homeowners will attempt to hold onto their home at all costs, but surrendering your home during bankruptcy has its advantages. For one, the process of foreclosure does not always end with the notice of sale. The real trouble for some homeowners can come afterwards, when they are still liable for additional, junior loans or the balance on an underwater mortgage after the sale of their home. Unemployed or financially strapped families may find that filing for bankruptcy allows them to circumvent a debt dilemma after foreclosure. Bankruptcy can effectively wipe the slate clean.

For employed homeowners, filing Chapter 13 bankruptcy can stall foreclosure proceedings and lay the groundwork for negotiating with a creditor to pay down their debt over the course of three to five years. A mortgage company can still bring homeowners to court once theyve filed for Chapter 13, but this step signals the potential to settle out of court. Nevertheless, this option is best negotiated with a bankruptcy lawyer who knows the true value of your case.

For all these eventualities, El Paso homeowners who are considering filing bankruptcy should consult with an El Paso bankruptcy lawyer. Bankruptcy law is complicated and varies from state to state. The best way to ensure that you are making the right choices for your family and your home is to work with someone who knows the territory well.

by: Davis Law

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