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Maria E. Cipollone's Blog

By Maria Cipollone | Agent in Coral Springs, FL

Is bankruptcy a good solution for you?

Many have considered and marketed bankruptcy as a "foreclosure solution", but this is only true in some states and situations.  If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution. If a homeowner can not afford their mortgage payment, a bankruptcy will only stall-non stop-the foreclosure process.

According to the United States Supreme Court," Bankruptcy gives to the honest infortunate debtor a new opportunity in life and a clear field for future effort, undisrupted by the pressure of preexisting debt".

A Bankruptcy discharge dismiss the debtor from personal liability for certain and specific types and debts. The discharge is a permanent order prohibiting the creditor of the debtor from taking any form of collection or action on discharged debts.

A decision to declare bankruptcy is stressful and should not be taking it lightly. Bankruptcy can be costly, is damaging to credit scores, and can only de declared once every seven years.

Until a few months ago, the only way a homeowner could wipe out a second mortgage or line of credit on his/her home was through the use of a Chapter 13 bankruptcy petition and plan that may require monthly payment for as long as 60 months. Llegally speaking, now a homeowner may also dismiss second mortgages and lines of credit through a chapter 7 bankruptcy which does not require monthly payments. When a judge removes mortgages liens from a property during bankruptcy proceedings it is referred to as "lien stripping". Bankruptcy courts must now follow a "bright line" rule in all chapter 7 cases which makes a second mortgage totally dismiss if the first mortgage exceeds the value of the personal residence.

If you are thinking to go these way, to qualify, the court will need proof that the property is appraised for less than the value of the first mortgage, which can be easily established with a certified property appraisal.

The current U.S. housing market and national financial crisis has caused untold stress and heartache for many American families, and of course, bankruptcy has become a common solution for many individuals, especially in South Florida.

If you are thinking to go this road hire an attorney and make sure that he/she will explain clearly all the details, pro and cons that a bankruptcy will bring you. Also, make sure that you know the difference between filing for chapter 7 or chapter 13 bankruptcy. Generally speaking, a chapter 7 bankruptcy allows you to get rid of unlimited amount of credit card and other unsecured debt, like medical debt and outstanding mortgage debt from a prior short sale or foreclosure.

On the contrary, if you are planning to buy a house, a car or even get a new job in the near future, filling for bankruptcy is not your best option.  Bankruptcy record will stay in your credit report for many years and it will make it nearly impossible to consolidate most of your financial dreams.

Maria Cipollone




By anthonybronx65,  Thu Sep 26 2013, 10:44
The decision of whether to file for bankruptcy can be a very difficult and stressful choice. But, without a doubt this article is been very helpful.
By Mariotoro1906,  Thu Sep 26 2013, 11:29
A fundamental goal of the bankruptcy discharge is to dismiss the debtor from personal liability for certain and specific types of debts.
By Steve Nash,  Fri Sep 27 2013, 05:48
Well written and informative you layed that out perfectly.
By Cecilia Marquez,  Fri Sep 27 2013, 06:28
Many people has found impossible to keep up with their mortgages for the past few years. If you were driven to bankruptcy or are considering it, you know that you are not alone. Many went this road already.
By Gino Landetta,  Mon Sep 30 2013, 08:55
Very common solution in an environment where home prices in most markets have fallen at least 40% or more.
By Mery Haz,  Thu Oct 3 2013, 21:44
If your mortgage payments have been fallen behind 60 days late and you have a financial hardship, you are better off trying to do a short sale instead of filing for bankruptcy.
By Marlenetorres906,  Fri Oct 4 2013, 17:28
Very good advice. Especially how costly the process is.

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