Facing Foreclosure:  Is Bankruptcy an Option for you?

Written by:  Dania S. Fernandez, Esq., Attorney at Law

Of The Law Offices of Fernandez & Associates, P.A.

When facing foreclosure there are many options available to avoid foreclosure and maintain your sanity all together.  These options include: Loan Modification/Loan Workout with your lender, Refinance, Obama’s Plan “Making Home Affordable” (go to website http://makinghomeaffordable.com) and Bankruptcy Chapter 13.  How can Bankruptcy save my home from foreclosure?  When should I file for Bankruptcy? Which Chapter should I file, Chapter 7 or Chapter 13?  These are three of the most frequently asked questions in my office.  First, in very simple terms here are the definitions of both Chapter 7 and 13:

Chapter 7: liquidation, wipes out most of your debts and in return, you may have to give up some of your property.

Chapter 13: reorganization, enables you to pay off all or a portion of your debts during a three to five year period, yet does not require you to give up any of your assets to pay creditors that you owe.  As long as you keep making

payments creditors will not bother you for payment or continue the foreclosure against your property.
If you are considering a Chapter 7 Bankruptcy and you are behind in your mortgage, then make certain that you first reach a loan modification/ loan workout or Refinance with your lender and then file Chapter 7.  In the Chapter 7 Bankruptcy there will not be a loan modification option of your existing mortgage and therefore if you stop paying your mortgage you could loose you home.  Your homestead is exempt, however if you do not pay, it can be foreclosed on.  In the Chapter 13 Bankruptcy you can save your house.  However, this should be your final option and by that I mean you have tried reaching a modification, you have been represented by a Real Estate Attorney to defend your foreclosure and time is ticking towards the auction date of your house.  Bankruptcy is a perfectly legitimate way to stop foreclosures and repossessions, put an end to lawsuits, protect paychecks from garnishments and regain control of your life once again. 

The following are gains when filing for Bankruptcy:

Bankruptcy can:

• Halt almost every type of lawsuit.
• Stop Foreclosure.
• Prevent you driver’s license from being yanked for unpaid fines or judgments. (This does not include judgments for child support.)
• Stop IRS Seizures.
• Prevent garnishment of any wages you earn after filing.
• Avert repossession.

Bankruptcy generally won’t prevent:

• Criminal prosecutions.
• Proceedings against someone who cosigned your loan, unless you file a Chapter 13 repayment and propose paying the loan in full.
• Contempt of court hearings.
• Actions to collect child support or alimony.
• Governmental regulatory proceedings

If bankruptcy is an option for you it is important to know what is or will be required of you.  Bankruptcy is regulated by Federal law and may be affected by Florida state law.  Even though  you are not required by law to work with an attorney to file for bankruptcy, it is highly recommended.  When filing for bankruptcy, it must be filed correctly in order to have the chance for it be successful. 
It is important to consult a bankruptcy attorney or debt relief lawyer in your area in order to ensure that you fully understand your options regarding bankruptcy and whether this is the best decision for your financial future.
The following is a list of facts you should know about filing Bankruptcy:

• Bankruptcy is a matter of public record.
• You can suffer some discrimination.
• You will need to take a credit counseling course and financial management course before you can file for bankruptcy.
• When you initially file for bankruptcy, the court will mail a notice to all the creditors listed in your bankruptcy schedule. Creditors will then be prohibited from contacting you concerning you debt. 
• Florida law will exempt certain assets.   A lawyer can help determine what is exempt and can help protect particular property. 
• In a Chapter 13 bankruptcy, you and your lawyer will need to work out a payment plan wherein you will pay creditors over a period of up to 5 years.
• Your income, bills, assets and property will all need to be evaluated in order to determine what is subject to liquidation, what debts can be discharged, the amount and duration of your payment plan (if any) and much more.
• A stigma may still be attached to filing bankruptcy.
• A record of filing for bankruptcy may remain on your credit profile for up to 10 years, depending upon the particular circumstances.
• While a bankruptcy filing does appear on your credit report, most people fail to realize that the damage has already been done to their credit due to missed payments or late payments.  By eliminating your debt in chapter 7, or making payments in a chapter 13, you will immediately improve your credit score.

Written by:  Dania S. Fernandez, Esq.  Attorney at Law
Of The Law Offices of Fernandez & Associates, P.A.
Located at 6705 SW 57 AVE, Coral Gables, FL  33143
Telephone:  305-254-4492
E-mail:  Dania@fap-law.com
Website: www.daniafernandez.com
For more information on Foreclosure, Loan Modifications & Bankruptcy go to www.daniafernandez.com.  Or, call The Law Offices of Fernandez & Associations and schedule a free consultation with one of our attorneys at 305-254-4492.