Record Foreclosures
It seems that everywhere you turn one of the top stories is related to interest rates on houses going up or the foreclosure rate at record highs. People that entered into an Adjustable Rate Mortgage (ARM) seem to be the ones suffering the most. Generally, these are people who are barely able to make their house payments as it is, and then their house payment goes up every six months.
Just because you house is up for foreclosure, doesn’t mean there is no hope. Filing a Chapter 13 can help you save your home and get current on your Mortgage payments. However, if you do not have a change in your financial situation, Chapter 13 might only put off the inevitable. Another route to go would be to file a Chapter 7 and surrender the house in the bankruptcy. This will relieve the Debtor of any further obligations on the house. So, if there is a deficiency (money still owed on the house after the foreclosure sale) the mortgage company will not be able to go after the Debtor for the money. Also, in the eyes of the IRS, the deficiency can be perceived as taxable income since technically it is money given to you that you don’t have to pay back. Surrendering a house in a bankruptcy will also prevent the IRS from trying to tax you on the foreclosed house.
Regardless if you want to try and save your home by filing a Chapter 13 or if you decide you can’t afford your home and want to surrender it in a Chapter 7, if your house is up for foreclosure you need to talk to an attorney to get your options.
Please fill out our free evaluation form to determine if bankruptcy is right for you.
