Should You Try to Keep Your Home When You File For Bankruptcy?
Filing bankruptcy, of course, is a personal financial strategy that should help you and your family eliminate or restructure debt and move forward with a liveable household budget. Many bankruptcy filers own a home and usually, they want to do everything possible to keep that home. In Chapter 7, this often means signing a reaffirmation agreement, and in Chapter 13 this can mean curing a delinquency (arrearage) in mortgage payments over a five-year plan.
Obviously, it makes less sense to keep a home if prices are falling and if neighborhoods consist of renters rather than owners.
If you are a homeowner who is contemplating bankruptcy, I strongly urge you to spend some time learning more about your local real estate market. Has the “recovery” of housing prices been driven by individuals buying homes for their own use, or has it been driven by investment funds buying homes as investment? If the latter, don’t be surprised if we see yet another crash in home prices as these funds look to cash out and salvage their investments.
As much as your initial reaction may be to keep your home, doing so may not make sense because of market forces you cannot control. Bankruptcy allows you to walk away with little or no penalty and sometimes that is the best course of action.
In addition to your own research on your local real estate market, it is also wise to consult with a bankruptcy attorney. They can offer legal expertise by reviewing your finances and advising you on what steps to take.
For 35 years, Cibik & Cataldo P.C has been providing debt-relief services to clients all throughout the state of Pennsylvania. Our legal expertise is compassionate and cost-efficient, and we include you in every step of the process. Michael A. Cibik is a partner at the frim and is one of the few attorneys in the Philadelphia area certified by the American Bankruptcy Board. If you are having financial troubles, do not hesitate to call us at 215-735-1060 for a free consultation.
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