Federal law allows homeowners to reduce their mortgage balance in bankruptcy and stop pending foreclosure sale dates. Our office can electronically file your petition at any time, 24 hours a day, 7 days a week, up until the time of the foreclosure sale and the sale will be stopped. This will also stop the mortgage company or the bank from continuing to add extra charges. After your case is filed, you will be allowed up to five (5) years to catch up on missed mortgage payments in monthly installments. Often the first year or two of installments are at a reduced rate.
What are some of the main benefits in filing for bankruptcy?
In most cases, you will not have to pay your credit card debts.
If the present value of your property is less than what you owe on the first mortgage, you may be allowed to eliminate your second mortgage without paying it at all.
With a short sale or foreclosure, you could owe significant amount in income tax, where the amount that is forgiven in a short sale or list in a foreclosure is considered a “gain” from the IRS perspective, and you would be required to pay regular income taxes on that gain. This is called phantom income.
In addition to stopping your sale, and wiping out your second mortgage, bankruptcy can also do the following for you:
(1) Eliminate the legal obligation to pay more or all of your debts. This is called a “discharge” of your debts.
(2) Prevent repossession of a car or other property, or force the creditor to return property that has been repossessed.
(3) Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
(4) Restore or prevent termination of utility service.
(5) Allow you to challenge creditors that have committed fraud or who are trying to collect more than you really owe.
(6) Repair and reinstate your family unit by eliminating financial problems, restoring credit, and getting a fresh start.