Foreclosure University
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There are several different “chapters” of bankruptcy. Some are work-out others are wipe-out, but here is the general idea. When someone files bankruptcy it’s almost like someone builds a “bullet-proof” barrier around the house. No one can touch them! However they are not free of all responsibility and most people do not understand that.
[Read more…] about Chapter 13 vs. Chapter 7 Bankruptcy. Which Is Better When In Foreclosure?
Question: I am in the process of filing for bankruptcy. I am filing chapter 13 so I can have my second mortgage, which is a line of credit through Bank of America, dismissed. My attorney just called and said that because my first mortgage was obtained after my HELOC, only because we refinanced, that the court may deem the HELOC as my first mortgage. Is this possible?
Question: CAN FILING BANKRUPTCY PROTECT YOU FROM A DEFICIENCY JUDGMENT?
Answer: -YES… for most people who go through a hardship like foreclosure, the main reason they file bankruptcy is because a judgment was filed against them. And since they are not in a position to pay off their mortgage amounts, bankruptcy was their only option unless they wanted their wages garnished. Bankruptcy can protect you from a deficiency judgment and that deficient mortgage amount would be included in the bankruptcy.
On a side note, most people do wait to file bankruptcy until after foreclosure because lenders don’t necessarily have to file a judgment against the homeowner. They can issue a 1099 which means the mortgage amount they forgave is considered as taxable income and they give up their rights to come after you for the deficient amount. I would recommend you seek counsel from a professional bankruptcy attorney so you know all your options. Good Luck