Bankruptcy and Saving the Homestead

The other day I remembered a client that I once had. A few years ago he and his wife sold a house and bought a new one. They made enough money on the first house to allow them to put down $30,000 on the new one.
By: Effect of Bankruptcy on Foreclosure
 
June 8, 2010 - PRLog -- The other day I remembered a client that I once had. A few years ago he and his wife sold a house and bought a new one. They made enough money on the first house to allow them to put down $30,000 on the new one. Their house payment was a little over one thousand dollars, and they had to pay the property taxes and insurance outside. Everything seemed to be working out.

Due to the time of year that they moved in, the property taxes were relatively low, about six hundred dollars. They were able to take care of that as well as keep up with their home owner’s insurance, which they paid monthly.

The husband was on disability, so his income was fixed, and his wife had worked for the same employer for twenty years, working all of the overtime that she could handle.

In March her company issued a policy discontinuing overtime pay, which reduced her monthly income by $1000. They looked at their bills and thought to themselves- “we can make this work.” It was in October that they found out how much they were going to need in January for the property taxes, $5500. Unfortunately, as is often the case in life, the timing of this event compounded the situation and they were unable to make the payment.

The next thing they new, the property taxes were due again, and with all the penalties and interest for not paying taxes on time their bill was close to $14,000. It was at this point that the mortgage company paid the taxes and issued a statement telling the clients to have the money ready or foreclosure proceedings would begin.

This is where I come into the story. Filing a Chapter 13 was the only way to stop foreclosure, because they had no other resources. While talking to them and looking at there income, I told them it would be tight. They either needed more money, or needed to sell the home to save what money they could from the down payment. She decided to get a part-time job to offset the loss of overtime. I then explained about their need to make the house payment and the trustee payment. Protected under bankruptcy law, as long as they made those 2 payments for the next five years, no one could take their house, and all of their credit cards and other bills on credit would be eliminated.

For more information visit http://www.bankrupcy-alternative.com/effect-of-bankruptcy... or call us directly. Here is another bankruptcy article http://www.prlog.org/10724837-bankruptcy-chapter-7-reaffi... for your reading enjoyment.

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