Understanding Bankruptcy, Oct. 4, 2018

COUNCILMAN MARK SQUILLA

Bankruptcy! I don’t want to file bankruptcy! Hey, if you do want to file, there is something wrong with you. But you want to keep your house? Avoid foreclosure? Which option hurts more: losing your home or filing bankruptcy?

Either way, you need to do the cold calculations, a real budget, how much do you have to work with, how much will it cost to do what you want to do.

There is always a money trade-off with these choices. For instance, if you meet with me and tell me keeping your house is priority number one, if I asked, “Would you pay $1 million for your house?” I bet you would say no.

In the old days, back when homes were worth more than we owed on them, (gosh, seems like a long time ago, doesn’t it?) most Chapter 13 bankruptcy cases were filed to stop a foreclosure and give you time to catch up on the missed payments, up to five years.

These days, most Chapter 13 bankruptcy cases are still filed to stop home foreclosure, but, in a quite different way: lien stripping. This option is only available if your home is worth less than what is owed on the first mortgage, and you have two, or more, mortgages. Many of my clients are able to file a Chapter 13 payment plan, and make a plan payment that is equal to, or even less than, their second mortgage payment.

Which is scarier: foreclosure, or Chapter 13 bankruptcy?

Next Week’s Question: After bankruptcy filing, beware of phony debt collectors who threaten arrest.

Michael A. Cibik, Esquire
www.ccpclaw.com
ccpc@ccpclaw.com
215-735-1060

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