Every day I speak with people who are in foreclosure. Every day the answer I receive when I ask about their situation is, “We’ve taken care of it.” Whether it’s because they just don’t want to talk to me, or because they truly believe they have done what needs to be done is a subject for another post. This post addresses the people who really believe that they have indeed “taken care” of their situations, specifically, the ones who believe that they have done so by claiming Bankruptcy.
Bankruptcy is a useful tool when dealing with creditors who call your home and work relentlessly. It can help to put the brakes on a situation that has spun out of control, giving you time to sort things out and to decide what your next move should be. You can think of it like a “Time Out” during the last few minutes of the Superbowl. The whistle blows, everything stops, and you can plan out your next strategy.
One thing that a BK absolutely cannot do however, is to end your foreclosure problem for good. It is a common misunderstanding among people I speak with, that your home can be included in a bankruptcy. It can not. Two debt items that a bankruptcy judge cannot forgive are student loans and mortgages.
What consulting a good bankruptcy attorney can do for you is to put the brakes on, slow things down a bit. During the final stretch before your home actually goes to auction, BK can be invaluable in stopping the sale. This can give you more time to explore all of your options. It can help determine if the forgiveness, or restructuring of some, or all of your debt, will allow you to stay in your home.
If you truly can’t afford to stay – and this is usually the case – then you will have more time to find a new place to live, clean out your belongings, and move at your own pace, your dignity intact.