Protecting Your Home is a Good Reason to Seek Bankruptcy
by Luke Homen
Your home may be the biggest investment you ever make, so keeping it is a critical reason to file for bankruptcy protection. The equity developed in a home is often used to start a business, put a child through college, or help you to retire! The Oklahoma Chapter 13 Convenient Bankruptcy law firm will discuss how to protect your homeownership while dealing with financial stress. Our Oklahoma Chapter 13 attorneys represent homeowners using their legal rights to keep what may be their greatest financial asset.
If you’re having a difficult time keeping up with mortgage payments, bankruptcy may give you enough financial breathing room for you to maintain your ownership. The Oklahoma Chapter 13 lawyers at the Convenient Bankruptcy law firm can help you understand your situation, explore your options, and determine which one is right for you and your family. Oklahoma Chapter 13 lawyer Luke Homen helps people like you resolve their financial challenges to achieve financial freedom, as you can see from their client reviews. Call us at 405-639-2099, and a Chapter 13 attorney will contact you.
Ways You Might Prevent Bankruptcy
Bankruptcy is a useful tool to help you when financial times are tough, but it’s not something you should jump at before thinking about other ways to help you stay afloat. If you’re behind in your mortgage, here are some ways to try to get back to current without going bankrupt:
- Reinstatement: This may work for a temporary financial hardship that prevented you from making your mortgage payments. You have the money now to make up for what you missed. There’s no formal plan, and you simply pay the money
- Forbearance: You’re having a temporary financial hardship, and you’ll be back to your regular income in a few months. This could be due to a job loss, a natural disaster, a serious illness or injury. You’d pay a reduced amount during your hardship, and the loan will continue to build up interest. You’ll need to pay what you owe at the end of the plan
- Repayment plan: You missed a few payments, but you can pay more than your monthly mortgage payment in the next few months to recover. You’ll make higher payments temporarily until the mortgage debt is made current. These plans usually last two to six months but could be longer
- Mortgage modification: You want to retain your home, but you can’t keep up the payments because of something more permanent – a changed marital status, your income is lower, or your costs are higher. You can try to make your payments affordable while making your mortgage current. You may have a three or four-month trial period when you must make payments before the lesser payments are made official.
- Short sale: You can’t afford your mortgage payment, and you owe more on your home than it’s worth (it’s “upside down”). You want to sell your home and be responsible for the process. You would work with the mortgage servicer on the price. Depending on the arrangement, you may need to pay any remaining mortgage balance after the sale.
- A deed in lieu of foreclosure: This is a similar situation, but you give your mortgage servicer the house’s deed, they’re responsible for the sale, and you can walk away from any remaining loan balance afterwards. Lenders usually don’t allow this option, because it doesn’t always give them “clear title” to your home.
Depending on your situation, as much as you want to retain your home, that may not be practically possible because of your limited finances.
Avoid “rent to own” schemes where someone proposes buying your property, becoming your landlord, and using your rent payments toward a repurchase. It sounds too good to be true because it is too good to be true! You may become a tenant, but the new owner may sell the house to someone uninterested in using your payments to help you buy your home back, or frequently the owner doesn’t properly document the transaction in order to benefit themselves!
Homes and Bankruptcy Basics
Bankruptcy is a federal legal process that takes some state laws into account. It allows debtors to be discharged of many, but not all, of their debts and obligations. Our Founding Fathers thought the ability to use bankruptcy to achieve financial freedom was so important they wrote into the Constitution Congress’ ability to create bankruptcy laws.
If you can’t keep up your mortgage payments, you may lose your home to foreclosure. This legal process can end with you being removed from your home and it being auctioned off. A mortgage is a loan with real estate used as collateral. If the debtor can’t make the payments, the creditor may get the collateral to repay the debt.
If the house sells for more than you owe (plus fees and costs), you should get that amount back. If not, you may need to continue to make payments even though you no longer live there.
Oklahoma Chapter 13 Convenient Bankruptcy law firm clients in financial trouble typically take one of two approaches to bankruptcy protection:
- Chapter 7: Those seeking this type of bankruptcy must show it’s necessary because they can’t pay their obligations. Generally, in exchange for sacrificing most of their assets, they are discharged of financial obligations. If you have equity in a home and want to keep it, you should avoid Chapter 7 bankruptcy
- Chapter 13: This involves creating a strict three-to-five-year budget to give you “breathing room” to get back on track. If you can keep up the payments (including the mortgage), your creditors can’t pursue you through the courts. After completing the plan, your payments should be caught up, you may have discharged some debts, and you keep your equity in your home. If you can’t complete the payments on schedule, your case may be converted to Chapter 7, and you may lose your assets (including the equity in your home)
Oklahoma was ranked as the 25th state for the number of housing foreclosures, given the overall number of homes for March of last year, according to SoFi. We saw 285 homes go into foreclosure that month, or about one for every 6,147 households. The worst state for foreclosures was Illinois (one for 2,548), while the state with the lowest rate was Vermont (one for 30,467). You don’t want to be one of these statistics.
Contact an Oklahoma City Chapter 13 Bankruptcy Lawyer Today
Ready to put financial stress in your past? We’re ready to help you. The Oklahoma Chapter 13 lawyers at Convenient Bankruptcy can discuss your situation and help map out your financial future.
Call us at 405-639-2099 or contact us online right now to get started.
Attorney Luke Homen is the President of Convenient Bankruptcy. He placed great value on helping individuals and families solve their financial challenges and achieve real financial freedom. His goal is to find a customized solution that fits each client’s unique situation. Luke has been practicing law since 2008, and was voted “Best Bankruptcy Attorney in Oklahoma” by The Oklahoman in the Reader’s Choice Awards.