Bankruptcy: Is it the right thing for you?

If you happen to be considering a bankruptcy to keep your home, click on the link below to learn other ways to avoid foreclosure without filing bankruptcy.

Click here to learn about foreclosure and possible ways to avoid it.


Foreclosure is a process whereby the lender exercises their right to force the sale of your home, if that is deemed necessary, in order to collect money you owe them. The following points outline how a typical foreclosure process works:

Foreclosures typically take several months, usually 6 months or more;

When you are more that 30 days past due, your lender will probably begin collection efforts: threatening letters, pushy phone calls, etc.; you will incur late charges and possibly even some pre-foreclosure charges;

Usually when you are about 90 days late, your lender will send you a Notice of Default. You are told to pay, or an attorney will begin foreclosure proceedings against you immediately. This is where the foreclosure expenses begin to accelerate due to their attorney fees which you will end up paying;

There are several variables, but it typically takes about 90 - 120 days, or more, from that point, before a Sheriff's Sale can be conducted; according to the attorneys, you must act to exercise you options and rights prior to the Sheriff's Sale, or you risk losing all, or a significant portion of your rights in the property.

After the sale of the property, you typically have 75 days to either redeem the property(buy it back for the balance owed, plus all costs), or move.

What a bankruptcy does to a foreclosure proceeding is to implement the automatic stay. This means that ALL attempts at collection must cease. A foreclosure is nothing more than the bank attempting to get their money back.

At this point, you have two choices. You can either allow the lender to go through the bankruptcy court to take your home, or you can reaffirm with the lender.

To reaffirm means that you will resume normal, or sometimes adjusted payments to them. Typically, what happens is that they take the arrearage, (a fancy way to say the payments that you are behind on) and the costs incurred by the lender attempting to foreclose, and place them at the end of the loan. This means that at the end of the repayment period (usually 30 years), you will still have a remaining balance equal to the arrearage and costs plus accrued interest.

This isn't so bad considering that most people either refinance or sell their home well before they pay the loan off.

However, when you do sell your home or refinance, this amount will be added to the payoff of the loan at this time. Expect it to increase your payoff by several thousands of dollars.

It's obviously much easier to act BEFORE the Sheriff's sale than after. However, even if you have procrastinated and kept thinking things would not get this far, it's still not too late, if you act quickly.

A company called DebtBug can probable help.

DebtBug was founded to help people faced with the nightmare of foreclosure by a team of mortgage loan brokers and paralegals with experience in solving foreclosures. Their Stop Foreclosure Service is available for the lowest price on the internet, offers a written guarantee, and has been proven successful across the country.

The foreclosure consultants at DebtBug are highly experienced in reviewing your specific situation, finding and exploring a variety of options to solve the foreclosure threat, working directly with your lender, and developing effective plans to successfully stop and avoid your foreclosure.

This is a service that I highly recommend.

Learn more about DebtBug by clicking here.

What is Bankruptcy?

Federal laws provide for a legal procedure for individuals and businesses to eliminate some of their debts. Some debts such as child support or student loans may not be eliminated. The law provides for different types of bankruptcies, but we only offer help on straight or liquidation bankruptcy under chapter 7 of the Bankruptcy Code.

Will Bankruptcy stop the collection calls & garnishments?

Yes. The moment you file your bankruptcy Application or Petition, the law imposes an "Automatic Stay" order. That means you are no longer obligated on most of your debts. That means your creditors can't try and collect the debts from you. If they do the Bankruptcy court could sanction them for violation of the automatic stay.

What happens when I file?

The instant you file, your assets become property of the estate and a trustee is appointed to liquidate or sell them and pay your creditors. But you can keep some of your properties as exempt. The types and quantity of exempt properties are different from state to state. Our powerful online program provides you with a way to determine if your asset or property is exempt under the laws of your state. If it is exempt, you can claim the exemption if you want and the amount of the exemption. For example, if your state law provides an exemption for a car up to $2,500.00 value, and your car is worth $2,500.00 or less, you could claim the exemption and keep the car. If the car is worth more than $2,500.00 you will have to pay to the trustee the amount over the $2,500.00 if you want to keep the car. Please also remember that the exempt only applies to your equity in the car. In our example, if the car is worth $2,500.00 and you owe $2,500.00 to a bank, you don't have any equity, and the exemption does not help you. You can still keep the car but you will have to agree to reaffirm your contract with the bank and continue to make you payments.

What if I still owe money on the exempt properties?

While your creditor cannot try and collect the debt from you, it is nevertheless entitled to the property you pledge as security or collateral for the debt. The same goes with nonexempt properties subject to creditor liens. To keep those properties, you must negotiate with your creditor; otherwise, you must surrender the collateral to the creditor with the superior lien. You could also work out a deal with the creditor for you to reinstate the loan so you can keep the property and continue to make the payments. Creditors are usually very willing to enter into reinstatement contracts with debtors. NOTE: As a rule of thumb, only reinstate properties that you have a substantial equity in them.

How much does it cost to file Bankruptcy?

The filing fee is usually about $200. Some states may be a little more depending on additional fees. Then there will be attorney fees that might range from $500 to $1,000 or more.

Can I file for bankruptcy on my own and save the attorney fees?

Yes. However, filing a bankruptcy is an emotionally draining process and if it's combined with a job lay off, medical problem or divorce, it's just that much more emotional.

There are some companies that sell "do-it-yourself" bankruptcy books or kits that can help to keep the attorney costs down. But in my opinion, I would not recommend these. The bankruptcy laws are just so complicated and if you make a mistake like missing a form or filing date, or leave out a creditor, it can cause major problems for you.

I cannot recommend enough, that you get as much knowledge about the process as possible and then find a competent attorney to assist you. Yes, it will probably cost you a minimum of $500-$1,000 in addition to the filing fee, but the peace of mind and security knowing that it will be handled properly is worth much more than the fee you will pay. In addition, the saving the time and stress that it would involve to file your own bankruptcy is invaluable.

I cannot recommend any specific attorneys because most attorneys are not licensed in all 50 states. However, I can recommend a program that I have personally been a member of for over three years and have found it has paid for itself many, many times over.

What I'm talking about is Pre-Paid Legal Services.

This is a 30 year old NYSE company (symbol PPD) that provides families and small businesses with access to top rated lawyers all over the country.

For a small monthly fee that is month-to-month, in other words, no lengthy commitment, they provide you and your family with access to the legal system for things such as:

1. Unlimited phone consultation

2. Letters written or phone calls made on your behalf

3. Contracts and documents reviewed BEFORE you sign them

4. A comprehensive will to protect your loved ones

5. Traffic ticket representation

6. Law suit protection

7. IRS audit protection

8. Legal Shield - 24 hour access to a lawyer if you are being arrested, detained or questioned by the police

9. At least a 25% discounts on all other legal issues such as DUI, divorce, child custody or support issues and Bankruptcy

As far as bankruptcy is concerned, you can see that it is not covered 100% in the $17 to $26 monthly fee. But the fact that you can get a very competent law firm to represent you at a fairly good discount is worth much more that the nominal monthly fee. Plus you get all the other benefits to protect yourself and your family as well.

The above listing is a summary of some of the benefits. This is not meant to be a complete listing and there are stipulations on some of the benefits. Please read more by clicking the link below and getting all the facts.

Get the details of how Pre-Paid Legal Services can help you and your family by clicking here.



However, there is no magic solution. Don't believe anyone who tells you otherwise.

I just recently read a book entitled 7 Bankruptcy Secrets. It is written by Bryan Rundell, a practical and no-nonsense personal finance expert and educator. His book is a quick read and it contains all of the forms needed for filing bankruptcy, should you choose to file on your own. However, this is NOT A DO-IT-YOURSELF KIT.

This is accurate and unbiased information that you can rely upon in making your decision as to if you should file bankruptcy or not, and if so, which chapter.

Deciding if you should file for bankruptcy is probably one of the most important decisions in your life. It is not an easy decision. You need to understand your options before you start paying attorney fees or signup for a long-term debt restructuring plan that could take you years to pay off.

The great thing about it is you get his personal email address to ask questions and he sends a personal finance and investing newsletter each month.

Get the facts BEFORE you file. Click here to check out this informative and educational E-book.

The information contained on the-mortgage-advisor.com web site is provided with the understanding that Anchor Mortgage & Investments, the parent company, does not offer legal, insolvency, tax, or other professional advice or services outside of the mortgage arena. As such, the information on this page should not be used as a substitute for consultation with professional insolvency, tax, legal or other competent advisers. While we have made every attempt to ensure that the information contained in this web site has been obtained from reliable sources, neither Anchor Mortgage & Investments nor the-mortgage-advisor.com is responsible for any errors or omissions, or for the results obtained from the use of this information.