Let's be honest, this economy sucks. Ever since the financial collapse in 2008, it has been very difficult for a great many people. For many, the biggest problem is unemployment. Most people are 90 days away from filing bankruptcy because we require income to survive. Many people, most of whom never even considered bankruptcy, now must face a stiff choice.
If bankruptcy makes sense, then there can be significant relief. Most credit card bills and medical bills will be discharged completely. Some debts remain, such as taxes, child support and student loans. Locked deep within the bowels of the bankruptcy code, however, lies another big advantage.
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Let us pretend you have a mortgage on a house. And let's say that mortgage is about 150k. Let's also pretend there is a second mortgage in the amount of 75k. You took out this second mortgage to pay off some debt, fix up the house and take a vacation. Why not? It was 2005. Your house was worth 225k. You had a well paying job. Times were good and the payments were easy. Enter 2008.
You still have a job. Perhaps there was a 20% pay cut. And the value of your house has plummeted to 120k. All of a sudden, that house is a huge problem. It's not the only problem, because you also fell behind on credit cards and some utility bills. But you are in a bad place financially and you believe you're stuck because you're still employed.
So many people believe you have to be completely dead broke to file bankruptcy. It is untrue, as you can look up any number of high-earning individuals who need the relief provided by bankruptcy. When someone in the above-mentioned case files for bankruptcy, they are able to receive one huge advantage, assuming their lawyer chooses to place them under the protection of Chapter 13.
The second mortgage, in that case, can be stripped off from the home. The key ingredient is that the value of the home has fallen to the point where the second mortgage would receive nothing in a sale at foreclosure. The second mortgage, in bankruptcy terms, is completely unsecured.
For many people, the monthly payment to the second mortgage they've been making will quite possibly be enough to pay all their debts in a Chapter 13 Bankruptcy plan. The situation would improve drastically, almost overnight.
All of a sudden, the house would be 30k under the mortgage instead of over 100k. All of their other bills would be wrapped up into one monthly payment. The stress and heartache caused by this financial disaster could be smoothed over. People can begin to have a bit of extra spending money that can be injected into their local economy as opposed to paying late fees to Visa and Mastercard.
Bankruptcy is not right for everyone. If you find yourself in an impossible financial situation, where you are juggling bills from paycheck to paycheck, it quite possibly can provide tremendous relief.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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