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Can You Save Your Home If You File for Bankruptcy?

by Erin B. Shank

If you are still feeling the impact of the recent recession you are certainly not alone. Some people suffered more than others, but few people made it through unscathed. For some, the financial crisis has led to the possibility of foreclosure. If you are one of those people, bankruptcy may be a way to save your home.

Foreclosure is the legal process required for a lender to take possession of a property when the borrower has defaulted on the loan. Most homebuyers rely on a mortgage loan to cover the majority of the purchase price when they buy a home. If the homeowner defaults on the loan by getting too far behind on the monthly loan payments, the lender may initiate the foreclosure process. For most lenders, this is an option of last resort because foreclosure costs money and takes time. Lenders would typically prefer to work something out with the homeowner when possible. If, however, you are being threatened with foreclosure, or have been served with notice of foreclosure, you must act immediately to save your home. Bankruptcy may be the best option.

A debtor may file for protection under several different chapters of the U.S. Bankruptcy Code. The most common chapters for individual debtors are chapter 7 and chapter 13. Due to the strong exemption laws, individuals can file a Chapter 7 case, stop the foreclosure and then seek a modification of their home loan, which may include a reduction of the interest rate and re-amortizing the payments that you were not able to pay that caused the lender to start foreclosure proceedings on your home. Another less attractive approach is to file a Chapter 13 bankruptcy case and paying your missed mortgage payments through a wage garnishment over three to five years. However, if you have income and want to save your home seek advise from a good bankruptcy attorney who can help give you options on saving your home.

erin b shank

I have been practicing exclusively bankruptcy law in Texas for almost 40 years. Unlike most other law firms, my firm is exclusively dedicated to helping individuals and small businesses find a way out of their financial difficulties through the use of our nation’s bankruptcy laws.

Associations & Awards
  • Client Companion Award | Erin B. Shank
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  • Preeminent Award | Erin B. Shank
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  • state bar of texas
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