Bankruptcy May Not Help Homeowners

Many homeowners believe that filing bankruptcy will help save their home and prevent them from going further into debt. Unfortunately, filing for bankruptcy if you are a homeowner is not as easy as you think. Approval for bankruptcy depends on your salary and the family size. Income limits are based on the state you live in www.justice.gov/ust/eo/bapcpa/20101101/bci_data/median_income_table.htm.

However, if have a higher income you can still file. You must provide proof that you are unable to pay your bills and have sought additional help in the past. You must provide documentation such as: tax returns, paystubs, bank statements, mortgage statement or rental lease agreements, detailed list of monthly expenses including, a list of all debt, amount owed, interest rates, canceled checks and credit card statements, retirement accounts, business income and debt, and child support. Be honest when providing documentation. If you decline to provide all the requested documentation required by the Trustee your bankruptcy filing may be dismissed. Do not include you SSN on any documentation provided. Mistakes in your documentation can cause delay or a dismissal. If you do meet the income requirements there are additional criteria you have to meet such as:

• You must take a credit counseling class prior to filing for bankruptcy.
• If you have enough income to pay some of the debt you may be considered for a Chapter 13 bankruptcy.

Here are 11 tips to consider before filing for bankruptcy:

• Bankruptcy fees when filing on your own cost approximately $300 when filing for chapter 7 (most debt cleared) or chapter 13 (repayment plan for 3-5 years). Bankruptcy filing fees when using a bankruptcy attorney can range from $1,000 - $4,000.

• Look for real estate investors in your city by doing a search on google “name of your city or state real estate investors”, i.e. “maryland real estate investors”, etc.

• Do not make any large purchases before filing for bankruptcy because this will decrease your chances of being approved.

• Don’t file Chapter 7 bankruptcy if your income exceeds your expenses.

• Don’t transfer credit card balances.

• Don’t make payments on any debt.

• Don’t file your tax return if you expect to get a large refund.

• Don’t cash out any retirement plans or 401k’s because this money is exempt from bankruptcy.

• Don’t take out any loans or open any new credit accounts.

• Disclose any judgments, collection accounts, and tax liens.

• Don’t bank where you owe money. Close the account and open a new at another bank. If you wish to continue doing business with the bank take all the money out of your account as soon as your direct deposit is posted to your account. If not, this will increase your chances of having your bank account garnished.

The following debt is not included in Chapter 7 bankruptcy: taxes and tax liens, student loans, child support and alimony, debts for fines or penalties to governmental agencies, debts for judgments in wrongful death or personal injury lawsuits, and condominium or townhome association fees. The following debt not included in Chapter 13 bankruptcy: some taxes, student loans, child support and alimony, debts for fines or penalties to governmental agencies, debts for judgments in wrongful death or personal injury lawsuits, debts incurred after filing your case.

Items that are exempt from bankruptcy:

• $16,500 in equity in your home

• $2,575 in equity in your car

• $425 per item in any household items up to a total of $8,625

• $1,625 in job-related expenses, books, etc.

• $850 in any property, plus part of the unused exemption in your home, up to $8,075

• Social security, unemployment, VA benefits, welfare, and pensions