As many New Yorkers may know, the recent economic downturn took its toll on consumers. Owning a home might be a goal, but having a mortgage that is not payable due to losing a job strains both family relationships and places undue stress on a family. Having an alternative such as bankruptcy might be a way to start over again.
Families doing well enough before a disastrous economic event to hold a mortgage on two residences might suddenly find themselves in a situation where they need to sell assets and take more than one job to hold onto their homes. Some people find that what they owe on their mortgage is more than the worth of the property. This may be solved by using a short sale where the bank agrees to accept an amount less that the mortgage. However, the bank does not always agree to a short sale, or buyers may not be available. In such cases, the debtor’s chance of recovering from debt is lessened. In this situation, other debt relief options might be available.
Bankruptcy is one way of starting over. Of the types that are available to individual debtors, Chapter 7 bankruptcy is the one most commonly sought. The debtor’s non-exempt assets are sold and the proceeds used to pay creditors. Most remaining unsecured debt is discharged. Another type of bankruptcy is Chapter 13, which may be available to debtors who have a regular source of income. Debts are repaid in accordance with a court-approved plan that lasts for a period of from three to five years.
Filing for bankruptcy can often put a temporary halt to debt collection activities and creditor harassment. There are eligibility and other requirements that pertain to filing that an attorney can explain.