Many debtors come to see our firm because they have gotten behind on their mortgage. Some of them have already been through the process of trying to modify their mortgages. Most of them say, at some point in the first meeting, “we just have to save our home.” All Bankruptcy attorneys will tell someone, “of course we can stop the foreclosure and save your home.” But what many will not tell someone is, “but in your case you just should not.”
Let’s face it, homes, like cars, are status symbols. Many, many, people buy and try to hold on to houses that are just plain more house than they need and more house than they can really afford. In the analysis, the factors that must be examined are, 1, what is the actual cost of occupancy and how does that compare with the community; and, 2, is there any equity in the property to protect and preserve with a bankruptcy case. If these factors do not favor keeping the home, and if keeping the home is just not easy in your newly reorganized financial structure, it may be time to let go.
Bankruptcy is a perfect fit for surrendering a home that doesn’t suit your needs. There are no complex negotiations, no short sale approvals, and no deficiency claims from the bank to worry about. Moreover, the debt forgiveness is not taxed as income when it results from bankruptcy.
Deciding whether to keep a house can be one of the most important issues to tackle when you are facing insolvency. Having helpful, objective, professional advice is an important tool in the process.