Bankruptcy Can Protect the Unemployed From Foreclosure, Advise Chicago Attorneys

The foreclosure saga continues. This week, the Washington Post reported that unemployment has officially overtaken subprime mortgages as the leading cause of foreclosure. An estimated 1.8 million homeowners could lose their house to the bank this year, compared to last year's 1.4 million.

Folks without jobs have an extra hard time qualifying for loan modification (so much for the federal government's modification program). As if that's not bad enough, lenders like to tack on late fees for delinquent borrowers - so that when they do find work again, they have to pay a lot more than just their missed mortgages.

But that's enough negativity for one post. How about some good news? Here it goes - even if you're dealing with unemployment, you still don't have to give up your house!

What's the catch? You need to act fast.

Unemployed homeowners often wait too long to seek help. I've seen it happen. When an acquaintance lost her job, she spent all of her time searching for and applying to new positions - a responsible thing to do, mind you - but zero time managing her budget. She didn't have an emergency fund, she didn't cut back on spending, and she certainly didn't allocate her unemployment to the mortgage. When she did find a job nearly three months later, it was too late - she was out of money and, after a short sale, a home.

Had she been proactive and sought help before it was too late, she'd be back at work, still in her home and - if she filed for bankruptcy -debt-free and able to pay the bills more easily than before the economy went to hell.

There are two types of bankruptcy - Chapter 13 and Chapter 7. Chapter 13 can stop foreclosure immediately thanks to a court order called an automatic stay. It's best for people with steady incomes - for instance, maybe you finally found a job after a layoff, but your time out of work has left you saddled with major debt.

If you've been out of work for some time, Chapter 7 might be a better option. In exchange for a quick discharge of your debts - sometimes in as little as a few months - you might need to liquidate some of your assets. However, there are many exemptions. Most items deemed necessary are exempt, as is the equity in your house up to a certain amount. Bankruptcy exemptions can be complex, but fortunately a DebtStoppers bankruptcy lawyer in Chicago or Atlanta can identify the best plan for you when you sign up for our free one-on-one debt analysis.

If you've ever looked for work, you probably already know that you can't expect a job to come to you - you have to come to it, by researching, applying and interviewing. Well, it's the same thing with your house. If you wait for a miracle, you probably won't find one. Instead, be proactive. Take matters into your own hands. Fight for your house just like you fight for your job. We can help you do it.

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