Keeping Home Sweet Home – It Depends!

October 27, 2007 7:39 am Published by

     Yesterday I quoted an article from the Wall Street Journal about people who need to file bankruptcy, and how what type of bankruptcy they choose affects whether they can stay in their home. When I’m helping someone take the big step of filing bankruptcy in Indiana, one of the big decisions is whether to go with Chapter 7 or Chapter 13.  Like tools, each chapter is designed to help people with different problems.

              The interesting thing that I’ve found — and remember that in my Indiana bankruptcy law office we’ve handled literally tens of thousands of bankruptcies — is that there’s no one right decision.  It depends.  For example, it depends on whether there are children involved, children who might have to change schools if the family needed to move.

              It also depends on what kind of mortgage is on the home.  If an adjustable rate mortgage is about to jump up to a higher rate, that will mean even higher monthly bills. There simply may be no way to pay the higher amount each month, catch up on other bills that are behind, all the while staying current on new bills.  As painful as moving might be, staying in the home may not make the most sense.

             Everyone’s situation is different.  Some people have been responsible with money all of their lives, but had their finances derailed by a major illness, or by a layoff by their company.  Maybe now they’re back on track with a new job, or been given a clean bill of health.  Given a couple of years, they can see their way clear to catching up on the house payments and other debts.  On the other hand, I talk with people who, to begin with, bought more house than they could handle.  The sooner they escape that oversized financial drain, the better.

            Whatever the circumstances, it’s best to find professional help, dig in, and make a plan.  It helps to keep in mind that your "home, sweet home" is wherever you are, where you come to at the end of the day. A plan of action is always better than no plan.  In the midst of debt problems that won’t go away without help, what people truly want, I’ve learned from my professional experience, is to get back on track.  To do that, they may be best off filing a Chapter 7 bankruptcy or best off filing a Chapter 13 bankruptcy.  Which one should clients choose?  It depends.  Either way, the whole idea is to start a new "chapter" in life!

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This post was written by Mark Zuckerberg

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