Even after five years of myth-busting in these Bankruptcy in Indiana articles, there are still so many half-truths circulating about bankruptcy, I think it’s important to keep shedding light and exposing misinformation when it comes to the way Indiana bankruptcy law really works. Often, there’s just enough truth that is mixed in with the falsehood to make the typical myth becomes all too easy to believe.
As a longtime debt consolidation lawyer in Indiana, I find that one really important myth that continually needs to be “put to bed” is that bankruptcy can’t help stop foreclosure. This is a harmful combination of true and false information for several reasons:
A foreclosure is a very serious thing to mortgage lenders, more serious than a bankruptcy. So, even if it turns out that you have to move, it's better to try to avoid foreclosure. Finding a compromise solution with your mortgage lender is one of the things I work on with clients.
Mortgages on primary homes are the only kind of secured debt that is NOT eligible to be modified in a bankruptcy. But, as my Bloomington, Anderson, Richmond, Indianapolis, and Columbus bankruptcy lawyer colleagues all know, if more people knew that Chapter 13 bankruptcy law could, in fact, be used to save their homes, they would be quicker to get the legal advice they need. In most cases, Chapter 13 puts off foreclosure while the homeowner works out a plan to pay off a portion of the debt, including the mortgage, over time. How long a time? Usually three to five years. Even with bankruptcy Chapter 7, the Automatic Stay “buys time” for debtors to work out a course of action.
- Not in every situation is it best for debtors to keep their homes. When I meet with folks in one of my five Zuckerberg bankruptcy law offices, we discuss different options that can help them get a handle on their financial problems. The best plan might mean purposely allowing a foreclosure (or using a Deed in Lieu of Foreclosure or Short Sale strategy).
Over my more than 26 years offering Indiana bankruptcy information, I’d have to say that the biggest and most dangerous myth of all is that there’s only one right course of action for all debtors. Since each client’s situation is different, it’s no myth that my colleagues call Mark Zuckerberg the “It depends answer man”!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg