What protection do I receive if I file a bankruptcy before foreclosure?

If you file bankruptcy before the foreclosure, the IRS cannot say that you have received taxable income, and the mortgage company cannot sue you for the deficiency.

If you want to keep your home, file a Chapter 13.

When you file a Chapter 13 Bankruptcy you receive an automatic injunction from the Federal Bankruptcy Court that stops the foreclosure. Your Chapter 13 plan will show how you will repay the delinquent mortgage payments over time. You have up to five years to complete these payments. The Chapter 13 plan will allow you to pay your secured creditors and a portion of your unsecured debt.  

If you want to surrender your home, file a Chapter 7.

If you surrender your home, then the chapter 7 will prevent the mortgage company from suing you for the deficiency, which is the difference between the mortgage and the sale price at foreclosure. If you surrender the home while you are in a Chapter 7, the IRS will not be able to claim that you had any relief of indebtedness income.

If you want to proceed with a filing, we can help.

You will need to fill out a comprehensive form stating your assets, debts, and IRS standing.  You will need to provide this information to our office before we begin to file your bankruptcy.  Please read over this information before you come in, so that we might have a better perspective of your situation.  You have the choice of printing out the forms and filling them in manually, downloading a Word document which you can fill out on your own computer, or filling out the information online and having the form sent via e-mail to our office.  These are not required for a first consultation, but the information is necessary before we can act on your behalf.  At any time during the process, do not hesitate to call our office to discuss specific issues.