The Bankruptcy Reform Act of 2005 changed the entire bankruptcy landscape as we used to know it. Today, most bankruptcy attorneys need at least 3 weeks before any major event, such as a foreclosure auction date, in order to adequately prepare a Chapter 7 bankruptcy petition, and file with the Court.
Homeowners who have waited too long to deal with foreclosure often find out what bankruptcy lawyers can do to help them. While the law still permits individuals to file their own bankruptcy petition on a pro-se basis (representing themselves), unrepresented individuals should NEVER file Chapter 7 bankruptcy without the assistance of a competent attorney.
It is important to remember that bankruptcy is a temporary solution and should always be
Bankruptcies usually only prolong the situation. In rare instances, a homeowner may be able to successfully use a Chapter 13 Bankruptcy as a way of restructuring all of their other debts where they can then free up enough cash in order to make their payments, such as their house payment. Unfortunately, less than 10% of all people who file a Chapter 13 Bankruptcy ever successfully make it through to the end of the Bankruptcy.
Furthermore, filing a Bankruptcy is the only adverse event that lasts longer on an individual’s credit report than a foreclosure action. In order to file for Bankruptcy, a homeowner is going to have to hire a lawyer in addition to having to attend various debt counseling classes all prior to being able to file Bankruptcy.
In instances where a homeowner knows that they will be unable to make their mortgage payments due to their financial situation, they would be wise to wait to file a Chapter 7 Bankruptcy until after the foreclosure process has come to a final conclusion.
“It is important to remember that bankruptcy is a temporary solution and should always be a last resort option.”