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Your Bankruptcy Options Before and After Repossession

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Repossessed car being towed

If you have been unable to make regular payments on a car loan, your lender may reclaim possession of your vehicle. Repossession usually results in the lender selling your vehicle to pay off the remainder of the loan, but there are steps you can take to stop the repossession or even reclaim your vehicle if it has been taken away through bankruptcy. 

Filing for Bankruptcy Before Repossession

If you are behind on your car payments, it is very possible that your vehicle may be repossessed at any time. If you have any reason to believe your lender may repossess your vehicle, or you know you may not be able to make future payments in addition to those that you already missed, one of your options to avoid repossession is to file for bankruptcy. Bankruptcy will give you time to catch up on your payments. Whether you choose to file for Chapter 7 or Chapter 13 bankruptcy will determine the amount of time you have to catch up. 

When you file for bankruptcy, an automatic stay goes into effect. This will not eliminate the possibility of future repossessions, but it will buy you some time to figure out your financial situation before your vehicle is repossessed. 

Related Post: The Effects of Bankruptcy on Repossession

Filing for Bankruptcy After Repossession

If your car has already been repossessed, you may be able to get your car back, depending on what type of bankruptcy you file. After your car has been repossessed, you typically have two weeks before the lender will sell it to help repay the money lost on the loan. In order to get your car back in those two weeks, you will have to file for bankruptcy before it is sold. 

Chapter 13 Bankruptcy

If you decide to file for bankruptcy to get your car back after repossession, Chapter 13 is usually your best option. Chapter 13 bankruptcy will give you time to catch up on your vehicle payments with a repayment plan, and lenders will typically return your vehicle to you after you file. 

Chapter 7 Bankruptcy

You may be able to get your car back through Chapter 7 bankruptcy, but in this case, you will not be allowed much time to catch up on payments before it is sold. In some cases, you may be able to negotiate the return of the vehicle, but this usually involves making the loan current which may be difficult in such a short amount of time. 

Related Post: Will Chapter 7 Bankruptcy Stop Vehicle Repossession?

Filing for Bankruptcy With Groce & DeArmon

Whether you want to avoid vehicle repossession due to too many missed payments, or your vehicle has already been repossessed, Groce & DeArmon can help. We can help you decide which type of bankruptcy is best for you, and we will be there for you during the process. Our bankruptcy lawyer Skari DeArmon has provided legal aid in the Springfield area for nearly 30 years and specializes in Chapter 7 and Chapter 13 cases. Visit us online for a free consultation or call us at 417-862-3706 today to learn more. 

What Happens to Vehicle Loans During Bankruptcy?

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Man signing car loan bankruptcy document

It can be difficult to decide what to do with your vehicle loan if you have filed for bankruptcy. What you can do with your loan? How easy it is to keep your car or get rid of your car? What type of bankruptcy do you want to file? These important questions can determine what will happen with your car loan. In today’s blog, bankruptcy attorneys Groce & DeArmon explain what happens to your car loan in Chapter 7 and Chapter 13 bankruptcy.

Car Loans in Chapter 13 Bankruptcy

If you are facing Chapter 13 bankruptcy, there are a few options for catching up on car loan payments. Here are a few of your options:

Reduce Principal

If you took your car loan out over two and a half years ago, you can reduce the principal of the car loan by finding the current value of the car and reducing the principal to match that value.

Reduce Interest

In many cases under Chapter 13 bankruptcy, you can reduce your car loan to a more reasonable rate by 4-6 percent.

Catch Up on Arrears

Under Chapter 13 bankruptcy, if you are behind on car loan payments you can tell your lender to accept small monthly payments to catch up, then resume making regular payments later on. This option is especially helpful for those facing repossession.

Related Post: Does Filing Bankruptcy Remove Repossession?

Car Loans in Chapter 7 Bankruptcy

If you are filing for Chapter 7 bankruptcy, here is what you can do with your car loan:

Surrender the Car

If you wish to get rid of your car, under Chapter 7 bankruptcy you can surrender your car to the bank. If you decide to give up your car you will not have to pay the remaining balance.

Retain-and-Pay

With retain-and-pay under Chapter 7 bankruptcy, your car loan will be discharged but you will be able to keep your car and pay the remaining debt without being personally liable. This means that the creditor can not come back to you for any unpaid debts and you are no longer legally required to pay the remaining debt. Once you have paid off the loan you own the car. This option is hard to come by because most lenders will demand a reaffirmation agreement instead.

Reaffirmation

Many lenders will not want you to discharge your personal obligation to a loan. In this case, they might demand a reaffirmation or a legal process where you will have to renew your commitment to paying the loan and will have personal liability.

Related Post: Will Chapter 7 Bankruptcy Stop Vehicle Repossession?

Bankruptcy Attorneys Groce & DeArmon

If you are considering Chapter 7 or Chapter 13 bankruptcy and are trying to decide what to do with your car loan, contact the trusted bankruptcy attorneys at Groce & DeArmon. With 30 years of experience, we can help you decide if bankruptcy is right for you. If you are interested in Chapter 7 or Chapter 13 bankruptcy you can start by scheduling a free consultation. Call us at 417-862-3706 or continue browsing our website to learn more.

Myths You Need to Know About Filing For Bankruptcy

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Hand drawing myth v. fact scale - bankruptcy attorney

Filing for bankruptcy can seem like a desperate decision for getting out of debt that leaves many people feeling embarrassed. Because of this, there are many myths associated with filing for bankruptcy that are simply wrong. In today’s blog, bankruptcy attorneys Groce & DeArmon clear up some of this uncertainty by debunking myths associated with filing for bankruptcy.

Related post: How to File for Chapter 13 Bankruptcy

Myth 1: It Will Ruin Your Credit Score Forever

One of the myths associated with bankruptcy is that it will destroy your credit for seven to 10 years. In reality, most people’s credit scores rebound within six months after bankruptcy is finalized. And in some cases, credit scores improve greatly after bankruptcy. Doing the right things to restore your credit like getting a secured credit card can help you get on the right track to a fresh financial start.

Myth 2: You Will Lose Everything

Many people believe that you will lose everything if you file for bankruptcy, including your car, your house, and whatever other assets you own. This is simply not true! Most Chapter 7 bankruptcy cases offer exemptions that allow you to keep your belongings up to a certain value.

Myth 3: Paying Off Debts Is a Better Option

Filing for bankruptcy isn’t necessarily a bad idea. In fact, if your debts are more than 50% of your annual income and you are not likely to pay them off in the next five years, bankruptcy is probably your best option. The immediate and long-term relief that you can achieve through bankruptcy oftentimes outweigh the downsides.

Myth 4: All Of Your Debts Will Be Forgiven

While it is true that many of your debts can be discharged or forgiven in Chapter 7 or Chapter 13 bankruptcy, it is important to remember that there are some debts that are less likely to be discharged. In general, this includes debts that you are personally responsible for like taxes, child support, student loans, and debt from fraudulent cases.

Myth 5: Filing For Bankruptcy Makes You a Failure

Some people believe that filing for bankruptcy is an embarrassing personal failure. In reality, many people file for bankruptcy as a result of situations out of their control, like medical bills or stagnant wages. Even if you are filing for bankruptcy because of mismanaged finances, it is important to remember that bankruptcy is a responsible step in the right direction to fix your financial situation.

Related Post: Filing for Bankruptcy Myths, Part 2

Bankruptcy Resources at Groce & DeArmon

If you find yourself in a difficult financial situation and want to learn more about how bankruptcy can help you, bankruptcy attorneys Groce & DeArmon can help clear up some of the myths you have heard about bankruptcy. With 30 years of experience in Chapter 7 and Chapter 13 bankruptcy cases in southwest Missouri, we can help you find a fresh start. Start by scheduling a free consultation. You can call us at 417-862-3706 or visit us online to learn more.

The Unexpected Benefits of Chapter 7 Bankruptcy

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Piggy bank with bandaid - chapter 7 bankruptcy

If you are filing for Chapter 7 bankruptcy, it is likely that you are looking for immediate relief from your financial burden. But what you may not know is that there are many additional benefits of filing for Chapter 7 bankruptcy that can help you find a fresh start financially. In today’s blog, bankruptcy lawyers Groce & DeArmon explain unexpected benefits of filing for Chapter 7 bankruptcy that you might not know about.

Related post: How To File For Chapter 7 Bankruptcy

Keep Your Vehicle Lease

If you are filing for Chapter 7 bankruptcy and have a leased vehicle that you want to keep, you can assume your lease contract within 30 days of filing. Assuming the lease allows you to keep the vehicle and still be legally bound to the contract. Keep in mind that assuming your lease means that you will give up the opportunity to discharge your debts or cancel your contract without owing anything.

Get Out of Your Vehicle Lease

If you decide that you no longer benefit from your vehicle lease, Chapter 7 bankruptcy can help you get out of your lease without owing any money.

Stop Student Loan Collection

If you owe student loans that you can no longer afford, Chapter 7 bankruptcy can help permanently stop the collection of those loans. This can be done through an automatic stay that will permanently stop collection, or by discharging the loan if it is determined to be causing you very specific conditions of undue hardship.

Related Post: How To Discharge Student Loans in Bankruptcy

Get Money Back From a Creditor

You can get money back that you paid to a creditor through preference law. This law states that if a creditor has received a greater share of debt than the rest of your creditors, they may have to pay the money back that was collected within 90 days of filing for bankruptcy.

Reinstate a Suspended Driver’s License

If you had your license suspended due to unpaid debts from a motor vehicle accident while driving uninsured, you might be able to get your license reinstated. Under Chapter 7 bankruptcy, you can discharge the debt which ultimately eliminates any reason to have your driver’s license suspended.

A Fresh Start With Chapter 7 Bankruptcy

Filing for Chapter 7 bankruptcy comes with many unexpected benefits, but one of the biggest benefits is that it will help you get a fresh start with your finances. By eliminating your financial hardship, you can be on your way to a financially stress-free life. If you have questions about filing for Chapter 7 bankruptcy or you want to get started today, Groce & DeArmon offers free consultations to help decide if bankruptcy is right for you. Call 417-862-3706 or visit us online to learn more.

What Not to Do Before Filing for Bankruptcy

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Bankruptcy resources - the do's and don'ts

The process of filing for bankruptcy can be confusing and stress inducing. Because of this, many people misunderstand and mishandle the process, resulting in irrational or even unlawful choices that can result in anything from dismissal to criminal charges. In today’s blog, bankruptcy attorneys Groce & DeArmon explain what not to do before filing for bankruptcy to keep you informed and to help protect you from getting in trouble.

Don’t Lie About Assets

You are required by law to provide complete and accurate information about your financial situation. Knowingly misrepresenting your information is a criminal offense that can be punishable by fines or imprisonment. It is also important to include all pertinent information, because the bankruptcy court may dismiss your case if it is not complete.

Don’t Run Up Your Credit Card Debt

Credit used within 90 days of filing for bankruptcy usually will not be included in your bankruptcy debts. Furthermore, if a creditor has reason to believe that you ran up your cards before filing, it will challenge your case, and you may end up having to pay your credit card debt in full.

Don’t Take On New Debt

Just like running up credit card debt, it is extremely irresponsible to take on new debt before you file for bankruptcy. This means no new car loans, no new student loans, and no payday loans. The responsible thing to do is stop all use of credit as soon as you decide on bankruptcy.

Don’t Pay Off Your Creditors

Paying off a creditor after you have decided to go bankrupt is not allowed. If you do this, it may be determined that you are favoring one creditor over another and could hinder your chances at completing bankruptcy.

Don’t Drain Your Retirement

Draining your 401(k) or retirement accounts to stash away money or use it to pay off creditors is risky business. Not only is it not allowed to pay off creditors before bankruptcy, but money in retirement accounts are exempt from bankruptcy and cannot be taken by creditors.

Don’t Transfer Assets to Family or Friends

Giving your possessions or assets away to friends or family with the intention of getting it back later is dishonest and can result in the denial of discharges. If you do sell property prior to bankruptcy in order to pay living expenses, this is allowed but must be supported with an explanation.

Do Consult a Professional Bankruptcy Attorney

Bankruptcy law is very complicated and easy to misinterpret, and there are many moving parts that can go undetected. This is why it is extremely important to hire and consult with a trusted and experienced bankruptcy attorney who can help you through the process. At Groce & DeArmon, our bankruptcy lawyers have over 30 years of experience to help determine if bankruptcy is right for you and help complete your case. If you are interested in Chapter 7 or Chapter 13 bankruptcy, you can start by scheduling a free consultation. Call us at 417-862-3706 or visit us online to learn more.

Related Post: When to Seek Legal Aid for Bankruptcy

How Bankruptcy Can Stop Wage Garnishments

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Bankruptcy attorney with money and gavel

If you are having a hard time covering day-to-day living expenses due to wage garnishment, it can be difficult to find a good solution for paying off debts. In today’s blog, Groce & DeArmon, P.C. offer a solution that could help: Chapter 7 or Chapter 13 bankruptcy. Read on to learn how bankruptcy can stop wage garnishments and how our team of bankruptcy lawyers can help.

Understanding Wage Garnishment

Wage garnishments are court orders that cause your employer to withhold a part of your paycheck in order to pay back a creditor or a person to whom you owe money. Creditors have the right to garnish 25% or more of your wages to repay debts on things such as child support, defaulted student loans, consumer debts, and unpaid income taxes.

Related Post: What Are the Wage Garnishment Laws in Missouri?

The Automatic Stay

Whenever a debtor files for bankruptcy, an injunction called an automatic stay goes into effect immediately. This will quickly stop wage garnishments along with other types of debts, giving debtors a temporary break from the financial crisis.

If the debt that led to wage garnishment includes credit card bills, medical bills, or court judgments, they will be wiped out during bankruptcy, permanently stopping the wage garnishment. If you filed for Chapter 7 bankruptcy, these debts may be discharged at the end of the case. If you filed for Chapter 13 bankruptcy, you can include these debts in the bankruptcy repayment plan rather than going through wage garnishment.

It is important to remember that not all debts may be discharged during bankruptcy. In some cases, bankruptcy will only temporarily stop the collection of debts and wage garnishment, in which case you will still owe these debts once the bankruptcy is over.

Recovering Previously Garnished Wages

In some cases, debtors can try to recover wages that were garnished before they filed for bankruptcy. But it is important to remember that most of the time this isn’t worth the cost, and that filing for bankruptcy as soon as possible will help you avoid the loss.

If you decide to try and recover garnished wages, remember that it must have occurred at most 90 days before filing for bankruptcy, it must not exceed a particular amount, and the amount you wish to recover will need to be covered by an exemption.

In most cases, there is little to no exemption protection for wage garnishments, and you will have to file a lawsuit in bankruptcy court against your creditor. It’s important to speak with your bankruptcy lawyer to decide whether or not recovering garnished wages is right for you.

Life After Bankruptcy

Remember that creditors are not able to resume wage garnishments on debts that have been discharged, including credit card balances, personal loans, and medical bills. Also, remember that creditors are able to resume garnishment for non-dischargeable debts which you will be responsible for paying.

Related Post: How to Prevent Wage Garnishment With a Bankruptcy Lawyer

Bankruptcy Attorneys at Groce & DeArmon, P.C.

If you find yourself in financial trouble due to wage garnishment and you think that filing for bankruptcy may be right for you, bankruptcy lawyers Groce & DeArmon, P.C. may be able to help. We offer trustworthy services that can help you decide which type of bankruptcy is right for you. Visit us online or call us at (417) 862-3706.

Bankruptcy and Foreclosure: What Happens to My House If I File Bankruptcy?

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One of the first questions that comes to mind when considering bankruptcy is, “What will happen to my house?” Being in an overwhelming financial situation raises concerns about what the future will look like. However, in most cases, you will not lose your house as a result of bankruptcy. There are several factors that determine whether or not you will be able to maintain ownership.

Every bankruptcy case is different, so it’s important to understand the components that make up your specific chapter filing. One of the most important steps in the filing system is determining what assets qualify for exemption. Read on to learn all the details from the attorneys at Groce and DeArmon in Springfield, Missouri.

Qualifications for Home Exemption

While filing bankruptcy, you are able to keep some of your assets. These assets are known as exempt property. Usually, you are allowed to keep your house because it is viewed as a necessity. Having home equity that exceeds the value of your home will be a consideration when filing for bankruptcy. In order to determine your home equity, you will take the home’s market value and subtract the amount of outstanding debt from your mortgage. You need your exemption to surpass your equity to increase the odds of maintaining ownership of your home.

Related Post: Exempt and Non-Exempt Properties

Filing Chapter 7 Bankruptcy

Chapter 7 bankruptcy is also known as the “liquidation bankruptcy” because trustees can sell some of your property to repay creditors. The total value of assets that are non-exempt will be an important factor for the liquidation process.

Having enough equity in those non-exempt assets to repay the creditors will make it easy to avoid the liquidation of your home. Another major factor is whether you are staying up to date on mortgage payments. If you are making payments on time, the likelihood of keeping your house is higher.  

Filing Chapter 13 Bankruptcy

The main purpose of chapter 13 bankruptcy is to formulate a payment plan with the lender over a three to five year period. You are more likely to maintain ownership of your home, however, there is some difficulty with a chapter 13 filing. Along with the new payments to your lenders, you must also maintain your original mortgage payments. If you are able to pay both payments on time throughout the entirety of the plan, at the end of the contract you will be out of bankruptcy and you will keep your home. But if you fall behind on these payments, you have a higher chance of losing your home.

Related Post: How To File For Chapter 13 Bankruptcy

How Groce and DeArmon Can Help

We understand that keeping ownership of your house is a priority. At Groce and DeArmon, we will work with you during the entire filing process and be a resource to you even after the case is closed. Contact Groce and DeArmon to discover more about how we can help your case.

Groce and DeArmon Explains: Life After Chapter 13 Bankruptcy

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The reasons to file for chapter 13 bankruptcy can be very situational. Chapter 13 bankruptcy, also known as “Wage Earner’s Bankruptcy,” enables individuals to restructure their payments within a three to five year period while keeping their assets. Unlike other bankruptcies, chapter 13 provides a plan to repay all or a significant portion of the debt.

So, what comes next? What can you expect in the future? You will likely have many questions about life after chapter 13 bankruptcy. Today, Groce and DeArmon help to answer some of these important questions to make your situation easier.

Rebuilding Your Credit

If you are filing for bankruptcy, it is likely that you have dealt with debt issues which affected your credit score. A first step in the rebuilding process should be applying for a secured credit card. In order to use the card, you need to deposit money to ensure initial payment. Secured cards are a great way to rebuild credit and become more spending-conscious while also being transparent with the credit issuer.

Groce and DeArmon Quick Tip: It can often be difficult to get approval for an unsecured credit card after bankruptcy. Start with a secured credit card and improve your credit score!

Staying Up to Date on Reports

It will be beneficial to stay up to date on your financial reports during the next three to five years. There can be mistakes hidden in credit reports that may go unnoticed without a careful eye. Life after chapter 13 bankruptcy needs to be very organized and cautious. By reviewing monthly credit reports, you can see what your spending habits are and determine what actions you should take to prevent overindulgence in unwanted categories.

Budgeting

You will need to limit some areas in your spending in order to prevent future problems. Make a detailed budget that shows your priorities and stick to this budget. If you are filing chapter 13 bankruptcy due to medical expenses, a job loss, or for other reasons, make sure to prioritize spending in areas that are necessary for daily life in your situation. Budget in an emergency fund just in case a situation arises without warning. Often times, not being prepared for an emergency can be the tipping point back into debt.

Seek Professional Help from Groce & DeArmon

Groce and DeArmon offers resources to help individuals post-bankruptcy. We are able to provide advice for how to recover from chapter 13 bankruptcy, and we have specialists that can answer your questions. We wish you the best in your financial journey, and we want to assist you to the best of our abilities. Contact Groce and DeArmon, P.C. to talk to a bankruptcy attorney or visit our website to learn more about the services we offer.  

Related Post: How To File For Chapter 13 Bankruptcy

Bankruptcy and Repossession: Does Filing Bankruptcy Remove Repossession?

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Repossession of a vehicle is a tiring and often confusing process, and making the decision to file for bankruptcy only adds to the stress. It’s important to understand the reason your vehicle is in repossession before you decide whether bankruptcy is the best solution.

Filing for bankruptcy before your car is taken may give you certain rights as a property owner to prevent further action. There are also ways to get your car back after a repossession. In today’s blog, the bankruptcy attorneys at Groce & DeArmon explain the different ways you can avoid or delay a repossession of your vehicle.

What Is Repossession?

Lenders of a secured loan may repossess property obtained through the loan if you have not been able to make payments on that loan. Repossession usually occurs on property such as vehicles or real estate, and will most often occur with notice and without force. Without further action, repossession usually results in the lender selling the property to pay off the remaining balance of the loan.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as the wage earner’s plan, allows individuals with consistent income to create a plan to repay all or part of their debt. Repayment plans are typically made in installments over three to five years. This form of bankruptcy is available for all individuals with unsecured debt less than $394,725 and secured debt less than $1,184,200.

What It Means for Repossession

Chapter 13 bankruptcy prohibits the lender from repossessing your vehicle or property until the payment plan is approved by the judge. However, this may not protect you if you have filed for Chapter 13 bankruptcy in the past 30 days or you reject a personal property lease. In these cases, the creditor can ask the court to lift the automatic stay. One benefit of this type of bankruptcy is that it may reduce the balance on your loan to match the value of the property.

If you feel that Chapter 13 bankruptcy is right for you or you have questions about filing, call the bankruptcy attorneys at Groce & DeArmon.

Related Post: How To File For Chapter 13 Bankruptcy

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common form of bankruptcy available to qualifying individuals, couples, or companies through the use of an overseeing Trustee. Chapter 7 bankruptcy is normally dismissed several months after the case is filed and may result in the selling of personal property and unsecured debts being wiped out.

What It Means for Repossession

Chapter 7 bankruptcy allows for an automatic stay on your property which keeps the lender from repossessing your vehicle unless they file a motion to lift the stay. In the event that the court allows the lender to proceed with repossession, Chapter 7 allows you to set forth one of the following options:

  • Redeem: Buy the vehicle back from the lender in one lump sum.
  • Reaffirm Debt: Agree to new terms of payment with the lender.

If you decide that Chapter 7 bankruptcy is right for you or you have questions about filing, call the bankruptcy attorneys at Groce & DeArmon for help.

Alternatives to Bankruptcy

Filing for bankruptcy is not always the best option for dealing with repossession. Here are a few things to consider before you make the decision.

  • Reinstating your vehicle loan by making all past due payments in one lump sum may help you avoid filing for bankruptcy. Contact your lender right away and start by requesting a reinstatement quote. The reinstatement amount is typically viable for a short amount of time and is no longer feasible if the car is sold.
  • Redeeming your vehicle is the act of paying off the remaining outstanding balance of your loan, including the fees and charges. Redemption is typically viable for a short period of time and is no longer feasible if the car is sold.

How to Get Bankruptcy and Repossession Help

It’s always a good idea to contact an experienced bankruptcy attorney at Groce & DeArmon to ensure you are making the right decision about filing for bankruptcy in the event of repossession. Schedule your free consultation with us today.  

Related Post: When To Seek Legal Aid For Potential Bankruptcy

Filing Bankruptcy Before Foreclosure: Advantages and Drawbacks

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A foreclosure typically begins after a homeowner falls behind on mortgage payments. If you’ve missed a few mortgage payments and have been persistently contacted by your bank, filing bankruptcy can help you. The timing of your bankruptcy can make a difference for you, and whether you should file before or after foreclosure depends on your particular situation.  

In some cases, it’s better to file for bankruptcy first, before the foreclosure sale occurs. Today, learn all the details about the process of filing for bankruptcy before foreclosure.

The Automatic Stay

Once the bankruptcy case is filed, legal protection called an automatic stay is issued by the court. The automatic stay restricts creditors from pursuing any debt collection actions, including a foreclosure on a home.

Your lender has the right to ask the bankruptcy court to remove the automatic stay and allow them to move forward with the foreclosure. But there is often a surplus of foreclosed homes on the market, so lenders usually wait for bankruptcy cases to conclude before continuing with foreclosure.

Buy More Time in Your Home

The automatic stay stops the foreclosure and allows you to stay in your home for the time being. As your bankruptcy goes through the court system, which could take three or four months, you can live in your home without paying mortgage or rent. This will then help you build up your savings.

Be aware that the length of the stay can vary, depending on your circumstances and the bankruptcy chapter you file. The foreclosure could last for several months, it could last for five years, or it could be permanent.

Consider Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, you make payments to your creditors over a three to five year period. You may keep your property in return. If you are in foreclosure and you want to try to keep the property, you may be able to pay off your overdue mortgage payments over the progression of your repayment plan. Then, at the end of your plan, you will be current with your mortgage again. You would not be able to get caught up on missed mortgage payments if you file bankruptcy after your home is sold at foreclosure.

Avoiding a Deficiency Judgment

A deficiency is the difference between how much you owe when your home is sold at foreclosure and its fair market value. By filing bankruptcy before the foreclosure sale, you remove your legal responsibility to pay the deficiency. Bankruptcy will also eliminate your obligation to pay mortgages that weren’t paid through the foreclosure sale, such as a second or third mortgage.

Potential Tax Benefits

You can also avoid the tax consequences that can follow a foreclosure, such as capital gains or tax due on forgiveness of debt income (if the mortgage company waives its right to collect a deficiency). It’s important to discharge the debt before the tax gets assessed.  

Contact Groce & DeArmon Today

If foreclosure is a threat to you, it’s important to seek out legal aid immediately to see what you can do to stay in your home. For more information about bankruptcy and foreclosure, contact Groce & DeArmon, P.C. today or call us directly at (417) 862-3706.

Related Post: Filing For Bankruptcy After Foreclosure