Bankruptcy & Foreclosure: Dealing with Your Home Through Bankruptcy

by John Skiba

In Sunday's newspaper they reported that nationwide there is expected to be an increase in the number of foreclosures. This not only impacts those families who are losing their homes but results in a continued downward trend in home values here in Arizona. If your home has been put up for foreclosure, or if you are debating whether you should stay in your home or not, it is important to understand how bankruptcy can help and open the options you have in dealing with your home. Below are three common scenarios I see with people and their homes and how bankruptcy can help in each situation:

Scenario #1 - Behind on House Payments

The most common situation I see homeowners in is being behind on their house payments. Some are a payment or two, some haven't made a house payment in more than a year. Usually after you have missed 3-5 payments the bank will send you a Notice of Trustee's Sale informing you of the date on which your home will be sold at auction. If you want to keep your home you should consider a Chapter 13 bankruptcy.

A Chapter 13 bankruptcy will stop the foreclosure sale that is set on your home and allow you to put together a plan whereby you can pay the missed payments. Further, you will be given three to five years to catch up on the missed payments. A Chapter 13 plan can make an impossible situation like getting all of your missed payments caught up at once into a more manageable situation where you pay a portion of the missed payment back over time. If you want to stay in your home Chapter 13 bankruptcy is a good option.

Scenario #2 - Upside Down in Home

Another common situation is where the value of the home is worth considerably less than what is owed. You love your home, but when you owe $350,000 on a home that is only worth $120,000, you have to question whether it is a good financial move to stay in the house. For many the reason the house is so far upside down is because they have a large second mortgage or home equity line of credit (HELOC). A Chapter 13 bankruptcy can help in this situation as well.

If the value of your home is worth less than what you owe on your first mortgage, we can eliminate your second mortgage or HELOC. For example, if you owe $200,000 on your first mortgage, and $50,000 on a HELOC, and the value of your home is $175,00, then we can eliminate the HELOC. However, if your home were worth more than $200,000 than we could not do this. For those who want to stay in their home but are very upside down in their mortgages a Chapter 13 bankruptcy is the way to go.

Scenerio #3 - Just Walking Away

For many it just doesn't make sense any more to stay in their home. Either the payments are too high, the bank has denied a loan modification, or you simply need to move. The problem you run into is in many situations if you walk away from your home the bank may be able to pursue you for the unpaid balance. If you are short sell your home you may end up with huge tax liability. However, if you surrender your home back to the bank through a Chapter 7 bankruptcy, you will have no future liability on the home and you will not incur any tax liability. An added bonus is if you have credit card debt or medical bills they can also be eliminated through the Chapter 7 bankruptcy process. If you have decided it is time to make a move, Chapter 7 bankruptcy is a good option.

All of my bankruptcy consultations are free. I would be happy to sit down with you and discuss your situation to see how I can help. Give me a call at (480) 420-4028 or contact me via email at .

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© John Skiba, Arizona Consumer Law Group, PLC | Attorney Advertising

Written by:

John Skiba

Arizona Consumer Law Group, PLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.