For debtors facing foreclosure, one of the biggest concerns is the ability to provide living arrangements for themselves and their families in the event that they wind up surrendering their homes. In this housing market, says Christian Younger of Younger & Hennecke, some homes are now worth far less than their original values, and it is no longer considered a wise financial move to save burdensome mortgages.
Unless a loan modification works out in your favor, which unfortunately is rare, the only other option for many is to file for Chapter 13. Sometimes, under Chapter 13, homeowners are able to find a way to repay past due mortgage installments and remain up-to-date on future payments.
For many people, however, this struggle is not something they want to put themselves through if they still owe more on their mortgages then their homes are being appraised for. In these instances, people may choose to give their homes up, file for bankruptcy, and start over. The question then becomes whether or not they will be able to buy or rent new spaces given the state of their credit reports.
The short answer, says Younger, a Bay Area Chapter 7 bankruptcy lawyer, is yes. In the past three years, he continues, a large majority of people have chosen to file for bankruptcy because of their outstanding mortgages. In those three years, Younger explains that none of the thousands of clients he helped who surrendered their homes came back to him because they were unable to find new living arrangements.
According to Younger, when you file for bankruptcy protection, you are in same boat as countless others. Landlords and property owners understand this trend and have altered the way that they do business in order to accommodate the influx of possible renters who may have filed for bankruptcy in the past. After all, rental units still need to be rented out; it just might mean that if a credit check shows that you have filed for bankruptcy, then you may have to pay a higher deposit when you sign your lease as added assurance.
On the other end of the spectrum are renters who are so far in debt that they can no longer afford to pay for their current living arrangements. In these instances, Younger says, it is possible that if you file for bankruptcy, you will be able to break your lease prematurely. This does mean, however, that you will have to vacate the space and move elsewhere. Regardless of whether you file for bankruptcy or not, Younger says, if you want to live somewhere, then you will have to pay accordingly.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Neither publication of this article nor your receipt of this article create an attorney-client relationship.