Sacramento Bankruptcy Attorney Talks About The New Bankruptcy Seeker
Sacramento Bankruptcy Attorney Talks About The New Bankruptcy Seeker
Few years ago, bankruptcy was a means for homeowners to preserve their property. Specifically, a homeowner could use the bankruptcy protections to realign their finances into a structure that they could handle which included a payment plan to pay off any missed payments in a Chapter 13 Bankruptcy and keep the house. Alternatively, the debtors could discharge their unsecured debt which allowed them to pay for secured debt such as the family residence in a Chapter 7 Bankruptcy. However, due to the subprime mortgage practices, a new kind of bankruptcy story has become common.
Today, which reflects the hangover from easy credit, bankruptcy has become a finite way for debtors to shed properties they no longer can afford (as opposed to keeping the properties). For example, a middle class family who were enticed into real estate speculation now has 2 investment properties that have no equity (or negative equity) due to dropping housing prices with an adjustable mortgage set to increase within the year (or already has). Such a couple cannot afford the new monthly mortgage payments and they cannot sell their property since there is no equity. Over the next two years, such a couple has no choice but to file bankruptcy or risk years of financial oppression that should never had happened to them. The key is how soon such a couple will realize that bankruptcy will help them.
The usual pattern is that the couple will begin to deplete their savings to make up the mortgage payments. There is hope that the market will turn or that somebody will bail them out which never materializes. Once the savings are gone, the couple may cannibalize their retirement accounts which destroys their future savings and then begin to heavily use credit cards for quick cash which locks them into a cycle of servitude to the credit card companies. Eventually, the higher debt begins to negatively affect their credit score which may cause the interest rates on their credit cards to skyrocket. Sometimes the interest will be over 20% a year. During all this time, the couple is paying out more than 50% of their income to lenders of one sort or another. Two years later, the couple still owes the mortgage, still has no equity, and no has incredible credit card debt.
Finally, when all the savings is gone, their retirement evaporated, and credit cards maxed out, the couple will look into bankruptcy. At which time they will discover that bankruptcy will allow them to surrender the bad investment homes, discharge the credit card debts, and save whatever retirement funds they have left. Could this couple have avoided this scenario by looking into bankruptcy sooner? Contact Sagaria Law at 1-800-941-6730 or www.sagarialaw.com for a consultation to find out.
