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Individuals in debt and facing foreclosure

Individuals in Washington saddled in debt need to be informed about all of their financial and legal options.  While filing bankruptcy may allow one to discharge most of one's unsecured debt, every situation is unique.  Besides unsecured debt, we also must take into consideration what is to be done regarding secured debts.

One of the major concerns for individuals filing bankruptcy is the homestead.  Individuals may file bankruptcy to stop a foreclosure as a filing can result in what is called an automatic stay.  An automatic stay is not the end of the story, however.  After an individual files for bankruptcy lenders may attempt to have the bankruptcy stay lifted in an attempt to foreclose upon property 

Under Chapter 7 bankruptcy, the trustee will have great say as to what will occur with a borrower's property in the event of such a filing.  One obligation of the trustee is to determine whether assets may be liquidated so that unsecured creditors can be paid back.  Sometimes rather than foreclosure, lenders will attempt to persuade the Chapter 7 trustee to opt for a short sale upon the property.  Lenders may seek this option as it could be less costly and time-consuming for them than a foreclosure.

Obviously homeowners do not wish to have their property foreclosed upon.  They also may be uncomfortable with lenders attempting to have the property forced into a short sale situation.

Because circumstances are so complex that individuals seeking debt relief may wish to speak to an experienced attorney that understands bankruptcy and other debt relief options.  These attorneys can represent clients going through Chapter 7 filings and can oppose lender attempts to have an automatic stay modified or lifted.  Such lawyers can also counsel individuals concerning other debt relief strategies besides bankruptcy.

Source: Savannahnow.com, "Bankruptcy: A good thing for unsecured mortgage lenders?" Margaret Puccini, Nov. 28, 2013

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