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Bankruptcy may allow for keeping home while erasing other debt

There are many reasons why people in Washington and other states file for personal bankruptcy relief. Their debt problem may be due to catastrophic medical debt, unemployment, disability or massive credit card debt caused by divorce and/or any of the foregoing problems. They may also be so overwhelmed with student loan debt that they seek bankruptcy relief to eliminate their unsecured debt and thus free up their budget to make student loan payments.

Consumer bankruptcy attorneys universally report that their clients are hard-working individuals and married couples who are used to always paying their debt on time. They come from good credit, bill-paying backgrounds. They are acting in good faith and in dire need of relief to put the raging fires of runaway debt out permanently.

The fact is that this can be done in a Chapter 7 straight bankruptcy. In most situations, the filer(s) can keep a house by keeping up the payments while simultaneously wiping out tens of thousands in unsecured credit card, medical and other personal debt. For those having problems keeping current on their mortgage payments, the elimination of the credit card and other debt will make it far easier for them to keep their home.

The same reasoning applies in a straight bankruptcy to retaining a car by continuing to make the payments while also eliminating large amounts of unsecured debt. However, the rules of bankruptcy in Washington state and elsewhere are complex, and an individual or married couple contemplating a filing will benefit greatly by first obtaining a free consultation with an experienced consumer bankruptcy attorney. The attorney will quickly determine their eligibility for bankruptcy relief and whether they are qualified to file a Chapter 7. In some situations, the attorney will recommend that a Chapter 13 is a more appropriate framework for the particular circumstances presented.

Source:, "What Really Happens When You File For Bankruptcy?", Judith Ohikuare, March 9,2018

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