Arizona has been hit particularly hard in the real estate market with dramatic decreases in the value of people’s homes. Are you behind on your house payments? Is your house in foreclosure? Do you owe more on your house than it is currently worth? If so, then you are not alone. Much of the population here in the Valley are in the same situation.
The decision to file bankruptcy is not to be taken lightly, and does have lasting effects. However, bankruptcy should not be immediately ruled out without a careful examination of what the bankruptcy laws can do to help keep you in your home. Bankruptcy, and Chapter 13 in particular, permits you to catch up on missed payments and will even stop a foreclosure – even if the sale date is fast approproaching. Not only will a Chapter 13 give you time to make up those missed payments, you may be able to discharge the home equity line of credit (HELOC) or second mortgage on your personal residence.
If, for instance, you are several months behind on your house payment, a Chapter 13 bankrutpcy will give you three to five years to get caught up. Also, if you owe more on your first mortgage than your house is worth, you will be able to discharge your second mortgage or HELOC. These are powerful tools that can help you stay in your home, even if there is already a trustee’s sale set.