More Good Reasons to Get Bankruptcy Advice Before Selling Your Home

Law Office of Robert L. Firth Aug. 19, 2013

If under financial pressure to sell your home, bankruptcy law can surprise you with ways to keep your home or sell it on your own schedule.

When it comes to selling your home, it is only sensible to know all your available options before you act.

This is the third in a series of four blogs about why you should get advice from a bankruptcy attorney before rushing to sell your home. It is so easy to make false assumptions about your options, and feel like you have to act in a certain way because of those assumptions. This often happens when you are under financial pressure, you think you need to act quickly, and the last thing on your mind is to question your assumptions. Well, maybe there ARE some better options. Consider the following two situations:

1. If You Need to Sell to Avoid a Foreclosure:

You likely know that filing a bankruptcy case stops a foreclosure. But that’s just the beginning. Bankruptcy law provides a wealth of tools for helping you keep your home, or to buy extra months or even years before needing to sell. If you have a second mortgage, you may be able to avoid paying most of it, potentially saving you tens or even hundreds of thousands of dollars. If you have a judgment lien, or tax or support lien, if you are behind on property taxes, or many months behind on your mortgage payment, in all these situations bankruptcy may be able to help in ways better than you thought possible. You may even be able to take advantage of property values that are finally climbing in most markets, by staying in your home permanently or long enough for it to regain some of its value.

The reality is that every homeowner who is facing a foreclosure has a unique set of circumstances. You need and deserve an individual analysis. Bankruptcy can often give you many different combinations for solving your personal home challenges, so you need to find out what will best fit your own goals. It would also help if you talk to an attorney who is also familiar with the local real estate market or, like me, is also a licensed real estate broker. You need someone who can do the proper analysis to determine if a short sale, foreclosure or bankruptcy is in your best interest.

2. If You Need to Pay off Your Ex-Spouse:

Divorce is so often so traumatic. Even in relatively non-antagonistic ones, emotions can cloud your judgment and memory. Your legal obligations about your property and your debts can get fuzzy.

So you may understand that your divorce decree says you are required to sell the marital home to pay off your ex-spouse. But that obligation might be changed through bankruptcy law. Most obligations that you owe arising from a divorce are not written off by a bankruptcy. But some are. And even those that are not written off, bankruptcy can affect the timing of payment or favor you in other ways.

Practically speaking, even if during your divorce you got some advice about how a possible future bankruptcy filing would affect the terms of your divorce, you may not remember that advice, or not remember it accurately. You had other things crowding your mind. You may not have even gotten correct advice, or complete advice, about all your options. Many—maybe even most—divorce attorneys do not know bankruptcy law well enough to give you the complete picture. Plus circumstances could have changed in the meantime. So now, before you sell your home to pay off your ex-spouse, get current and thorough advice about your options from a competent bankruptcy attorney.

Please come back next week for the final blog in this series. Thank you for visiting.