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Bankruptcy Attorney ● Child Custody ● Personal Injury
Greensburg ● Irwin ● Jeannette

Impending Mortgage Foreclosure
and Bankruptcy

By Maureen Kroll, RN, MN, JD

 After you review this information, don't forget to contact us for a consultation.

I receive calls on a daily basis about one’s impending mortgage foreclosure. Often, the client is severely behind in their payments and have been unsuccessful in refinancing at a lower rate. Before throwing in the towel, it may be very helpful to talk to me about your options. Filing for bankruptcy may not be your only choice. Sometimes it may be worthwhile to challenge any foreclosure actions, especially in light of the many changes that the mortgage companies have experienced. Also, do the foreclosure complaints have the correct facts? Have the foreclosure proceedings been followed as required by law? It is important to take a close look at every case.

Chapter 7 Vs. Chapter 13

Often a client wants to know the difference between a Chapter 7 and a Chapter 13 Bankruptcy. In a Chapter 7 Bankruptcy, debts which are not secured by property such as credit cards, medical bills, or personal loans, can be eliminated upon the filing of this type of bankruptcy. Certain income guidelines must be met and the ability to keep one’s house or other property is often protected, but this issue needs evaluated on a case by case basis. Filing a Chapter 13 is recommended when either your income is too high or you have assets which exceed the allowable exemptions.

Collection Activity/Foreclosures

Once a bankruptcy petition is actually filed, then any collection activity and/or hearings to collect a debt are stopped immediately and the bankruptcy laws prohibit creditors from continuing any further activity, unless the court permits.

Student Loans/Tax Debts/Home Mortgage

The bankruptcy court may allow a mortgage company to proceed with foreclosure activities. However, if you intend to keep your home and your payments are brought to a current status, you may exempt (or keep) this asset. It does depend on the amount of equity in your home.

Tax debt and student loans are normally not dischargeable unless extreme undue hardships exists. However, judgments or liens currently on record may be avoided once a bankruptcy is filed. This is a separate proceeding. 

Pension Plans/IRAs

Other exempt property protected by the bankruptcy laws are pension plans, individual retirement accounts, profit sharing plans, and so forth.

The bankruptcy laws were intended to give individuals a fresh start and companies an ability to reorganize and get back on the path of business success. The bankruptcy filing does remain on your credit report for up to ten (10) years. However, lending institutions may see you as an okay risk because you have eliminated a majority of your debt.

So many advertisers want you to do a debt reduction program. Keep in mind that these companies do collect fees for their service, which can be significant, and some amount of debt remains to be paid. All of which continues to impact negatively on your credit report. A consultation with a bankruptcy attorney to evaluate this strategy is a must to determine if this is right for you.

In summary, I have tried to give you information to help you navigate through this stressful time. I know that most of the time these situations exist because of a loss of job, medical problems, divorce, or a combination of the three. Remember, you can and will get through this, and I would like to help you.

DO NOT WORRY. If you file for bankruptcy, it will not be listed in the newspaper.

Please call for your personalized consultation. Contact us today!

Service Area

Attorney Maureen Kroll provides services in Westmoreland County, PA, including the communities of Greensburg, Irwin, Jeannette, Ligonier, Mt. Pleasant, North Huntingdon, Latrobe, and Scottdale.


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