I JUST BOUGHT A HOME AND DIDN’T REALIZE ALL THE EXPENSES INVOLVED AND HAVE RUN UP SUBSTANTIAL CREDIT CARD DEBT. CAN YOU HELP ME?
As discussed in Mr. Taieb’s book, The Debt Trap: How Your Life Choices Impact on Your Financial Future, many people who buy their first home don’t realize how expensive a home is. They only allocate a certain amount of money for the mortgage payment and then if repairs begin to escalate, they find themselves in a money pit.
If you are in that situation, help is available by filing either a Chapter 7 or Chapter 13 bankruptcy petition to get a stay in effect to protect you against creditors.
If you are current with your mortgage payments and there is no equity in the home, and you are under the median income, you can file a Chapter 7 and get a break from all the credit cards that are killing you. This will allow you to keep your home since there is no equity since you just bought it and are current with the mortgage payments. Also, you will not lose a vehicle you are financing if you are up to date with payments so long as the vehicle has minimal equity.
However, if the costs of repairs and renovations have put you behind on your mortgage along with credit cards, then it is advisable to file a Chapter 13 which will allow you to keep your home and get the same benefits of Chapter 7 by paying nothing back to your general unsecured debt, which includes credit cards debt. Even though I can never guarantee that we can wipe out your debt in Chapter 13, most of my clients who are under the median income are usually struggling and in many circumstances get the same benefits in Chapter 13 as Chapter 7.
The few instances where you have to pay a large portion of your general unsecured debt back is when you either have substantial equity in your home or other vehicles, you are above the median income which means you usually don’t qualify for a Chapter 7, or you have substantial disposable income.
However, if you just bought a home and now have substantial debt, please contact TAIEBLAW to learn how we can help you.
If you have any questions concerning this matter or any other matter contact TAIEBLAW at 856-235-4994 and schedule a FREE initial consultation.
Steven N. Taieb, Esq. has been a South Jersey Bankruptcy Attorney for over 33 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.