Bankruptcy And Foreclosure - Five Myths That Many Bankruptcy Attorneys Won't Tell You

As part of my work with people facing foreclosure, I was speaking to "John" yesterday who casually mentioned that he had filed bankruptcy a year ago.

Why did he file?

Because he had something like nine properties that he couldn't refinance and couldn't make the payments on.

His lenders began the foreclosure process and he visited a bankruptcy lawyer.

The lawyer told him "you could have deficiency judgments by these lenders, so you should file bankruptcy."

So he did. Which was a mistake. Because his lawyer didn't tell him the five myths
of filing bankruptcy to stop foreclosure:

Bronx Bankruptcy Lawyer, Mortgage After Bankruptcy, Bankruptcy Software For Attorneys,

Bankruptcy stops foreclosure -- NOT

Bankruptcy lets you stay in your home even if you can't make the payments -- NOT

Bankruptcy lets you escape the "debt forgiveness" tax -- NOT

Bankruptcy is better than having a foreclosure on your credit report -- NOT

Bankruptcy is "no big deal" today -- NOT

Now, bankruptcy may not be the end of the world, but it sure is the end of good credit.

* Bankruptcy sits on your credit report for ten years.

* Bankruptcy changes how people view you in the business world.

* Some employers will be reluctant to hire you if you have a bankruptcy.

* You will sometimes have to sell off things that are precious

to you like jewelry, artwork, family heirlooms, etc.

But the biggest problem with bankruptcy filing is what it doesn't do:

* Bankruptcy doesn't stop foreclosure, it only delays it for a

few months

The truth about stopping foreclosure and bankruptcy

If you are facing foreclosure, and you file for bankruptcy, as soon as you tell your lenders that you have filed, they will immediately stop contacting you.

Your phone won't ring.

Things will go completely quiet.

But behind the scenes, your lenders are busy. Their lawyers will file a "motion for relief from automatic stay" that the court routinely grants.

That means that in about two months, your foreclosure will continue and you could lose your home. Now you have a foreclosure and a bankruptcy on your record. It is even hard to rent when you have these credit bombs on your record.

If "John" had known these myths about bankruptcy, he might have done things very differently. It is possible he could have avoided bankruptcy altogether, and possibly even avoided having any foreclosures on his record. What he lacked was knowledge.

Knowledge -- there is a lot you need to know about bankruptcy and foreclosure. Remember that nothing you read is a substitute for competent legal advice from a good lawyer. But hopefully the information here will help you ask the right questions when you do visit with a lawyer, and perhaps you can avoid the five myths about bankruptcy and foreclosure.

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