The Problem With Bankruptcy
1. Bankruptcy costs more than people realize.
Did you know that for a chapter 13 bankruptcy, the standard attorney fee that you pay is $3,500.00, and that you can be charged an additional $3,500.00 for the bankruptcy trustee and the U.S. Trustee that get assigned to your case? A bankruptcy can cost $7,000, and your monthly chapter 13 payment is how you pay for it. So you get bankruptcy debt that replaces your previous debt. Don’t take my word for it. If you ever talk to a bankruptcy attorney just ask him about these costs, but be careful about what he tells you, compared to what he guarantees in writing. When you borrow money, for the next 10 years lenders can charge you a higher interest rate than for people with good credit.
2. Bankruptcy doesn’t save your home.
Chapter 13 bankruptcy is called the “home saving” bankruptcy. That’s not an accurate description. If you have a mortgage on your home, the only thing that will save your home is money. With chapter 13, you need to be able to afford your original mortgage payment, in addition to the chapter 13 payment on top of it. Both chapter 7 and 13 bankruptcy can slow down the process of the bank foreclosing on you.
The bottom line: If a person can’t afford his/her current mortgage payment, then bankruptcy won’t save the home, and will cost money!!!