File Bankruptcy or Foreclosure and debt settlement? 24 Answers as of August 17, 2011

I have two properties I use to rent out that foreclosed on 4 months ago. I have $10k in credit card debt and my home is in foreclosure with the date approaching next month. My home is worth $350k and I owe $400k on it. I also make roughly $60k now that I don't get the rent from the two houses. Should I get debt settlement or file for bankruptcy?

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Melinda Murphy Dionne, PC
Melinda Murphy Dionne, PC | Melinda Murphy Dionne
I would recommend that you file a bankruptcy case. Debt settlement companies normally charge large fees and are rarely successful in getting all of your creditors to work with you on a repayment plan. In addition, a debt settlement company may not be able to resolve the debt arising out of the foreclosures. The filing of a bankruptcy case can resolve all of your debt problems for a much smaller cost. In addition, it will be easier to rebuild your credit after a bankruptcy filing.
Answer Applies to: Alabama
Replied: 8/17/2011
Eric J. Benzer, Attorney at Law
Eric J. Benzer, Attorney at Law | Eric Benzer
No debt settlement
Answer Applies to: Maryland
Replied: 7/15/2011
Financial Relief Law Center
Financial Relief Law Center | Mark Alonso
You are probably better off in the bankruptcy, in my opinion. While there are some laws that prevent deficiency judgments against homeowner's for their mortgages on their primary residence, I am not aware of any law preventing deficiency judgments from non-owner occupied properties. Even if you haven't been contacted by those mortgage companies yet, you could still be. Bankruptcy would prevent them from collecting from you further. With respect to your primary house: do you want to try and save it or would you feel better just letting it go? If you want to try and save your property, there may be loan workout options for you with this loan amount and the income level you described below. If you haven't tried that yet and want to keep the home, I would suggest doing that prior to filing for bankruptcy. Then, afterwards, file for bankruptcy to discharge the rest of the debt you owe, which may or may not include the mortgage from your primary residence, depending on how the modification/workout on the mortgage goes. I would advise anyone in your shoes to contact an attorney who is experienced in both bankruptcy as well as loan workouts to assess your situation in detail to determine your best course of action.
Answer Applies to: California
Replied: 7/15/2011
Benson Law Firm
Benson Law Firm | David Benson
This is a complicated question and very fact-dependent. Your first step should be to find an attorney competent in both bankruptcy and foreclosure defense. Your first consultation about which route to take should be free of charge. So you've got nothing to lose. -
Answer Applies to: Ohio
Replied: 7/15/2011
Tucker Legal Clinic
Tucker Legal Clinic | Samuel Tucker
I suggest bankruptcy. Chapter 7 if you do not want to try to keep your home, or Chapter 13 if you want to try to keep it.
Answer Applies to: Mississippi
Replied: 7/15/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    Debt settlement is only an option if you have enough cash to settle the debts because you can only settle a debt for less than owed if you have a lump sum to pay each creditor. Most likely bankruptcy is the only choice you have, particularly if you plan to keep the house and can pay the arrearage in a Chapter 13 Plan. You need to consult with a bankruptcy attorney to see whether you qualify for bankruptcy and which Chapter would be the best option for you.
    Answer Applies to: California
    Replied: 7/15/2011
    Mercado & Hartung, PLLC
    Mercado & Hartung, PLLC | Christopher J. Mercado
    You need to talk to a local attorney, personally I would need more facts
    Answer Applies to: Washington
    Replied: 7/15/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    Debt settlement is not a guarantee. Bankruptcy will work if you qualfy.
    Answer Applies to: California
    Replied: 7/15/2011
    Apple Law Firm PLLC
    Apple Law Firm PLLC | David Goldman
    You should speak with someone who does both bankruptcy and foreclosure defense and discuss your specifics to determine which is better or which order to do them in based on your circumstances and goals.
    Answer Applies to: Florida
    Replied: 7/15/2011
    we frequently help those underwater with their home. you may be able to keep the house and avoid bk. debt settlement could help with the 10k though.
    Answer Applies to: California
    Replied: 7/15/2011
    Guardian Law Group PLLC
    Guardian Law Group PLLC | C. David Hester
    If you have dependants then you should qualify for Chapter 7, which is what I would recommend. With the otherforeclosed propertiesthey can come after you later for the difference from what you owed and what they sold it for. In a Chapter 13 if youwould like to stay in your home and have a second mortgage you may be able to have it reduced orelliminated with a cram down. Talk to an attorney to go over your options.
    Answer Applies to: Utah
    Replied: 7/15/2011
    Law Offices of Iman Abouelazm, P.A.
    Law Offices of Iman Abouelazm, P.A. | Iman I. Abouelazm
    The decision to file for bankruptcy or settle your debts depends on various factors. If you have the means and excess income to make payments towards your debts, and your debts are minimal, then it would better to avoid having a bankruptcy on your record. However, with 3 foreclosures and possible deficiency judgments against you, you may in fact need the protection of bankruptcy. Most people think that Bankruptcy is the end of the world. To the contrary, bankruptcy gives people a fresh start at their financial life and actually improves your credit score in a shorter amount of time than having a judgment or paying off debts. You should discuss your situation with a bankruptcy attorney. Most bankruptcy attorneys offer a free initial consultation. ** This is a general answer to your question. It is best to consult with an attorney about your specific situation and goals for the most accurate and reliable legal advice. Good Luck!"
    Answer Applies to: Florida
    Replied: 7/15/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Talk to a bankruptcy attorney. I would need to see your pay stub, know how many dependents you have, cars you own and about 6 more things before I could answer that question. Debt settlement is more expensive than bankruptcy and the results are not guaranteed.
    Answer Applies to: California
    Replied: 7/14/2011
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    I would be looking at bankruptcy with the 2 rental homes already being foreclosed and yours about to be. Unfortunately debt settlement doesn't seem to work, in my opinion, when you are looking at potentially large amounts. The laws have been changed recently to try and eliminate some of the debt settlement companies that were ripping people off, but they haven't been in effect long enough to know if they will really work or not. Do the bankruptcy so you aren't facing "income in Forgiveness of Debt" taxes on all the house and get a fresh start!
    Answer Applies to: Michigan
    Replied: 7/15/2011
    Colorado Legal Solutions
    Colorado Legal Solutions | Stephen Harkess
    Debt settlement companies are generally a bad investment. In most cases, you will get sued by one or more creditors before you can reach a settlement with all of them. In that event, you have paid a lot of money to a company and will have to file bankruptcy anyway. If you have the ability, you may try to reach settlements with all of your creditors on your own. If you succeed, you may not need to file bankruptcy. If you can't, you still have the option to file for bankruptcy.
    Answer Applies to: Colorado
    Replied: 7/14/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    Filing bankruptcy is never a first choice. If the amount of debts is fairly low settling may be a good option. If your home is being foreclosed there will not be a deficiency owed under California law.
    Answer Applies to: California
    Replied: 7/14/2011
    Law Offices of Michael J. Berger
    Law Offices of Michael J. Berger | Michael J. Berger
    I need more information to advise you. Please call me for a free consultation. One important factor will be whether or not the lenders that foreclosed on two of your properties are legally eligible to sue you for the deficiency balances.
    Answer Applies to: California
    Replied: 7/14/2011
    Mark Anderson, Attorney at Law
    Mark Anderson, Attorney at Law | Mark Anderson
    It depends upon what you want to do. Most people in debt settlement want to avoid bankruptcy. You would probably need to file a chapter 13 because you have regular income. You can try debt settlement first. If it does not work, then you can always file bankruptcy.
    Answer Applies to: Montana
    Replied: 7/14/2011
    Ray Fisher Law Offices
    Ray Fisher Law Offices | Ray Fisher
    If you can afford to pay your house payments and want to keep it you should consider filing chapter 13 bankruptcy. If not, you may want to consider filing chapter 7. If you mean by debt settlement offering to pay the credit cards some smaller amount than what is owed to settle them, the question would be what is the point considering you have 2 deficiencies from foreclosures now and will be facing a third one when your home is foreclosed.
    Answer Applies to: Texas
    Replied: 7/14/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    Banktuptcy! Why break your neck to pay bills thay will never be done? Debt settlement will cost more than a bankruptcy attorney and will result in a taxable event for you.
    Answer Applies to: Virginia
    Replied: 7/14/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    Most "debt settlement" outfits are complete scams. That is a good way to lose your money and keep your debts. Whether bankruptcy is a good option depends on detailed financial information. You should do a lawyer consultation to evaluate if you can file and how it will help you.
    Answer Applies to: Georgia
    Replied: 7/14/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Bankruptcy may be the better alternative for you.
    Answer Applies to: California
    Replied: 7/14/2011
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