Create a Safety Net as Part of Your Bankruptcy Strategy!
11 Aug 2010
With the foreclosure crisis deepening, especially in Orlando, and more and more people coming to grips with the difficult decision to walk away from their homes, an opportunity arises for people to take steps to ensure that they never are faced with that same difficult decision ever again.
How do you create a safety net in these difficult times? By employing a strategy involving filing for bankruptcy, remaining in the home for as long as possible while the home goes through foreclosure, and saving up money in the process.
The first thing you have to realize that if you walk away from your Orlando home, and it is sold at auction in a foreclosure sale for less than what you owe on it, under Florida law you are liable for the remaining balance. This means the lender will report this debt on your credit report and can actually hire a lawyer to collect on the judgment by, for example, garnishing your wages. By filing bankruptcy, of course, you wipe out the debt and deny the lender the chance to take your money from you.
The foreclosure process in Orlando, and really all over Florida, used to take about 90-120 days from the time the homeowner was served the initial complaint to the time the sale date was entered and the homeowner had to move out. Not so much the case anymore. Because of the massive number of foreclosures that have been filed in Orlando and all over the State the last couple of years, our Courts are literally overrun by the caseload and as a result the process now can take over a year to complete. This is the case even if you don’t have a lawyer representing you in the foreclosure case.
With the help of a bankruptcy lawyer, once you have discharged your debt for the home loan in a Chapter 7 bankruptcy, why not camp out in the house, without paying a mortgage or rental payment, until you legally are required to move? I realize this might sound shady, or dishonest, to some folks, but, legally speaking, you are doing absolutely nothing wrong by staying in the home. Your name is still on the deed to the home until it is sold through the foreclosure process. Wouldn’t the lender prefer to at least keep the home occupied and kept up rather than vacant anyway?
During the time you are staying in the home, while you are not paying a mortgage, rent, or any other debt, because it has been wiped out in your bankruptcy, stash as much cash away as is humanly possible. You are creating a safety net, an emergency fund, call it what you like. The point is, you are setting yourself up to not only be able to easily cover the moving expenses when you do eventually have to move out of the home, but you will have a big cushion available for other “emergency” expenses that, in the past, you may have relied on your credit cards to cover.
Like the idea of a safety net?