Bankruptcy & Chapter 7

Is it better to lose one’s home to bankruptcy, or is it better to serve a life sentence of overtime, 2^nd jobs, and twice as much debt for a home?  A house worth $100,000 can easily cost an individual $200,000 through reaffirmation, where individuals agree to pay the debt under a new agreement with the bank.

Chapter 7, also known as, “a fresh start” provides people with just that:  a fresh start. 

When Robert and Betsy first agreed to declare bankruptcy, they were heart broken.  While employed they had worked very hard to maintain a home.  They shared many fond memories in that house and were not willing to give it up.  

A few months following bankruptcy, they realized the important things they shared were still with them.  They had one another, their children, and they still had their fond memories.  More importantly, they didn’t have the stress of having to “save” their home, by countless additional hours of work.  They didn’t have the stress of how they would find a 2^nd or 3^rd job to pay off the obscene new agreement they would have had to sign.  Things hadn’t worked out the way the planned, but they forgave themselves for whatever misfortune they found, but now they were living life anew. 

Some lawyers believe only a third of individuals seeking bankruptcy will choose Chapter 7. 

Aside from mortgage debt, the 2^nd biggest debt comes from student loans, which currently cannot be declared in bankruptcy.  This is unfortunate for those individuals who are burdened with a loan of $100,000 but only earn a salary of $30,000.  For those individuals who already have a home, this can be considered a 2^nd mortgage.  

The author, Ben W. Koyl, is an attorney located in Chicago, IL. He is the principal of the Law Office of Ben W. Koyl, P.C. with offices located in the Chicago Loop, Beverly Woods / Blue Island, and Joliet, IL. The firm's website is http://www.chicagobklaw.com.