It is estimated that over one-third of all homes in America are considered to be carrying underwater mortgages. For areas hardest hit by the foreclosure crisis, like Florida, these numbers are even greater. Luckily, Tampa bankruptcy does provide some options to help homeowners fight mortgage debt troubles.
Filing for Chapter 7 bankruptcy is one option to fight mortgage debt. First, it can eliminate the liability for deficiency judgments and default penalties. Also, it can remove most non-mortgage related debts, alleviating financial hardship. Chapter 7 can also strip multiple mortgage debts off of a property, and eliminate liens related to defaulting on second or more mortgages. The drawback to Chapter 7 is that it may not be able to guarantee possession of the home. In most cases, bankruptcy exemption laws will allow for a home to be protected from liquidation in a Chapter 7 bankruptcy, but there are circumstances in which this does not happen.
Filing for Chapter 13 bankruptcy is another option for dealing with mortgage debts. Like a Chapter 7 bankruptcy, Chapter 13 can eliminate default liability, strip off multiple mortgage debts and eliminate other non-mortgage related debts. The difference is that payments are made to creditors in a Chapter 13 case and assets are rarely at risk for liquidation. While a Chapter 13 case may require payments to be made over the period of three to five years, repaying the debt versus eliminating it guarantees assets are safe and has a reduced impact on credit standings.
The bottom line is that bankruptcy is a valuable tool that can save homes from foreclosure, eliminate debts and provide a fresh financial start for the future.