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Can bankruptcy save an Ohio home from foreclosure?

There is no question that the news has been filled with stories regarding the foreclosure crisis and home loan modification programs. Cincinnati bankruptcy lawyers are aware that some distressed homeowners overlook bankruptcy as an option to stop a foreclosure.

General statistics show that unemployment remains high, foreclosures continue and budget woes are reducing wages for those who are employed. The fact of the matter is however, that each individual's financial status is unique. In some cases, bankruptcy can help a distressed homeowner to retain the home; in others it may make more sense to surrender the home into the bankruptcy.

Filing for bankruptcy puts a halt to the foreclosure process. In order to resume the foreclosure, the bank needs to have permission from the bankruptcy court. Filing for chapter 7 relief can help some individuals find relief from credit card debt, enabling them to get current on the home loan. In other cases, chapter 13 can provide a mechanism to make up home loan arrearages over the course of the chapter 13 bankruptcy.

Choosing to file for bankruptcy does not guarantee a person the ability to retain the home. But in certain situations, bankruptcy may be a better option for distressed homeowners than just allowing the foreclosure to go through. Many individuals worry about what effect filing for bankruptcy has on their credit.

Credit restoration after bankruptcy is possible. A bankruptcy remains on a person's credit rating for seven years. However, many individuals who have filed for bankruptcy can become eligible for a new home loan in four years. Individuals remain ineligible for a mortgage for seven years following a foreclosure.

Opening new accounts and re-establishing credit after a bankruptcy allows people to restore credit after bankruptcy. Many credit card companies make offers of credit to people who have filed bankruptcy. The individual's debt load is discharged in the bankruptcy and the law bars another filing for up to eight years after a discharge. Credit companies often find people who have filed bankruptcy to be a better credit risk.

An experienced Ohio bankruptcy attorney can help an individual understand what options are available. Understanding the options during a time of financial distress can help individuals make informed decisions on how to proceed on the road to getting back on their feet.

Source: MSNBC, "Filing for bankruptcy could save your home," John W, Schoen 9 Mar 2011

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