When people get into serious financial difficulty, to
the point where their very home is threatened as they fall behind on loan and
mortgage payments, they often turn restlessly to bankruptcy as a solution. Unfortunately, they often only have a vague
idea of how these tools can be used most effectively – and using the wrong tool
can be disastrous.
The RV as Primary Residence
One complicating factor is how you define your
home – if you used a loan to purchase an RV and then fall behind on that loan,
what form of bankruptcy can help? The wrong choice can leave you homeless:
Chapter 7, for example, won’t protect you from having the RV repossessed by
your lender, even if it’s your primary (or only) residence. Many people make the mistake of thinking that
banks and other lenders can’t (or won’t) put your family on the street. The fact is, they can – and they will - unless
you use the right tools.
The Right Tools
In this scenario, Chapter 13 Bankruptcy is a
much better choice. Chapter 13 can
prevent repossession/foreclosure as it enters you into a five-year plan for
paying down your debt. You’re assigned a
court-appointed trustee and a payment plan is created. As long as you make your payments, you can’t
be pushed out of your home or RV.
Even better, Chapter 13 can be organized with
what’s known as a “cramdown” mechanism that can help people whose homes or RVs
are “underwater” – that is, worth less than they owe. Using a cramdown provision, the filer can pay
just what the home is worth plus reasonable interest over the course of the
five-year period instead of the full balance of the loan, and emerge fully
paid.
The right tool is essential in any bankruptcy
filing. If your financial situation has
you frantically researching bankruptcy on the internet, contact a professional
today for sound advice as to what tool you should be using.
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