People will go to great lengths to protect their homes. When the threat of foreclosure looms, they may explore a variety of options, including bankruptcy.
While bankruptcy is a viable method of preventing foreclosure, it should be considered a last resort. If bankruptcy is filed, the process must be followed with care. Any attempts to abuse the process of game the system could result in serious criminal charges, as seven Texas residents recently discovered.
When Filing Bankruptcy Results In Criminal Charges
According to a notice from the Department of Justice, seven individuals were charged with bankruptcy fraud-scheme to defraud and making false declarations under penalty of perjury in separate but similar schemes. The individuals would receive a notice of foreclosure from their creditors. Then they would file bankruptcy to get the protection of the automatic stay, which prevents creditors from moving forward with a foreclosure.
So far, this is all perfectly legal. Instead of moving forward with the bankruptcy process, however, the individuals simply let time run out. They would not file the additional required documents. Their bankruptcy cases would be dismissed after 45 days. Then, when they received another foreclosure notice, they would file bankruptcy again. When they filed bankruptcy again, they would fail to list their previous bankruptcy filings.
The number of bankruptcies filed ranges from four in a two-year period for one defendant to 12 in a five-year period for another. If convicted of the charges, the defendants could face up to $250,000 in fines and up to five years in prison.
Consider All Other Options Before Filing Bankruptcy
This news emphasizes the fact that bankruptcy should be used cautiously and with the help of an experienced attorney. Furthermore, bankruptcy truly should be a last resort.
There are many other foreclosure defense options available, including loan modification. Attorney Matthew Obermeier has a reputation for success in using nonbankruptcy techniques to stop foreclosure and keep people in their homes. The initial consultation is free.