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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mike M2 who wrote (45053)	1/30/1999 8:05:00 PM
From: Ilaine	Respond to of 132070

It actually makes a certain kind of sense to reduce the equity in your house if you think you may file for bankruptcy. A person who files for bankruptcy can reaffirm debts, which takes them out of the bankruptcy proceeding. Thus, if you want to keep a car that you are paying a note on, you can reaffirm the debt, and keep the car. If you want to reaffirm a credit card, you can do that. You can reaffirm your mortgage, but the caveat here is that the trustee may sell the house if there is equity because he owes a duty to the creditors to make sure they are paid if there is anything to pay them with. But, if there is no equity, or not enough equity to make it worthwhile in a "fire sale," the trustee will "abandon" the property, allowing the bankrupt to reaffirm the debt. The bankrupt does not even need the permission of the mortgage lender if he has kept his payments up to date and there is no right of foreclosure. So, having no equity, or only a little equity, makes sense, if you are contemplating bankruptcy, and are able to pay your monthly notes. Most people who face bankruptcy don't plan well, because they are basically honest, and want to pay everyone, but are in over their heads. I recently (last month or two) read, in the Real Estate section of Washington Post, that home equity percentages are higher than it has ever been, that more people own their homes outright than ever. I have not attempted to find this statistic, but am repeating it to you because I think it will surprise you.