What should I know before I file for Bankruptcy in California?

With the dramatic impact of the mortgage and housing market in California, you are not alone in dealing with financial troubles in this state. I also live in California, and have seen firsthand through my family how housing values and job loss can cause a household to fall into financial distress.

You are correct in that bankruptcy is often used as a defense to a foreclosure lawsuit. When a lender files a foreclosure against a homeowner, it usually takes about one to three months before the initial sheriffs sale occurs. Most homeowners will try to negotiate a loan modification with their lender, but it is almost alway fruitless. Lenders are concerned only with ensuring they get their money, and less so with the well being of their customers.

Recently, a judge in New York set a precedent by denying a lender the right to foreclose. Basically, he said that the lender came to court without any real knowledge of the families financial situation in an attempt to collect money borrowed on good terms.

This is a great stride for homeowners that have been duped by shady lenders selling unreasonable home loans. Bankruptcy is a solution that will allow homeowners to fight off a foreclosure and keep their home.

Filing Bankruptcy in California

California has established further laws that protect homeowners facing foreclosure and filing for bankruptcy. Laws like the California Foreclosure Prevention Act help homeowners force a lender into modifying a loan to more reasonable terms.

Additionally, California protects a bankruptcy filers homestead, and allows them the keep and live in their home. A Homestead is defined as the bankruptcy petitioners primary owned residence.

For more information on bankruptcy protection in California, check out the links below, otherwise click on the "talk to a lawyer" button to get a free case review and legal advice from several local bankruptcy attorneys.

Good Luck!