Earlier this month there was a great deal of hoopla by both politicians and the banking industry about the changes being made so that people facing foreclosure could deal with their situation better; either by refinancing, modifying their home loan or in extreme cases making an orderly  transition when the homeowner needs to surrender the property back to the Lender. 

Multiple banks and multiple states have entered into a settlement agreement over how the banks handled foreclosure or were in the process of handling foreclosures.  Finally many Banks being made accountable for their actions.

Filing for Bankruptcy was something that I never dreamed would “happen” to me.  I worked hard to pay my bills and seldom even had a late payment.  My husband made a good salary.  Life was good.
Then one day I found myself in the middle of a messy divorce and learning about my soon to be ex-husband’s gambling problem.   I ended up with $15,000 in credit card debt (my half) and only one income.  I had 2 small kids and made just enough to pay the mortgage, utilities and keep food in the house. 

Practicing bankruptcy law in the greater Washington, DC area, we often get this question from nervous government employees and defense contractors: "If I file bankruptcy, will I lose my security clearance?"

The answer is: It's not the bankruptcy itself that is the problem. It's the underlying circumstances leading to the bankruptcy that is the determining factor.

 
 
Filing bankruptcy will not, in and of itself, cause a person to lose his/her security clearance.

Tis the time for resolutions. As an attorney specializing in the financial woes of small businesses and the self-employed in DC, VA and MD and drawing from my 22 years of experience, here are three tips to consider as you draw up your list for 2012:

Second Mortgage “Stripping”

One of the advantages of filing bankruptcy under Chapter 13 is that an entirely unsecured second mortgage, or other junior mortgage, can be “stripped” from your homestead or other real estate.  This mortgage is then treated by the Chapter 13 plan as an unsecured claim, the same as a credit card or other unsecured debt.  Consequently, it only has to paid in part rather than being paid in full as for most mortgages.

The answer to whether or not unemployment benefits are dischargeable in bankruptcy hinges on the following:  1) whether the state receives adequate notice of the bankruptcy filing; 2) whether the state upon proper notice brings a timely complaint (adversarial proceeding) in the bankruptcy court, and 3) whether the state wins its complaint and proves that the debtor obtained the unemployment overpayment by fraud or theft as opposed to having made a reasonable mistake.