Feb 19, 2012 11:59 PM
TUCSON - Bankruptcy is a word that can sound scary. But if you're a distressed homeowner, perhaps with maxed-out credit cards, filing bankruptcy may be the only solution that can help you recover financially.
'Dan' is a salesman whose income dropped when business slowed. He did not want to be identified in this interview. He tried to modify his loan to keep his house, but the bank didn't go for that.
"You just keep getting deeper and deeper and deeper and you wonder, 'what happened?'" says Dan.
As he was moving toward foreclosure, Dan sought help from Tucson attorney Kathy Johnson.
She told us the numbers tell the real story: "I have a lot of people come to me who desperately want to keep their house, and when I look at their numbers, there's no way they can afford to keep the house."
Dan ended-up filing a Chapter 13 bankruptcy, which let him keep his house. He now has up to five years to make payments to a trustee to catch-up on his debts.
But not only can Dan keep his house, calls from his creditors stopped once he filed for bankruptcy. And ironically, he's now considered a better credit risk.
Kathy Johnson said many people who file bankruptcy get new credit offers almost immediately.
"You'll actually get credit offers right after you file a bankruptcy, believe it or not. Because you can't re-file for eight years, so you're actually a better credit risk than someone who hasn't filed yet, it's crazy."