Legal Question in Bankruptcy in Illinois

Re: falling behind on house and bill payments

If they want to keep their house without filing a chapter 13 bankruptcy, then they need to come up with the money to become current on the house. I do not recommend selling the house to a broker to lease back to them. That is typically one of many mortgage/foreclosure scams that rarely help out the homeowner. If they cannot refinance, I am not sure what other options they could possibly have. Either they file chapter 13 and get caught up that way, or borrow the money to get caught up, or refinance the mortgage to render the mortgage current. If they cannot do any of the above, it is time for them to accept that they cannot afford this house and they should either put it on the market, give the mortgage company a deed in lieu of foreclosure or just allow the foreclosure to proceed. If there is a possibility of a deficiency, and they are going to lose the house, a Chapter 7 can at least take care of any deficiency.

Re: falling behind on house and bill payments

They may consider a chapter 13 to consolidate the months they are behind on the home, and pay back a portion of the unsecured debt. (10% -100% based on income). IF their bankruptcy was more than 8 years ago, they may be able to file chapter 7 to eliminate the consumer debt, freeing up income to pay the mortgage.

Refinancing is always a possibility, but the bankruptcy would protect the equity they do have.