Legal Question in Bankruptcy in Maine

Re: bankruptcy in lieu of foreclosure

The answer to this question depends on your personal situation and a number of factors, including, among others (i) are you currently employed, (ii) do you have equity in your home (& if so, how much), (iii) your age, and (iv) do you have other debts? Maine has a "homestead exemption" but it is pretty small. Look at Maine Bankruptcy Exemptions at mainebankruptcy.com for more info about the exemption amount.

Chapter 13 bankruptcy (wage earner repayment plan) allows you to cure arrears over time. You need to have regular income to file chapter 13, either from employment as employee or self-employment. If you have equity in the house (depending on amount) or are not very far behind in payments and have regular income chapter 13 may be a good option for you.

Chapter 7 (liquidation) can be used to slow down the foreclosure process, but is not a way to �save your house�. The filing of a bankruptcy petition creates an automatic stay that prevent further action on the foreclosure untill the creditor obtains "relief from stay" in the bankruptcy court. That process can take 30-60 days. A chapter 7 bankruptcy filing may or may not be a good strategy in your situation.

One strategy you might want to consider depending on your situation is a �deed in lieu of foreclosure�. This is where you do a deal to basically voluntarily give the house to the bank/lender without them going through the formal foreclosure process. The reason to do it is to prevent a foreclosure on your credit report. You would need an attorney to negotiate the deal for you and would want the lender/bank to report "PAID AS AGREED" to the credit agencies. If you have no equity in your house and no way to fund a chapter 13 it could make sense for you, depending on your situation.

A chapter 7 bankruptcy filing stays on your credit report 10 years, a chapter 13 filing stays on your credit report 7 years. A foreclosure judgment would stay on your credit report for 7 years or until the governing statute of limitations has expired (a local Maine attorney can advise you about this).

I suggest you consult a competent local bankruptcy attorney in your area to learn your options. You should be able to get at least a short free initial consultation that will give you a better idea of your rights and remedies. If you decide to go the bankruptcy route hire an attorney and don�t try to do it yourself. Check with your local bar association for a referral (you should be able to find it in the phone book or by calling the nearest courthouse). If you need a referral let me know. I will be glad to provide you with some names of Maine bankrupty attorneys.

Good luck,