Bankruptcy problems for homeowners in distress

At a luncheon seminar yesterday, even the guest speaker Attorney didn't want to touch the bankruptcy question since he didn't specialize in the area. So I can't and won't even provide an opinion on whether bankruptcy is an option for you if you're home is under water and you can't afford to keep up with payments. However, if in that situation, you ought to consult with a bankruptcy attorney to find out if it could provide any relief.

Unfortunately, per this New York Times op-ed piece from a Professor of Law at Columbia, it doesn't sound like there is much bankruptcy can do since 2005 when Congress changes bankruptcy rules.

This from the professor "the reforms created a system that makes it harder to file for Chapter 7 while doing nothing to make Chapter 13, once the savior of homeowners, useful in this sort of mortgage crisis."

He also says there's been a significant increase in paper work making it a "lawyer- and paperwork-centered system" which costs filing homeowners much more than before.

Still, the additional fees the Op-Ed talks about are less than $1500. In San Francisco with our high cost real estate market, that may be chump change for those facing larger than normal financial issues so a call to a bankruptcy attorney is warranted if you're considering a Short Sale or strategic default foreclosure.