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How personal bankruptcy can save you from zombies

California readers may have heard news of recent zombie activity. While not quite as frightening as bloodthirsty undead roaming the streets, 'zombie' foreclosures have many homeowners in fear for their financial lives. The phenomenon has received wide media attention, and is a serious concern to homeowners facing foreclosure. In the end, many afflicted borrowers wish that they had pursued personal bankruptcy as an alternative.

A zombie foreclosure takes place when a lender notifies a homeowner that a foreclosure sale is scheduled. The individual or family is asked to vacate the property in advance of the sale. The family moves on, taking on the expense of setting up house in a rental or other staying with friends or family. They come to terms with the loss of their home, and wait for news from the bank of the final sales figures and remaining debt.

However, in many cases the bank does not move forward with the sale, and the home simply sits vacant for months or even years after being vacated. The homeowner, who believes that they have lost the home, is actually still on the hook for property taxes, homeowners' association fees and other expenses. Like the zombies of comic book lore, the foreclosure is dead, yet the debt remains alive.

When facing the loss of a home, it is imperative that California homeowners make every effort to learn about their options. There are cases in which a homeowner has walked away from their home, only to find themselves many thousands of dollars in debt for lingering expenses associated with the property. In such instances, it would have been far better to remain in the home and stop the foreclosure by filing for personal bankruptcy. Doing so can give homeowners the chance to eliminate some forms of debt and restructure that which remains, all while keeping their home.

Source: CNN Money, "Zombie foreclosures: Borrowers hit with debts that won't die," Les Christie, Feb. 22, 2013

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