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 Dear
Bankruptcy Adviser,
My husband died October 2004. I have a home and I'm on Social Security
disability. I cannot pay off my credit. I need to just take care
of the mortgage for a place to live. I only receive $641 a month
on disability. I got fuel assistance last year and will go for help
to the welfare office. If I don't file bankruptcy, what can happen
to me? I don't really have the money to file.
-- Dee
 Dear
Dee,
Hang in there. I can see that you're in a difficult
situation, but there is some good news: Creditors cannot garnish,
or take away, any of your Social Security income. This means that
if you file for bankruptcy, not only will you eliminate your credit
card debt completely, but you will keep all of your monthly disability
check.
Here's another piece of good news: In order for you
to be paying the mortgage using only your Social Security, your
mortgage balance must be pretty low. This means that even if a creditor
has a lien placed against the house, you may be able to protect
most or all of the equity.
This depends on what state you live in. But suppose
you live in California, your home is worth $200,000, and your mortgage
balance is $50,000. If you're age 65 or over, the law says you can
protect $150,000 of the value of your home, and thus none of your
home would be at risk. If you're under 65, you can protect $75,000
(and the remaining $75,000 would be at risk).
Talk to a bankruptcy attorney to see how much of the
equity in your home you can protect. As well, you may wish to consult
a mortgage broker. There may be a way to access the home equity
to help you through this difficult time. However, be very careful
when using home equity to pay off unsecured credit card debt. You
may not want to waste the equity on unsecured credit card debt,
but rather use it to supplement your retirement income.
Justin Harelik is a practicing bankruptcy lawyer
in the Los Angeles office of Price Law Group. To ask a question
of the Bankruptcy Adviser go to the "Ask
the Experts" page, and select "bankruptcy" as
the topic.
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