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SMART MONEY: Homes are usually protected in bankruptcy

by By BRUCE WILLLIAMS on April 14, 2013 1:50 AM

DEAR BRUCE: I am a 74-year-old female, divorced. I had to quit my job a few years ago because of poor health and had to live and pay bills on credit cards, on which I now owe more than $30,000.

Consequently, I took out a reverse mortgage and didn’t receive much cash. However, it eliminated the monthly mortgage payments, which helps a lot.

I now live only on Social Security ($1,204 a month). I want to declare bankruptcy, but my lawyer tells me I can’t because I still have some equity in the house.

How is it that these rich Hollywood stars are allowed to declare bankruptcy and stay in their mansions? Is there any way around this? I really need to get these collection people off my back. I anxiously await your reply. — Avid Reader, via email

DEAR AVID READER: I don’t understand why your attorney says you can’t declare bankruptcy because you have some equity in the house.

You didn’t give me the numbers, but if the house is worth a great deal and you owe the mortgage company only a modest amount of money, it’s entirely possible that the house could be sold and you could pay off your obligations. Your primary home, in almost every case, can be protected in an absolute bankruptcy.

I don’t know where you found this attorney, but I would seek out one who specializes in bankruptcy. I think you will find that you would have this protection.

DEAR BRUCE: I would like to know how to find low credit card interest rates that last more than six months.

I have excellent credit and know there have to be some decent deals out there somewhere.

I have a very low-interest card at the moment, but that is going to change shortly.

I need to find a new card to which I can transfer my balance of about $3,000. — T.P., via email

DEAR T.P.: I don’t know that you’re going to find a credit card with an interest rate that remains continuously low. At the very best, you might find a rate that is reduced for a few months but then bounces back up.

With a relatively modest $3,000 balance, your emphasis should be on paying down your balance.

Send questions to or to Smart Money, P.O. Box 7150, Hudson, FL 34674. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.

The Bruce Williams Show can now be heard at on the Made in America Broadcast Network.

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