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If you have a home in Miami and are considering bankruptcy, you may want to save your home from inclusion in your action. The Statement of Intentions form is your declaration of your plan regarding secured debts (house, auto, furniture or jewelry loans).

Having your bankruptcy attorney file this form does not automatically create new debt or reaffirm former liabilities. You are merely stating your intention to keep your home or other assets secured by outstanding loans. You are declaring your “intention” to save your home and continue making mortgage payments on time and as agreed per your loan note.

However, while the bankruptcy is “active,” you must decide on one of the four options noted in the Statement of Intentions. You can choose the “surrender” option, which means you no longer want the property and will give it back to the lender. If you choose the “redeem” option, you plan to pay off the outstanding loan with cash or a new loan. However, this option does not apply to your home. Redeeming only applies to tangible personal property.

You should exercise caution before choosing the “reaffirm” option. You might select this option if you’re satisfied with the loan you have and want payments made after your bankruptcy filing to show on your credit report. The final option, “other,” opens the door to many potential solutions. For example, your home’s loan-to-value (percentage resulting from dividing your mortgage balance by the current value of your home) may be exceedingly high in a down real estate market (sound familiar?). Your legal advisor may recommend that you try to negotiate a loan modification agreement with your mortgage lender to lower interest rates or monthly payments to improve your loan-to-value or cash flow position.

Consider your preferences in light of your attorney’s advice to choose the best option to save your home during a Chapter 7 bankruptcy. The good news: You can save your home if you so choose. Evaluate all options before making a final decision.

Source: FOX Business, “What Should You Say to Save House in Bankruptcy?” Justin Harelik, March 6, 2012