The past seven years have been difficult for the real estate market in the Pottstown area. Some areas of the country are starting to see substantial gains again in real estate values again. Unfortunately, the median sales price for a home in the Pottstown area in year 2014 is still the same as it was in year 2003. That means that eleven years have passed without any home appreciation- a truly staggering amount of time to see flat home prices. The reasons for this may be many, but the result is that many homeowners who have paid their mortgage and real estate taxes every month for many years have no home equity or worse- they may be “underwater”. An underwater homeowner is trapped in their home because the homeowner owes more than the home is worth and therefore cannot sell or refinance the mortgage in the private mortgage market. This also means that the law firms that foreclose on homes are very busy in the Pottstown area. Without any option to sell or refinance, underwater homeowners tend to give up on their home much more often than homeowners with home equity.
While the news is grim regarding the lack of home equity for many homeowners in the Pottstown area, there is a silver lining for those struggling with their mortgage payments, medical bills, credit cards, and other types of debt. When a homeowner lacks a large amount of home equity, the power of a bankruptcy is at its greatest as a tool to better the situation for the homeowner. First, if the homeowner desires to retain the home and eliminate credit cards and other debt, the lack of equity allows a homeowner to keep their home and eliminate credit cards and other unsecured debt through a Chapter 7 without risk of losing the home. Second, a Chapter 13 bankruptcy can not only eliminate the credit cards and other unsecured debt like a Chapter 7 bankruptcy, but it can sometimes eliminate second and third mortgages on a home simultaneously! As real estate values rise, which they eventually will, the ability to “strip” second and third mortgages off of a home is no longer available. Additionally, higher real estate values eventually lead to home equity which then leads to larger payments to the Chapter 13 trustee for the benefit of creditors.
The bottom line is that slumping home values are temporary in the Pottstown area. Eventually, this area will see home price increases. But right now, low real estate values are a benefit to those who want to eliminate or restructure their debt for long term financial health. A no fee consultation with one of our experienced bankruptcy attorneys located in Pottstown, Pennsylvania will answer your questions about how we can help you better your finances. Contact us.