A recent Wall Street Journal Article describes recent concerns regarding abuses associated with reverse mortgages.  A reverse mortgage is a type of home equity loan available to persons who are over 62 years of age.  The benefit of the reverse mortgage is that it can free up the equity for the senior to use for other expenses.  There are no restrictions on how the proceeds can be used.  At first blush, this seems like a win-win for a senior who is struggling with the constraints of a fixed income in a bad economy.   The WSJ cautions, however, that incidents of fraud are on the rise when in the reverse mortgage fraud industry.  One consumer, Lawrence Ford, obtained a reverse mortgage that he thought would improve his finances and enabled him to pay off his existing mortgage.  When his lender threatened foreclosure, he learned that the reverse mortgage never went through because the title agent did not forward the funds to pay off the mortgage.  The foreclosure would have left him homeless at 68 years of age.  The even more disturbing part of the WSJ report is who is involved in the fraud.  Everyone expects there to be a white collar criminal in the background waiting to pillage.  Unfortunately, many of the new complaints of fraud also involve family members and caretakers.  The increase is attributed to a recent change in reverse mortgage rules which increased the maximum amount to be borrowed from $417,000 to $625,500.  Essentially, greed is still the motivator for fraud…. But you can reverse that trend.

A qualified bankruptcy attorney in your area can review all your options with you and help you make decisions that help you keep your home and resolve your debt issues.  Depending on your retirement status and your age you are eligible for certain government programs.  When you participate in a reverse mortgage program, you may obtain a sum of proceeds.  Even though these proceeds are not considered income, they are considered assets which could disqualify your eligibility for certain assets—in addition to the fraud risks discussed above.  Instead of risking your home or your much needed benefits, bankruptcy is a better option.  First, you don’t have to worry about being scammed by an unscrupulous lender.  The bankruptcy process includes safeguards like approval of plans by a bankruptcy judge to make sure that all parties are treated fairly.  Second, you can resolve high debt issues, which will improve your cash flow… so you can afford to live.  Third, you don’t get back lashed by the gains you obtain through bankruptcy being considered “assets” that would disqualify you for important programs.

If you are in retirement mode, or close to retirement mode, gambling with your finances is not an option.   Bankruptcy is the best way to protect what you have and re-align your debt.  To learn what options are available and are best for your situation, contact a qualified bankruptcy attorney to get more information.    Even if you’re not over 62 years of age, your house is more than siding and a roof, it’s your home.  Bankruptcy can help you protect your home.