How Bankruptcy Changes the Landscape

HYPOTHETICAL

Consider a husband and wife who own their home in Chester County, Pennsylvania which has a current appraised value of $450,000.  They have two children, ages 4 and 6.  They purchased their home in January, 2006 for $550,000, and there are two mortgages which encumber this property.  The first mortgage had an original balance of $360,000 and the second $85,000.  Their down payment of $105,000 came from the equity they realized from the sale of their prior home.  When they purchased their home, both husband and wife were working and their combined incomes were necessary to pay their daily living expenses.  The husband’s yearly income was $80,000 and the wife’s $50,000.