One of the most common reasons West Virginians file for bankruptcy is to save their homes. During the housing boom, many mortgage brokers coaxed people into buying homes that they could not afford. This sometimes involved putting false information on documents to get the mortgage approved.

Since then, not only have these home buyers struggled to avoid defaulting on their mortgages, but -- thanks to a poor economy -- so have long-time homeowners with established mortgages. Those who default on one or two payments are threatened with the prospect of foreclosure -- the lender issuing a notice of default, followed quickly by a scheduled foreclosure sale, where the lender sells the house at an auction to the highest bidder. To avoid this outcome, many homeowners file for bankruptcy -- usually Chapter 13, because Chapter 13 bankruptcy gives filers more flexibility to pay back their mortgages.

Back in February, Attorney General Darrell McGraw was one of 49 state attorney generals to reach a settlement agreement that stood to make many struggling homeowners' lives a little easier. The settlement targeted mortgage servicing fraud and abuse and provided limited relief to homeowners. Provisions include $33 million in assistance, which consists of $2,000 to those who already lost their home; $18.4 million in loan modifications for those currently in foreclosure; $5.7 million for homeowners who are underwater, but current in their payments; and $6 million for foreclosure and mortgage assistance.

The settlement concerned mortgage lenders' practice of signing loan documents outside of a notary public's presence, without knowing whether the facts were accurate. Five major mortgage lending banks were involved in the settlement: GMAC, Bank of America, Citi, JP Morgan, and Wells Fargo.

While the settlement provides little comfort to those who already lost their homes, it at least gives others the opportunity to avoid foreclosure. What its overall effect will be on stamping out mortgage fraud remains to be seen. At least there has been some effort to hold mortgage lenders and appraisers accountable, as this recent sentencing of one mortgage appraiser illustrates.

Mark Greenlee was convicted of preparing false appraisals of houses, which impacted the size of the loans mortgage lenders offered to prospective buyers. He is one of several appraisers and former appraisers being taken to court.

Yet even with the settlement and the benefits it offers, many people might find that it just is not enough to save their home. They initially took out large loans to afford the house, giving the mortgage lender a security interest in the process. Then they lost their job or became ill, or otherwise could not afford to keep making mortgage payments.

After months of default, the mortgage lender might then have decided to apply the security interest, foreclosing upon the house and selling it at a trustee's sale to recoup their loan. If you find yourself in this situation, don't wait until the lender has held a trustee's sale to act.

Hire an experienced West Virginia bankruptcy attorney and file for Chapter 7 or Chapter 13 bankruptcy. Filing for bankruptcy puts an automatic "stay" in effect that prevents lenders from taking any action to repossess your home or other items. The stay will remain in effect as long as you are in bankruptcy, unless the lenders request relief from automatic stay.

The lenders might argue that while you are in bankruptcy, the property (your house) is losing equity and they are not being adequately protected. To avoid having a judge grant relief from stay, you might consider reaching an agreement to provide adequate protection to a lender while the bankruptcy remains in place. That usually means agreeing to make a series of payments and back payments on the loan that you can afford.

If you choose Chapter 13 bankruptcy, you will need to provide a plan of repayment anyway. If lenders do not object to your plan, and you make your payments regularly, you should not need to worry about any lender asking for relief from stay. Anyone who wishes to save their house should consider seeking Chapter 13 rather than Chapter 7 relief, because Chapter 7 merely liquidates all nonexempt assets to pay off creditors.