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Despite the apparent economic improvement -- with the unemployment rate finally moving below 9% back in November -- millions still face the possibility of losing their homes through foreclosure.

While it's not a "magic bullet" that can discharge a first mortgage loan on your residence, filing for bankruptcy can buy you some time, force a mortgage lender or servicer to negotiate with you, and eliminate a significant portion of other unsecured debt, depending on your circumstances.

According to regulatory data provided by SNL Financial, the "big four" U.S. banks had huge amounts of one- to four-family residential loans on their balance sheets and serviced for others, for which the underlying homes were in the midst of the foreclosure process as of Sept. 30:

  • Bank of America had $23 billion in residential mortgage loans on its balance sheet with homes in foreclosure, while loans serviced for others in foreclosure totaled a whopping $90.6 billion.
  • For JPMorgan Chase, residential mortgage loans in foreclosure totaled $28.9 billion, while loans serviced for others in foreclosure totaled $54.7 billion.
  • For Wells Fargo, residential mortgage loans on the balance sheet with collateral homes in some phase of foreclosure totaled $18.1 billion, while loans serviced for others in foreclosure totaled $37.7 billion.
  • Citigroup reported $6.9 billion in residential mortgage loans in foreclosure on its balance sheet, and $10.3 billion serviced for others that were in foreclosure.

While President Barack Obama's expansion of the Home Affordable Refinance Program, or HARP, will allow millions of borrowers with mortgage loans held by Fannie Mae and Freddie Mac to refinance their balances at today's low rates -- even if the borrowers owe significantly more than the homes are worth -- HARP is available only to borrowers who have been current on their loans over the past six months, and the Fannie/Freddie loans represent only about half of U.S. mortgages.

Filing for bankruptcy, of course, can't be taken lightly, and you will need the help of a lawyer.

According to Geoff Walsh, a staff attorney with the National Consumer Law Center, "the first threshold question that people need to consider when they're looking at bankruptcy as an option for foreclosure is whether all of their major assets are covered by state exemption laws."

In New York, for example, $100,000 in home equity is exempt if you go through bankruptcy. This means that if the difference between the market value of your home and the outstanding liens on your home is less than $100,000, you will emerge from bankruptcy still owning your home. If you have more than $100,000 in home equity, the bankruptcy trustee will sell the home, give you $100,000, and pay the rest to the mortgage lien holder.