Pay for a lawyer.
Chances are, if they had done that in 2006 they’d still have their home. Bankruptcy is almost always a bad option, but if it cannot be avoided, at least get it filed by someone who understands what they are doing.
When they filed for Chap 7 bankruptcy in 2001, was it dismissed or discharged?
If it was discharged, they have to wait 8 years after the discharge to file again, so they may not be able to file again until 2009 or later, depending on how long the case took to get from filing to discharge.
If it was dismissed, you should start by looking at the papers they originally filed then. Nolo Press is also a good source on the law for non-lawyers.
Bankruptcy can be filed by a non-lawyer, but there are a lot of i’s to dot and t’s to cross, and any one of them could get the bankruptcy thrown out, sometimes without being able to re-file, so it’s generally best to use a lawyer.
The link httpwwwusalegalcarecomaccidenthtm.