Bankruptcy seems as if it would be one of the most devastating things that could happen to a person financially, but the truth is bankruptcy is one of several options that fix financial turmoil. In many instances, it is the best option. One of the more important benefits of bankruptcy is how it affects foreclosure proceedings. For many homeowners, filing for bankruptcy stopped their foreclosure and allowed them to remain in their homes.
What Should You Know About Filing for Bankruptcy if You are Facing Foreclosure?
If you have received a “Notice of Default” from your mortgage lender your financial situation is serious and about to affect your living arrangements. Your lender has initiated foreclosure proceedings that could result in your losing your home. The good news is you are not powerless and there are things you can do to buy time to sort through your situation. If you are like most people, your home is your most valuable financial asset and one of your most important possessions. If there is something you can do to protect it you should take action as soon as possible.
Chapter 7 and Foreclosure: A Temporary Solution
Chapter 7 bankruptcy creates an automatic stay. This means all creditors and debt collectors must stop their collection efforts against you immediately. This includes your mortgage lender.
Unfortunately, Chapter 7 does not stop foreclosure permanently. What it can do is free up money you were paying toward other debt to now put toward your mortgage. If your income is not enough to bring your mortgage current and pay off any non-dischargeable debts, you could still be at risk for losing your home.
Chapter 13 and Foreclosure: A Better Option?
Chapter 13 bankruptcy can stop foreclosure on a permanent basis, as long as it is handled properly. Chapter 13 is more a repayment plan than it is a discharge of any debt. You must pay back your debts, but it must be done within a certain timeframe and based on certain arrangements approved by the bankruptcy court.
The goal of Chapter 13 when it comes to your mortgage is to arrange a payment plan that is manageable. You are able to negotiate regarding some of the back payments you owe and you can continue to live in your home as long as you make payments based on the plan.
Keep in mind not everyone qualifies for bankruptcy, Chapter 13 or otherwise. This is why it is so important to work with a bankruptcy attorney who understands the laws and can explain your options in a way that makes it easy to determine which choice is best for you. It is also important to note that foreclosure laws vary from state to state.
Are you facing foreclosure? Are you wondering if filing for bankruptcy could allow you to continue living in your home? We can help. Contact the Law Offices of Robert M. Geller at 813.254.5696 for more information.