Although the housing market appears to be on the rebound, there are still many homeowners that are struggling to pay their mortgage payments. If you have fallen behind on your mortgage loan and you believe that a foreclosure is in your near future, you should consider filing for bankruptcy protection under Chapter 7 or Chapter 13. Bankruptcy can be an effective tool for individuals who are trying to avoid a foreclosure action.
Individuals who file bankruptcy most commonly file under Chapter 7 or Chapter 13. Each type of case offers its own advantages and disadvantages. One of our seasoned bankruptcy attorneys can review your unique circumstances and assist you with determining which type of filing you qualify for or will be most beneficial for you.
A Chapter 7 is often referred to as the “liquidation” bankruptcy because your non-exempt property can be sold by the trustee to pay your creditors. The reality, however, is that most Chapter 7 debtors have very few (if any) non-exempt assets and they keep all of their assets. While a Chapter 7 filing does not completely stop the foreclosure process, it can buy you some additional time in your house. During this time, we can help you try to negotiate with your mortgage lender too. In order to proceed with the foreclosure, your creditor must seek relief from the automatic stay from the bankruptcy court. If the court grants the motion and your home is foreclosed, your Chapter 7 filing will discharge or eliminate any amount you still owe under the mortgage after the foreclosure sale. This can save you from owing thousands of dollars!
A Chapter 13 debtor must submit a plan of reorganization which sets forth how the creditors will be paid, fully or partially. You repayment plan will last a term of three to five years, depending on your individual circumstances. During this time, you can make small payments under the plan that are applied to the mortgage loan delinquency. When your Chapter 13 case is over, you will be current on your mortgage loan. While your Chapter 13 case is pending and you are making your plan payments, the foreclosure process is halted.
Don’t lose your home in a foreclosure. Contact us to discuss your different options for saving your home and whether filing bankruptcy is the solution.