Stop Foreclosure with Bankruptcy
Filing for bankruptcy can sometimes be an effective way to stop foreclosure. The type of bankruptcy you need to file if you want to have any chance at saving your home is chapter thirteen bankruptcy reorganization. This is the only type of bankruptcy that will allow you to keep your home. Filing for bankruptcy under chapter seven will only discharge your debts, not let you reorganize them.
For people who are having trouble paying their monthly payments, bankruptcy reorganization allows the possibility of restructuring debt with new terms so that the resulting payments are more manageable. Chapter thirteen bankruptcy does not help people who have more debts than they can ever hope to repay. You must be able to present a realistic plan for repaying your debts within a reasonable time period.
When you file for reorganization under chapter thirteen, the foreclosure process on your home will be halted, at least temporarily. This can buy you some time to work out another plan for saving your home. For example, if you have a buyer but need more time for them to close. However, keep in mind that even if your plan succeeds, you are going to end up with a bankruptcy filing on your credit report in addition to the foreclosure action that is already there.
Having your credit report scarred by not just a foreclosure but a bankruptcy as well makes you look very questionable to potential lenders. For that reason, you should think twice about filing for bankruptcy if you think you are going to be trying to buy another home within the next few years.
Although the credit repercussions can be severe, many people opt for chapter thirteen bankruptcy in an attempt to save their homes. In fact, bankruptcy reorganization is often the only realistic option to prevent foreclosure of a home. Under bankruptcy reorganization, you and your attorney will come up with a plan to pay off your debts. A federal bankruptcy judge will then have to approve your plan.
Of course, you should take extra care to ensure that your bankruptcy reorganization plan is realistic. You will not be given another chance to reorganize your debts. Once you have set up a bankruptcy reorganization plan, you must make every payment on time. Otherwise, you could still end up losing your home to foreclosure.
A reorganized payment plan is not guaranteed when you enter chapter thirteen bankruptcy. The judge may determine that you are unable to pay off your debts and refuse your plan. It is a good idea to discuss your case with a good bankruptcy attorney before deciding to proceed with chapter thirteen bankruptcy. An experienced attorney will have a pretty good idea of how likely you are to be able to reorganize your debts under chapter thirteen.
Chapter thirteen does not help everyone. In fact, it can make things worse if you are unable to keep up with the reorganized debt payments. You should always do plenty of research before making a major financial decision, and this is no different. Learn all you can about bankruptcy and foreclosure before deciding whether chapter thirteen bankruptcy is the right choice for you.