Bankruptcy To Stop Foreclosure

by David
(Colorado)

Can I see as a option?

For a long time, I believed that bankruptcy was just about as bad as foreclosure and should be avoided at all costs. However, I’ve come to realize just how great an option it is for many individuals who are facing an imminent foreclosure situation. It's much better for your credit rating and it can help you keep your house.

If anyone’s looked at the news recently, you’ll find that your options to stop foreclosure are increasing. Because of the large amount of real estate foreclosures recently, many large mortgage companies are suspending foreclosures or changing their processes to help limit the number of foreclosures. The housing market is in real crises and mortgage companies know they are most profitable when customers can pay their mortgage. So – they are doing whatever they can to help customers get back on track.

But – let’s say you’re one of those people where the foreclosure process has started and the mortgage company no longer answers your calls. Yet – you know that if given time, you could get back on track. It’s time to use the courts!

For these cases, chapter 13 bankruptcy is the way to go. Chapter 13 is designed to stop forfeiture of assets, including a primary home, wages or vehicle. When it comes to any court proceeding, it is always best to get legal advice, but I’ll go ahead and highlight some of the highlights of Chapter 13 Bankruptcy.

You must be able to pay!
Not only do you have to have a plan to get back to timely payments, you must also be able to pay the current charges and stay up-to-date on currently due payments. However, the past due amounts are treated differently and may be exempt from accruing interest and late payments. There have been some circumstances where a portion of past due debts are forgiven, so don’t forget to ask your lawyer if that’s an option.

All your financial obligations are considered.
You can’t just go into Chapter 13 for a mortgage and exclude all your other debts. Chapter 13 is about all of your debts, all of your incomes and all of your fiscal responsibilities. In many cases, a court-appointed trustee becomes the middleman for ensuring that obligations are repaid.

Chapter 13 is a tremendous tool that is designed to help you keep your assets and get your finances back in order. It is a longer-term solution, but a mortgage is a long-term debt. If you’re already going to lose your house to a foreclosure, Chapter 13 bankruptcy is a very valid option to stop the downward spiral and get back on track financially and for your own credit rating.