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File Bankruptcy To Stop ForeclosureA chapter 13 bankruptcy enables individuals with regular income to develop a plan to repay all or part of their debts. You would ask: can’t I file bankruptcy to stop the foreclosure? Of course you can file bankruptcy to stop the foreclosure but this is only a temporarily solution. Why? Let’s focus on Chapter 13 bankruptcy. Chapter 13 Bankruptcy is also known as a reorganization bankruptcy. It is filed by individuals who want to pay off their debts over a period of three to five years.This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep. It is also only an option for individuals who have predictable income and whose income is sufficient to pay their reasonable expenses with some amount left over to pay off their debt. During the time so called “bankruptcy reform” many conditions have changed, impacting the alternatives for a “homeowner” to save their home by filing a bankruptcy to stop foreclosure proceeding. Let’s take a look at which chapter (7 or 13) you may qualify.
Homeowners must qualify in order for an attorney to file a Chapter 13. Basically, they must have enough income for all of their expenses along with enough left over to make a payment to the Trustee of the court. All bills are put into the Chapter 13, car payments, credit cards, past due amount on the mortgage, etc. Once the papers have been filed with the court, the trustee sets up a meeting for the creditors. The homeowners must show up or their case will be dismissed.If the Trustee approves their case, they will be given a monthly payment From this point forward, homeowners might find themselves in a very uncomfortable situation.
What in case the homeowner manages to stay in the bankruptcy and complete the terms that the Trustee set at the beginning of their case. While the homeowner was in the Chapter 13 their mortgage has continued to be in arrears. The lender has received a small portion of the monthly payments from the Trustee to apply to the mortgage. In the meantime, the lender has been adding late fees and interest every month to the outstanding arrearages and they have continued to multiply over the years. If the homeowner completes the Chapter 13, they will usually find that they still owe the lender a very large lump sum and probably be in worse shape then when they originally filed years before.
By explaining the basics we are showing homeowners facing foreclosure that it is cheaper to mediate and put their funds towards repaying the debt directly, than incurring additional fees through bankruptcy, which only postpones the inevitable. Bankruptcy like a foreclosure and deed in lieu will stay on your credit report for a long time. This is something every homeowner should consider before making final decision. From File Bankruptcy To Stop Foreclosure page go to Home page Read about Foreclosure Consequences and what others have to say about it. Would you like to help others sharing your experience here? It's easy. By sharing you will help and you will be helped.
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