You may find that bankruptcy is not only an opportunity to straighten out issues with your finances; it’s also an effective method to save your home if your financial situation has caused you to fall behind in mortgage payments. If you get too far behind, the bank may begin the foreclosure process. However, if you file for bankruptcy, you can stop mortgage foreclosure through Chapter 13. Here are a few important things to understand.
The first thing is that Chapter 13 is a form of bankruptcy that helps you repay the creditors. Unlike Chapter 7, which wipes out a great deal of your personal debt, Chapter 13 is a court-ordered and court-structured repayment plan that can last from 3 to 5 years.
Chapter 13 is relegated to people who make a certain amount of money. If your income is relatively low, you’d most likely qualify for Chapter 7, which helps you eliminate a great deal of your revolving credit debts, such as credit cards. However, regardless of if you’re filing for Chapter 13 or Chapter 7 bankruptcy, once you file for bankruptcy, any efforts that creditors are making to collect a debt immediately stop, and this includes foreclosures.
As long as the bank hasn’t sold your home, once you file for bankruptcy, it immediately freezes any foreclosure processes from moving forward. This is the time you need to work towards catching up on your mortgage payments. Some people do this prior to reaching a Chapter 13 repayment plan agreement, while others figure the catching up payments into the actual payment plan. The important thing to remember is that the repayment plan needs to be affordable, so you can get current with your existing debts, mortgage included, and continue this payment plan to get out of debt in 3 to 5 years.
You can stop mortgage foreclosure with Chapter 13. However, to understand all the nuances involved in filing for Chapter 13 bankruptcy, you’ll want to speak with a bankruptcy attorney. They can help you understand the process and help you file for bankruptcy with the courts. If you need to know more about this process, you can schedule a free consultation with a bankruptcy attorney.
