If you are a homeowner considering filing for bankruptcy, there are two petition options—Chapter 7 and Chapter 13 bankruptcy. Filing a Chapter 7 bankruptcy petition allows you to discharge your debts while creating a reaffirmation agreement with your lender. A Chapter 13 bankruptcy petition, on the other hand, allows you to keep your home by paying off your debt obligation under a supervised repayment plan.
Automatic Stay Order
As soon as you file for bankruptcy, the court will issue an automatic stay order, which ceases any creditor collection activity against you. This means that if you are late in making your mortgage payments, the automatic stay prevents your lender from continuing collection against you, unless your lender receives permission from the bankruptcy court.
There is a misconception that homeowners always lose their home during a bankruptcy case. In reality, the U.S. Bankruptcy Code provides some flexibility in avoiding foreclosure, whether you decide to file for Chapter 7 or Chapter 13 bankruptcy. In order for you to maximize the benefits of declaring bankruptcy, it’s important to choose the correct bankruptcy process for your finances. For example, Chapter 7 is the best option if you have limited financial resources. Chapter 13 is a better option if you are in a more stable financial position, as it allows you to pay off most, if not all, of your debt.
In order to protect your home and assets, you need to understand bankruptcy law as well as procedure. For this reason, it’s best to consult with an experienced bankruptcy attorney instead of trying to handle this complicated legal process alone. Your attorney can help you decide whether a Chapter 7 or a Chapter 13 petition is in your best financial interest.
Since 1990, the bankruptcy attorneys at Cutler & Associates, Ltd. have provided quality representation to people in the Chicago area. By calling us today, we can stop collection calls, UCC 1 filings, and foreclosure proceedings.