Deciding to file bankruptcy is not typically done lightly, and if you’re worried that you’ll lose your home, you may be nervous about choosing this option. Fortunately, bankruptcy doesn’t always mean you’ll face foreclosure. In fact, sometimes bankruptcy can help you avoid foreclosure, buying you more time to decide what to do with your house.
If you’ve been struggling to pay your mortgage, you may be eager to sell it and pay off the debt. Especially if you have more than one mortgage, you have no equity, or you struggle to pay property taxes, selling the house might seem like a reasonable solution. If you do have equity, it’s an even more sensible idea, because that will allow you to pay some other debts. If you’re facing foreclosure, you may feel pressured to sell the house before you lose it.
However, selling your house under pressure is rarely a good idea. If you sell your house under duress, you may have to list it in a down market, or before you’ve had time to fix it up for sale. Additionally, you might not want to sell. How can you get a break to get your house into a good position to sell, or to catch up on payments and taxes so that you can keep it?
The answer may be bankruptcy. Bankruptcy stops a foreclosure through a federal law called the “automatic stay,” so that if foreclosure is scheduled, it will not happen. This is just one way a bankruptcy offers you some breathing room.
- Chapter 7 bankruptcy can help you catch up on your mortgage or back taxes. By discharging your other debts, it frees up some money to pay the debt that’s putting your home at risk. However, if you won’t be able to get caught up quickly enough or if the collection process has gone too far, Chapter 7 may not be enough.
- Chapter 13 bankruptcy gives you time to figure out a solution. In this case, you’d work out a repayment plan that works with your optimal timeframe. You might need several months to get the house ready to sell, or you might want to keep the house or delay the sale for a few years. Chapter 13 allows you to find a solution so that you can do what’s best for your particular situation.
When you’re trying to figure out which type of bankruptcy is best for you, you can trust the compassionate, dedicated attorneys at Cutler & Associates to help you navigate the unfamiliar terrain of bankruptcy while keeping your best interests in mind. A Chicagoland bankruptcy firm, we have clients throughout the Chicago metropolitan area and work hard to make sure our clients get what they need. Our offices are conveniently scattered throughout the area, with locations in Aurora, Chicago, Hoffman Estates, Lisle, Naperville, Oak Brook, Schaumburg, and Skokie. Contact us through our website, or call (773) 360-5802 for more information.