If you have fallen behind on your mortgage payments and are facing foreclosure, filing for bankruptcy may be your best solution. Chapter 7 bankruptcy can delay foreclosure proceedings, while filing for Chapter 13 bankruptcy is a better option for some property owners to save their homes. Here is how a bankruptcy attorney can help you determine if bankruptcy is a good choice for you.
Who Can Use Bankruptcy to Prevent Foreclosure?
For troubled homeowners who are facing foreclosure, bankruptcy puts an immediate stop to all foreclosure proceedings. In many cases, bankruptcy can actually help you save your home permanently. If you are substantially behind in your payments but still have an ongoing income and will be able to make payments at some point, bankruptcy may be your best option.
How Does Chapter 7 Delay Foreclosure?
Immediately after you contact an attorney and file for bankruptcy with the court, foreclosure proceedings—and any harassment from debt collectors—are automatically prohibited. The court then gives the homeowner time to decide how to reorganize your finances. A Chapter 7 bankruptcy can delay foreclosure, but may eventually result in the liquidation of all assets. Some bankruptcy lawyers recommend a Chapter 7 filing because it eliminates all unsecured debt, leaving your mortgage exempt.
How Does Chapter 13 Prevent Foreclosure?
Depending on your financial situation, your attorney may recommend Chapter 13 bankruptcy, which gives you three to five years to repair your finances and hold onto your home. In a Chapter 13 bankruptcy, a court-appointed trustee will outline an income-based repayment plan. If you are able to keep up on your payments, you will emerge from bankruptcy with your property intact.