There are few things more disheartening than having your home foreclosed. In addition to losing your most valuable asset, you are also losing the home that your family has grown to love. Unfortunately, home foreclosure has become all too common these days. Fortunately, bankruptcy could provide recourse for individuals whose homes are threatened with foreclosure. Keep reading to learn how declaring bankruptcy could stop your home from being foreclosed on.
- What is Foreclosure?
When most people buy a home, they have to take out a mortgage, a bank loan specifically formulated for real estate purchases. As per the mortgage contract, the individual who takes out the loan for a home is required to make certain payments every month. However, when an individual fails to comply with the terms of the mortgage by missing payments, for example, the bank can begin the process of taking the home back. This is called a foreclosure. While the process sounds daunting, there are several things a homeowner can do to stave off foreclosure. Filing for bankruptcy is one of the best options.
- How Can Declaring Bankruptcy Prevent Foreclosure?
When you file for Chapter 13 bankruptcy, the court orders an automatic stay on all creditors, including the bank that issued your mortgage. This means that a foreclosure cannot take place while bankruptcy proceedings are going on. An automatic stay on your creditors can give you the breathing room you need to figure out your financial situation. More importantly, filing for Chapter 13 bankruptcy can give you an opportunity to reorganize your debts and come up with a manageable repayment plan. If you have a source of stable income, this could be a great opportunity to save your home. Unfortunately, if you simply don’t have a reliable stream of income, Chapter 13 will do little to stop the foreclosure process.
If your home is being threatened with foreclosure, don’t delay. The longer you wait, the harder it will be to save your home. Consult a bankruptcy attorney immediately so you can get an automatic stay from a court.
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