A scary word, we know, but bankruptcy has actually been a lifesaver for millions of homeowners facing foreclosure.
Here’s how it works.
Bankruptcy is a legal process available to over-indebted homeowners who need to eliminate or reorganize their debts under the protection of the United States Bankruptcy Court. It provides protection from debt-collectors and aggressive creditors’ so that you have a chance to get caught up without fear of negative repercussions.
When you file for bankruptcy, even if it’s within hours of the final auction of your home, the bankruptcy courts will immediately issue what’s called an ‘automatic stay.’ The automatic stay is basically an order telling your mortgage company (as well as other lenders) that they are banned from taking any legal action against you, to include foreclosure procedures, during the bankruptcy proceedings.
When considering bankruptcy as a foreclosure defense, it’s important to determine what your priorities and goals are. If you’d like to keep your home and reorganize your debts, a Chapter 13 bankruptcy might be your best option. Homeowners with a reliable source of income, who are simply looking for an opportunity to get caught up, can often save their home by paying delinquent mortgage payments through the protection of the bankruptcy plan.
However, if your income has decreased, or been eliminated altogether, and your aim is simply to stall the foreclosure and buy yourself some time, then Chapter 7 is probably for you. It typically won’t save your home, but it will delay the foreclosure for several months, giving you time to make a plan, as well as eliminate many of your debts so you can start fresh.
Bankruptcy, of course, requires meeting certain eligibility requirements. But if you’re an over-indebted and struggling homeowner, it’s worth a closer look; especially if a foreclosure is looking eminent. We have compassionate, innovative experts standing by who can walk you through your options and help you make the right decision.
