Bankruptcy | Foreclosure

Can bankruptcy stop foreclosure?

Laden with debts? You suddenly find that not only have you incurred thousands of dollars in debt but also find that you are unable to repay them. You keep dodging your creditors, avoiding their calls and staring miserably at the documents calling in your debt.

Will they take away your family home as well? You don't know. Wish that you could find a way out of this mess! Not to worry! You do have a way…

The most easy and efficient way is to file for bankruptcy. You can either file for a Chapter 7 or a Chapter 13 bankruptcy to get out of your unpaid debts. Let us find out more about them.

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Chapter 7: This particular chapter can waive off all the debts that are unsecured. In other words, the debts which are not tied up in any way with property or any other form of security can be successfully written off. Personal loans, credit card debts together with unpaid medical bills & payday loans all fall under this category. Any bankruptcy lawyer will be able to guide you on the benefits of applying for a Chapter 7 bankruptcy.

The periodic harassment by your creditors may also cease. There are however, certain eligibility rules for which you must qualify to file for bankruptcy. The lawyer will have to go through your financial records and income statements before giving the 'All Clear' sign.

Behind on your mortgage? Don't Panic- Talk to us. Learn more about your options. We can help.

People owning property or having a regular income may not be qualified to file for Chapter 7 bankruptcy. There are also some governmental rules which you will have to follow before being considered fit for Chapter 7 bankruptcy. Have a look at them below-

Chapter 7 Means Test- Is a test to see whether you are absolutely bankrupt or can afford to pay a small sum to your creditors.

Credit Counseling Q&A- The bankruptcy law requires you to undergo credit counseling before applying for Chapter 7.

Debtor Education Course- The debts will be written off under Chapter 7 bankruptcy only after you complete a course on debtor education.

If everything goes right, you can get a discharge within six months.

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Chapter 13 Bankruptcy And Foreclosure:

Although Chapter 7 may completely clear your debt, it is Chapter 13 which aims to lower your debt by letting you make partial payment and thereby offers you greater protection. If you are sure of regaining your financial status, it's best to file for a Chapter 13. You are usually required to make a small monthly payment to a trustee appointed by the court.

This will let you pay off your debt slowly but surely. Furthermore, the trustee will have the authority to deal with all your creditors. That means that you won't have to face the daily insults and harassments anymore. The best news is that the court takes out a stay order on all legal cases, foreclosures and repossession.

The court normally takes about 15 days to send a notice to all your creditors after the bankruptcy is filed. You must also inform the court of your repayment plan within 15 days.

Most people dilly-dally & lose out on precious time. So if you know that you are financially at a dead end, review your situation properly. Then get hold of a lawyer and make your decision wisely.

Home owners facing the terrible reality of foreclosure mostly find extreme difficulty in dealing with the processes and decisions that steered them inexorably toward impending disaster. Let's face it, losing your family home is nothing short of a catastrophe and it happens to many people through no fault of their own.

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