Is it a good idea to file for bankruptcy to stop your foreclosure? Well, you’re in luck. Because that’s exactly what we are going to cover in this article. We’ll break down what each of the bankruptcies is and how they can affect the foreclosure process. Note, we are not lawyers and we do recommend consulting with a bankruptcy attorney before you finalize anything. So, without further ado… Let’s get started.
What is bankruptcy?
Bankruptcy is broken down into different chapters, most common are chapter 7 and chapter 13. But how do they differ? Chapter 7 bankruptcy is a liquidation bankruptcy that wipes out most general unsecured debts. Things like credit cards and medical bills without having to pay them back through a repayment plan. Chapter 13 on the other hand, is a reorganization bankruptcy. This is designed for the debtors with a regular income who have enough left over each month to pay back a portion of the debt with a repayment plan. This is generally where most people fall into when they are facing foreclosure and considering bankruptcy.
Can I still keep the home after bankruptcy is filed?
The short answer to that is yes. But there are some stipulations to that. Of course, you will have to set up a repayment plan with the creditor, we recommend that you consult with an attorney to get all of your ducks in a row. Upon the successful completion of this Chapter 13 repayment plan, the debts will generally be forgiven. However, It can be difficult to create a repayment plan that will be approved by the bankruptcy court and manageable for the debtor.
Because keeping a home can hinge upon the successful completion of the Chapter 13 plan, it is imperative to obtain the counsel of an experienced bankruptcy attorney who can help create a manageable repayment plan.
Can I still file bankruptcy if I already have received a Notice of Default?
You can still file, however, it may be a little more complicated and you could still end up losing the home anyway. When you do file for chapter 13 bankruptcy, you do have a good chance of keeping the property as long as you set up a repayment plan with the lender or get the payments current again. But if you’re reading this article that is probably not the case.
The lender still may be able to foreclose on the home if you are too far into the process. For example, if you are 45 days into the process and that is when you reach out to a lawyer to file bankruptcy, the lender may foreclose anyway.
The best thing you can do is to reach out to the lender and make arrangements to repay your loan or see what you can do to get it back in good standing. If it is too late for that, contact a lawyer to see if filing bankruptcy is the best option for you.