Are your creditors threatening foreclosure? You can temporarily stop this frightening process by filing for bankruptcy – Chapter 7 will help you to bide more time, and Chapter 13 will give you the option to stop the bankruptcy process altogether. Which option is right for you and your family? This quick guide will help you sort through the options.
Chapter 7 Versus Chapter 13
The choice between Chapter 7 and Chapter 13 makes all the difference in the world of foreclosure. Chapter 7, the “clean slate” variety of foreclosure, often ends in the lender simply asking for permission to continue and complete the foreclosure. Because a home counts as a secured debt, the court will often grant the lender this request.
This does not mean that Chapter 7 is an inappropriate choice. On the contrary – Chapter 7 is the ideal option for some borrowers, especially as it still halts the foreclosure process temporarily. Because of the risk involved, always contact a skilled bankruptcy attorney before filing for a Chapter 7. The threat of foreclosure makes this tip even more important.
Chapter 13 is very different from Chapter 7. The purpose of a Chapter 13 is to establish a workable repayment plan. This repayment period usually lasts about three years. If you comply with the terms established in your Chapter 13 agreement, you will be able to resume your current mortgage payments once the necessary conditions are satisfied.
Make your decision very carefully. We do not suggest filing the paperwork yourself, at least not without a careful review from a trusted attorney. There are no easy answers when it comes to bankruptcy and foreclosure, as every situation will require different solutions. Generalized advice can never account for all the variables. Start thinking about your goals and your needs now – the next section will explain the role of timeliness in achieving the resolution you desire.
What To Expect During Foreclosure
When a mortgage goes unpaid for too long, the loan goes into default and the lender will generally begin the foreclosure process. Every jurisdiction has different laws regarding how many months of nonpayment serve as the minimum for corrective actions, and you may or may not receive any warning in advance.
Once the creditor has started the foreclosure process, the countdown to auction begins. It is extremely important to contact an attorney as soon as possible – although filing for bankruptcy can stall the foreclosure process immediately, complications during the filing process could lead to unfortunate delays. Near misses are extremely risky business.
Taking The Next Steps
Filing for Chapter 7 or Chapter 13 bankruptcy can temporarily prevent foreclosure, and completing a full Chapter 13 plan will help you stop the foreclosure process altogether. The peace of mind is immediate. But before you can enjoy this peace of mind, you have to take action. We recommend taking some time to contact the attorneys at Paul Staley for the information and tools you need to get started.
Do not wait until the eve of the foreclosure auction before jumping into the bankruptcy process; filing for bankruptcy is not always as straightforward as it may seem. Make some time to contact an experienced foreclosure attorney before deciding between Chapter 7 and Chapter 13. Start collecting your financial records and projections now so your attorney can put those gears into motion even quicker.
You can stop the foreclosure against your home and you can do it sooner than you think. There are always options available to explore. Maintain an open mind regarding any alternatives your attorney may suggest.
Bankruptcy is not just a way to resolve debts – it can also serve as a powerful tool against foreclosure, a method of taking immediate action against the loss of home or property. Contact a reputable attorney to find out if Chapter 7 or Chapter 13 can help you to achieve your financial recovery goals. The foreclosure help you need is out there waiting.
SB is a financial advisor and business writer. He covers news about personal finance, frugal living, mortgage and debts.