How Does Bankruptcy Stop Foreclosure And W ays In Which Bankruptcy Stops Foreclosure

 This article discusses how and if a bankruptcy can stop a foreclosure.  It highlights and discusses the different types of bankruptcies and how they affect a foreclosure.

Having an impending foreclosure is any homeowner’s nightmare. If you can not find any other way to avoid it, filing for bankruptcy can help. Through bankruptcy, you will be able to stall the foreclosure and give yourself time to look for funds that can solve the foreclosure problem.

To many home and business owners, foreclosures are like the corporal punishment; only this time, the chastisement is more intense since they get to see something that they don’t want to lose go. What homeowners usually do is that they try to find easy and fast ways that can help stop foreclosure. This will result to an increased vulnerability to foreclosure scams and thus, end up losing their homes faster.

One unlikely but proven way to stop foreclosure is by filing for bankruptcy. Many do not know about this since it still is not a common practice. So, how will bankruptcy stop foreclosure? Here are the facts.

Chapter 13 Bankruptcy

Have you heard of this chapter? If you haven’t, then it’s about time that you do. This chapter talks about protecting you and your assets. Within this chapter, you are able to pay your entire debt or a portion of it while at the same time protecting your personal assets such as your house.

Many homeowners’ foreclosure problems start with bad financial managements. They have enough money but since they spend a lot, or do not keep track of their expenditures, they go down to having very little. This is where Chapter 13 bankruptcy comes to the rescue.

With Chapter 13 bankruptcy, you are able to pay mortgage and ‘arrearage’ or unpaid payments within the plan that you propose. For example, you mortgaged your house and still haven’t started paying it off. When you file for Chapter 13 bankruptcy, the court will allow you to come up with a Chapter 13 plan, such as giving you three years to pay off the debt.

However, with this chapter, you should have enough money to pay for your mortgage and your arrearage. When you are able to meet all of your payments within the time that is in your repayment plan, you will be able to avoid foreclosure and keep your house. Through Chapter 13, using bankruptcy to avoid foreclosure really is possible.

Chapter 7 Bankruptcy

However, there are just times when you just can’t do anything since the foreclosure really is fast materializing. In this case, the best thing that you can do is stall the foreclosure and pay off your mortgage.

Through filing of Chapter 7 bankruptcy, you have to accept that you will lose your home in order to ‘pay off’ the mortgage and all your other debts that are secured by your home. Through this chapter, you will be given a fresh start.

When you use or file for Chapter 7 bankruptcy, you will be able to stall the sale of the house. This is because while the court is having your bankruptcy filing reviewed, which takes about 2-3 months, the house is automatically protected from being sold by your lender.

Although through the filing of this chapter you can not save your home from being foreclosed, it can, however, help you find another home. In the given time in which your bankruptcy is reviewed, you are allowed to live for free in your home even way after your case is closed. With this, you can save money which you can use to find yourself a new home to move in.