Can Bankruptcy Really Help me Stop a Foreclosure_
Facing foreclosure can be a stressful and overwhelming experience. It can be difficult to know where to turn or what options are available to help save your home. One option that may be available to you is filing for bankruptcy. However, it’s important to understand how bankruptcy can help you stop a foreclosure and the role of a bankruptcy attorney in the process.
Foreclosure occurs when a homeowner is unable to make their mortgage payments and the lender initiates the process of repossessing the property. This process can take several months and can result in the homeowner losing their home.
Filing for bankruptcy can help stop a foreclosure by providing the homeowner with a temporary reprieve from their mortgage payments. This is known as an “automatic stay.” The automatic stay is an injunction that goes into effect when a person files for bankruptcy. It prohibits most creditors from continuing to collect on debt or foreclosing on a property. This means that once you file for bankruptcy, the lender is prohibited from continuing the foreclosure process.
There are two types of bankruptcy that can be used to stop a foreclosure: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy is also known as “liquidation” bankruptcy. It is designed to discharge unsecured debt such as credit card debt, medical bills, and personal loans. However, it does not discharge secured debt such as mortgages. Therefore, if you file for Chapter 7 bankruptcy, it will provide you with a temporary reprieve from the foreclosure process, but you will still be responsible for paying your mortgage payments.
Chapter 13 bankruptcy is also known as “reorganization” bankruptcy. It is designed to help individuals who have a regular income but are unable to keep up with their debt payments. Under Chapter 13, the debtor must submit a repayment plan to the court. The plan must be approved by the court and the lender. The repayment plan can include a reduction in the mortgage payment, an extension of the loan term, or a combination of both. The debtor is then required to make payments to the bankruptcy trustee, who will then distribute the payments to the creditors.
Chapter 13 bankruptcy can also provide relief to homeowners who are facing foreclosure by allowing them to pay off their mortgage arrears over a 3-5 year period. During this time, the homeowner is protected by the automatic stay and the foreclosure process is temporarily halted.
It’s important to note that filing for bankruptcy is not a decision that should be taken lightly. It will have a significant impact on your credit score and can make it difficult to obtain credit in the future. Additionally, if you file for bankruptcy, you may have to give up certain assets such as a second home or a vehicle.
It is highly recommended to contact a bankruptcy attorney before making any decision. A bankruptcy attorney can help you understand the process and the pros and cons of filing for bankruptcy. They can also assist you in determining which type of bankruptcy would be best for your particular situation.
In conclusion, filing for bankruptcy can help stop a foreclosure by providing a temporary reprieve from the mortgage payments. However, it’s important to understand that bankruptcy is not a cure-all solution and it will have a significant impact on your credit score. It’s important to speak with a bankruptcy attorney in Alabaster, Alabama to understand all of your options before making a decision. Bankruptcy attorney can help you navigate the process and make an informed decision about whether or not to file for bankruptcy.