It has been said that delinquent borrowers can save their homes from being foreclosed by filing for personal bankruptcy. Read on to learn more about the different types of bankruptcy and how filing for bankruptcy affects the home foreclosure process.
What is Foreclosure?
Foreclosure is defined as the legal process where a borrower's ownership of a property is terminated, usually due to inability to make mortgage payments. The process of foreclosure usually involves the forced sale of the property where the proceeds of the sale are used to pay off the mortgage debt.
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How Can Bankruptcy Stop The Foreclosure Of Your Home?
Filing for bankruptcy actually stops foreclosure proceedings. Not only that, it can also end harassment from debt collectors and give the debtor ample time to make up for missed payments and do some reorganization of their debt payments. There are also cases wherein filing for bankruptcy can help the debtor save his home permanently.
Once a debtor files for bankruptcy, the first thing it accomplishes is the cessation of the foreclosure process. It will usually and legally postpone the sale of your home for at least three to four months event if it has already been scheduled for foreclosure sale.
This, however, doesn't end all your problems. Filing for bankruptcy may temporarily save your home from foreclosure, but you as the debtor still have to make a deal with the mortgage company to repay the past due amount to enable you to keep your home.
This is why filing for Chapter 7 bankruptcy to stop the foreclosure of your home is not advised because oftentimes, it only delays the ultimate foreclosure. More often than not, debtors ultimately lose their homes in a Chapter 7 scenario.
A Chapter 13 bankruptcy is more effective in this home saving scenario and if there is equity, bankruptcy is often advised by experts as a prudent financial decision. With a Chapter 13 bankruptcy, a debtor will be given the opportunity to reorganize his finances and to repay his debts in a time span of three to five years where the bankruptcy court agrees to an income-based budget with a trustee receiving monthly payments from the debtor.
Debtors can actually bounce back from bankruptcy with their homes intact and still in their possession so long as they kept up with their payments and in the process rebuild and reestablish their credit ratings.
Some people might see bankruptcy as the best solution in cases of extreme financial hardship, but it is not the best decision for everyone Homeowners need to take into consideration the pros and cons of filing for bankruptcy to stop the foreclosure of their homes and it would be best to get advice from a bankruptcy lawyer who also understands the foreclosure process and reals estate market.
For more information on bankruptcy and foreclosure, contact a bankruptcy lawyer who has experience in bankruptcy law and helping clients protect their assets. The Law Office of Kevin J. Pratt is comprised of dedicated Georgia bankruptcy attorneys who put the client's interests first.
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