Can Bankruptcy Help In Foreclosure?

Can Bankruptcy Help In Foreclosure?

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Debt relief companies and debt relief options like debt consolidation and debt management etc have to a large extent helped people in tackling their debts and related problems in an organized and legal manner, however thoughts of foreclosure have always brought in the most fearful nightmares of losing ones biggest asset called home. Usually the lender starts the process only after you have missed several payments and it takes numerous legal steps including notifications and proper proceedings which do not happen overnight. This gives you time to try some alternative measures such loan forbearance, a short sale or a deed in lieu of foreclosure and above all bankruptcy is also a good possibility for avoiding or delaying foreclosure which will give you ample opportunity to find ways of keeping your home to yourself. For instance filing for chapter 7 or chapter 13 bankruptcies has the provision of automatic stay or delayed foreclosure issued by bankruptcy court order, which directs the creditors to cease their collections activities immediately. In that the foreclosure of your house will be legally postponed by at least two months or even 3 to 4 months if the lenders are slow to pursue the motion to lift the automatic stay. But in case the lender had already issued and sent a foreclosure notice to the homeowner prior to 3 months from the date of foreclosing the house, then the court cannot expand the time period of the foreclosure as the lender could file a motion to lift the stay and would ask the court to re-schedule the foreclosing process. Another way to keep your home entirely to yourself for indefinite future is by filing for chapter 13 bankruptcy, which lets you pay off the late and unpaid payments over a certain repayment plan period of generally 5 years. However you need to have enough income to pay the current mortgage payment and the added arrearage. On successfully making all the current payments, late charges and interest rates within the prescribed period of time, one can keep the home by avoiding foreclosure. In some cases chapter 13 can also help you by eliminating the payments on your second or third mortgage because, if your first mortgage is secured by the entire value of your home which is possible in case the home has dropped in market value, that will leave you with no further equity to secure your later mortgages, which allows the chapter 13 court to nullify the second or third mortgages and re-categorize them as unsecured debt, which can be easily avoided. Thus both chapter 7 and chapter 13 bankruptcies can somewhat make the situation of foreclosure distant or inapplicable to the debtors delight, however chapter 13 would hold more relevant in letting the debtor keep his house by following the legal norms and debt repayment obligations.

About the Author:

Neil Dreak is a Journalist who writes on various http://www.bestdebtcare.com
href="http://www.bestdebtcare.com">Debt settlement



Article Originally Published On: http://www.articlesnatch.com


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