stop foreclosure bankruptcy
Can Bankruptcy Stop Foreclosure
Can Bankruptcy Stop Foreclosure?
Declaring any type of bankruptcy should not be seen as any sort of easy option. It has serious and lasting consequences and should always be regarded as a last resort. Having your home about to be taken from you may very well be one of the few times that bankruptcy is a preferable option. So bankruptcy can indeed stop foreclosure, but only if you can do it in time, and only on a temporary basis. It is not a cure for mortgage arrears and is most definitely not a soft option.
There are different types of bankruptcy. It is important to understand the difference between Chapter 13 bankruptcy and Chapter 7 bankruptcy. With Chapter 7 bankruptcy the responsibility for paying off your debts is taken on by the court, but in exchange for this, full control of your assets transfers to them, and as with UK bankruptcy, your property can be sold off to repay your creditors. The alternative to this, however, is Chapter 13 bankruptcy, which is an agreement you make through the court to gradually pay off your debts over a length of time. This is much more appropriate for the purposes of stopping foreclosure. How much of your debts you manage to pay off, and the size of the repayments you have to make, will depend on many factors. The more obvious of these include how much income you get and how much you owe.
If foreclosure proceedings have started against you, a very important point with regard to Chapter 13 bankruptcy is that the sale of your home will be stopped provided you can file for bankruptcy before the foreclosure sale date. Herein lies a problem, because changes to US bankruptcy law introduced in 2005 can sometimes make it impossible to file bankruptcy in time. The change in legislation introduces the requirement that you cannot file for bankruptcy until after you have had credit counseling, and the counseling must be for not less than 180 days. The principle of undergoing counseling is not a bad idea, but if the foreclosure process results in a foreclosure sale of your home in less than 180 days, you will simply not have time to file for bankruptcy to stop it.
When foreclosure proceedings have begun, your options are fairly limited. The main choice you have is to either pay off what you owe in full (which seems unlikely) or file for Chapter 13 bankruptcy to halt the process. However, you must be aware that filing bankruptcy does not mean your home is then safe. You must still get your financial house in order to truly remedy your debt situation.
To learn more about debt relief and how to get started, please visit Debt Relief.bz
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