How bankruptcy can help you in avoiding foreclosure
When you are having monetary problems, you be having problems in aiming your debt payments too. Now, if yours is a serious problem and if you think that you can’t even make even the minimum payments on your debts, it is better to go for bankruptcy. Bankruptcy helps you to put a stop on the debt amount from increasing and also discharges some part of your debts. Other than this, bankruptcy also helps you to avoid foreclosure.
How to avoid foreclosure
Your home can get foreclosed if you fail to make the on-time payments against your home loan. The lender might take away your home and sell it off to get back his money. However, if you file bankruptcy either Chapter 7 or Chapter 13, you may be able to save your home. Chapter 7 bankruptcy delays the foreclosure process and with Chapter 13 bankruptcy you may be able to totally avoid foreclosure.
When you file bankruptcy, irrespective of the chapter under which you have filed, a stay order comes into effect. As a result of this, no creditors can sue you for non-payment of bills. Neither can any lender foreclosure your property nor take away any of your assets because of your nonpayment of the bills. All kinds of collection activities are bound to cease after you file bankruptcy. The lender can however file a motion to lift the stay. However, still you may get at least two month before your house gets sold off by your lender.
However, in case a foreclosure notice had been filed before your filing of bankruptcy, the stay order might not work. This actually depends on the state laws. Some state allows the lender to foreclosure the property in such a condition while some states do not allow the lender to go on with the foreclosure process. So, it is important for you to know your state laws on bankruptcy and foreclosure before filing bankruptcy.
Especially in case of chapter 13 bankruptcy, there is no fear of your home getting foreclosed. Chapter 13 is like the repayment plan which is approved by the state. You are required to make payments against your debts (secured or unsecured) as per the court approved repayment plan. If you are able to finish off the debt payments as per the plan throughout the repayment term, without once faltering, the debt left after it gets discharged.