Ohio foreclosures up; bankruptcy may be a possible solution

June 22, 2013 (Press-News.org) Ohio foreclosures up; bankruptcy may be a possible solution

Article provided by Guthrie Law Office
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Although there are some signs of economic recovery nationwide, homes are still being foreclosed on at an alarming rate. Unfortunately, Ohio is not immune to this trend. Recent data from RealtyTrac shows that Ohio had the nation's third highest foreclosure rate for the month of April.

According to the data, one out of every 427 Ohio households were foreclosed on during April. In addition, foreclosure-related court filings increased 12 percent over March with 11,991 filings. The number of foreclosure auctions scheduled in April increased 33 percent over March to a 68-month high.

How bankruptcy can help

For Ohio homeowners with a regular income who are facing foreclosure, Chapter 13 bankruptcy can offer a way out. Chapter 13 works by consolidating your debts into a monthly payment plan. The monthly payment amount is based on the filer's disposable income, so the monthly payments are affordable. The debts are paid off in full or in part over a three to five-year period. As long as payments are made under the plan, lenders are prohibited from instituting or proceeding with foreclosure proceedings.

Each monthly payment is made to a bankruptcy trustee, who is tasked with distributing the payment among creditors. Each creditor is paid in order of priority. Secured debts, such as a mortgage or car loan are paid first. As a result, this allows the filer to catch up on his or her mortgage payments. Unsecured debts, such as credit cards or medical bills, are paid last. Unsecured debts may be paid partially depending on the amount of the filer's disposable income.

After the filer makes payments under the payment plan for three to five years, the bankruptcy court grants a discharge of most of the remaining debt. This wipes out the filer's obligation to repay the remaining unsecured debt, giving the filer a fresh start.

In addition to foreclosures, Chapter 13 bankruptcy can help homeowners who are struggling with second or third mortgages. In Chapter 13, subsequent mortgages may be treated as unsecured if there is no equity in the property for the subsequent mortgage liens to attach. This means that the filer's obligation to pay a second or third mortgage is eliminated at the completion of bankruptcy. This process is called lien stripping.

Consult an attorney

Although bankruptcy offers a solution for those facing foreclosure, it is not the right solution for everyone. If you are considering bankruptcy, it is important to first consult with an experienced bankruptcy attorney. An attorney can inform you of your debt relief options and recommend a course of action that would be best for you.