Bankruptcy May Help a Homeowner Avoid Foreclosure
By the time most people contemplate bankruptcy, they are finding it difficult to make monthly house payments and are likely a few months behind on the mortgage.
April 24, 2011
Bankruptcy May Help a Homeowner Avoid ForeclosureBy the time most people contemplate bankruptcy, they are finding it difficult to make monthly house payments and are likely a few months behind on the mortgage. For many, the primary concern going forward is to avoid foreclosure, but many assume filing for bankruptcy means losing your home. This is not necessarily the case.
Not all bankruptcy filers remain in their homes -- and for some it is not in their best interest to do so -- but if saving your home is a high priority there certainly are options.
No matter where you are in the foreclosure process, bankruptcy will halt the process immediately. This is not permanent, but for some who can catch up on mortgage payments it can make the difference on whether or not you are foreclosed.
Chapter 13 bankruptcy is used most often for people with a steady income who need to lose some debt, but can make a 3 to 5 year payment plan that will pay off secured debts. This is usually the best choice for those wanting to keep their home. If you can afford to make your mortgage payment, plus a little extra if you are behind, you should be able to save your home.
The biggest benefit from bankruptcy is that it will get rid of unsecured debt. Unsecured debts, like credit cards, are not tied to any of your property. The savings can then be put towards your mortgage payments.
Doing Nothing About a Potential Foreclosure is the Worst Choice
Some people can feel overwhelmed about rising debts and threats of foreclosure. It can be tempting for some to simply not pay the mortgage and let the foreclosure happen.
A foreclosure is not the best choice. There are other options to bankruptcy, such as home loan modification, that should be looked into with the help of an attorney. If bankruptcy is ultimately the best decision, however, it won't negatively affect your credit as much as foreclosure. Even if you ultimately lose your home, it is still better for your credit to file for bankruptcy rather than just let the foreclosure happen. A better credit rating will let you buy another home sooner, sometimes just a few years after a Chapter 13 bankruptcy.
If you are in danger of foreclosure, contact a bankruptcy attorney that can explain more fully how bankruptcy can help save your home.
Article provided by The Epstein Group
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