Bankruptcy and Home Foreclosure
If owning a home is part of the American dream then foreclosure may be part of the American nightmare.
But home foreclosure has become a common occurrence in much of the country. As the housing bubble burst, many people have found themselves owing more to a mortgage that is more than their house is worth. Others saw their mortgage payments jump up to unmanageable levels. These people may have felt helpless, but the truth is there is home foreclosure help available.
Even if the foreclosure has already begun, there are steps you can take to save your home for today and the future.
One of the most significant and impactful steps you can take may be filing for bankruptcy.
Filing bankruptcy is designed to provide strong legal protections for your home that can help you stop foreclosure and give you the opportunity to get your past due mortgage payments up to date.
How the Bankruptcy Automatic Stay Is Designed to Stop Foreclosure
When you file bankruptcy – whether Chapter 7 or Chapter 13 – the automatic stay kicks in.
The automatic stay is a court order that puts an immediate stop to all collection actions. Bankruptcy courts consider foreclosure a type of collection, along with:
•Phone calls
•Bills
•Wage garnishment
•Repossession Read more
Qualifying to File Chapter 7 Bankruptcy
Of all the bankruptcy options, Chapter 7 may be the most dramatic. Typical cases take only a few months, and are designed to completely eliminate all of a filer’s debts related to credit cards, medical bills, utility bills and personal loans.
Because Chapter 7 bankruptcy can be so effective and sweeping when clearing out unsecured debts, Congress established a set of requirements that must be met before a person is able to file.
The Bankruptcy Means Test
The bankruptcy means test, as it is known, was part of the new bankruptcy laws of 2005. In order to file Chapter 7, you’ll need to pass the means test.
The good news is, the means test is not an actual exam. It is a measurement of “true need,” and a bankruptcy lawyer can take you through the test and, in short order, let you know if you qualify.
Basically, it works by taking into account your income, your debt and the size of your family, to determine if you truly do need Chapter 7 bankruptcy.
This may sound intimidating, but it’s not designed to be the roadblock it may seem. The means test is in place to prevent people from taking advantage of the system. That’s a testament to the power of Chapter 7 bankruptcy. Read more