Could Chapter 13 Bankruptcy Save Your Home From Foreclosure?
February 8, 2009 by admin
You May Be Able To File Bankruptcy And Keep Your Home
Times are tough. If you’ve fallen behind on your mortgage payments, you’re certainly not alone in your struggle. In fact, a foreclosure occurs every 13 seconds in the United States, according to The Center for Responsible Lending. But just because you may be facing bankruptcy, it doesn’t necessarily mean that you must lose your home to foreclosure. If you act quickly, you’ll likely have debt-relief options that could help protect your home. One of those debt-relief options may be filing Chapter 13 Bankruptcy.
How Does Bankruptcy Stop Foreclosure?
When a person files for bankruptcy, the automatic stay typically goes into effect right away.
Under the stay, creditors are court-ordered to stop all collection efforts, which include:
• foreclosure
• repossession
• some lawsuits
• most wage garnishments
• harassing phone calls & letters
Millions of Americans with money problems, and facing foreclosure on their home, have sought the protection of the automatic stay, and filed Chapter 13 bankruptcy to save their homes.
Chapter 13 Bankruptcy Basics
Chapter 13 bankruptcy is typically referred to as reorganization bankruptcy because it helps debtors by placing them on a realistic repayment plan. The plan is structured so they can repay their past due amounts while staying current on their other bills. Under Chapter 13, filers make one lower monthly payment directly to the bankruptcy court, and there is zero contact with creditors.
The Chapter 13 repayment plan generally lasts between three and five years and may be a good option for people who have regular income but are struggling to keep up with scheduled debt payments.
Chapter 13 Eligibility
Not everyone qualifies to file Chapter 13 bankruptcy. Typically, a debtor will qualify if he or she:
• has steady income and is able to pay for basic living expenses
• has debt amounts that fall between the acceptable limits established for secured and unsecured debts. (These limits are periodically updated and a lawyer can let you know what the exact limits are.)
Keep in mind, if you don’t qualify for Chapter 13, you may still be eligible to file Chapter 7 bankruptcy, which may also stop foreclosure proceedings. Talk to a local bankruptcy lawyer today about your debt-relief options.
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