When the threat of a foreclosure hangs over a person’s head, everything is more stressful. It can be difficult to make smart financial decisions; however, filing for bankruptcy can provide you the relief you need to reorganize your finances and perhaps even save your home.
When you file for bankruptcy, an automatic stay is put on all collectors to stop trying to collect debts that you may owe. This includes your home. Most people find at least a couple of month’s relief from foreclosure unless the court approves an exception. While this does happen, it is rare when you file for Chapter 13 bankruptcy. Since Chapter 13 bankruptcy restructures your debts so that you can repay them in part or in full over a period of three to five years, Chapter 13 bankruptcy may allow you to avoid foreclosure and keep your house. This process lets you repay delinquent mortgage payments through a structured plan that you can afford. So long as you keep up with bankruptcy payments, you can avoid a foreclosure.
Unlike Chapter 13 Bankruptcy, Chapter 7 Bankruptcy May Not Save Your Home
While Chapter 7 bankruptcy totally clears your debts and may delay a foreclosure by several months, it ultimately may not allow you to keep your home. Since Chapter 7 bankruptcy clears your debts by liquidating your assets, the bankruptcy trustee may sell your home in order to pay off creditors. While this would technically avoid foreclosure, you still would not keep your home.
In the event that your home is not worth enough to trigger a sale during your bankruptcy, you still may be foreclosed upon later if you are not current on your mortgage payments. On the other hand, you may still be able to keep your home in Chapter 7 bankruptcy. In the case that you are current on your mortgage payments, you can keep your house so long as your home isn’t worth enough to trigger a sale in the bankruptcy. In fact, most people who file Chapter 7 bankruptcy can keep their homes, since the pressure of other loans has been eliminated, allowing you to focus on paying off your mortgage.
As you can see, though, determining the best course of action in order to keep your home can be tricky. An experienced Ohio bankruptcy attorney may be able to give you the most realistic advice on which course of action to take for the best possible outcome. If you are worried about your home going into foreclosure and need advice on your options, contact Cleveland Bankruptcy Attorneys today. Just call (216) 586-6600 now to set up a free consultation on your individual situation.