After falling behind on mortgage payments, a homeowner might be shocked
to find that the bank has ordered the
foreclosure of their home. If nothing is done soon, the property will be seized by
the bank and the homeowner will be literally and figuratively shown the
door. But what
can be done to stop a foreclosure once it starts, other than drumming up funds
fast to pay the mortgage?
Stopping Foreclosure with Bankruptcy
Chapter 13 bankruptcy filing can be an effective legal tool to prevent foreclosure. It might sound
counterintuitive to willingly file for bankruptcy in order to save your
home. However, there are real
benefits to bankruptcy, especially in Chapter 13.
If you were to use a
Chapter 7 bankruptcy filing, the majority of your debts might be entirely
discharged. However, the trade-off is often losing your most valuable assets, including
your home. There are some circumstances that can still protect your home
depending on the total equity, but for many, it can be a gamble. Furthermore,
you need to pass a means test to even qualify for Chapter 7 bankruptcy,
which is yet another hurdle to overcome. While many people can and do
qualify for a chapter 7 bankruptcy, it does not force the lender to allow
you time to get caught up on your mortgage payments like a chapter 13 does.
Chapter 13 bankruptcy works differently. Rather than trying to totally
erase your debts and move on with an arguably-clean slate, you reduce
the existing debt and rearrange what is left into a repayment plan stretched
out over 3-to-5 years’ time. Depending on your circumstances, a
chapter 13 will not only allow you a lot of time to get current on your
mortgage payments, it may also let you entirely wipe out your unsecured
debts in the process. Every case is different, and depending on your situation,
you may have to pay back anywhere from none of your unsecured debts, to
all of it. Our job is to minimize the amount of unsecured debt you are
required to pay back. In addition, since a bank usually has more interest
in you keeping your home than taking it away, you might be surprised to
find that your bank may willingly work with you to make your post-petition
mortgage payments more affordable.
San Diego Bankruptcy Attorneys with 14+ Years of Experience
Are you staring at a foreclosure notice and do not know how to save your
house? Start by calling
888.875.9190 and connecting with the San Diego bankruptcy lawyers at San Diego Legal
Pros. We are passionate and adamant about doing whatever it takes to help
keep our clients happy and in their homes. With multiple professional
awards for skills and ethics, we should be your first choice in legal
representation during this trying time.
Want to know more about bankruptcy? Check out our FAQ page
or request a free consultation.