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
A 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.