Bankruptcy can stop foreclosure?
Declaring any type of bankruptcy should not be seen as any sort of easy option. It has serious and lasting consequences and should always be regarded as a last resort. Having your home about to be taken from you may very well be one of the few times that bankruptcy is a preferable option. So bankruptcy can indeed stop foreclosure, but only if you can do it in time, and only on a temporary basis. It is not a cure for mortgage arrears and is most definitely not a soft option.
There are different types of bankruptcy. It is important to understand the difference between chapters, and 13 Bankruptcy Chapter 7 bankruptcy. With Chapter 7 bankruptcy of the responsibility for paying your debts is taken on by the court, but in exchange for full control over your assets to transfer them, and when the British declared bankrupt, your property can be sold to repay creditors. The alternative is Chapter 13 bankruptcy, an agreement that you are doing, by the court at and after you pay your debts over a length of time. This is much better suited for the purposes of termination of foreclosure. How much of your debt, you manage to pay off, and the level of the repayments have to do depends on many factors. The more clearly infer from this how much income you receive and how much you owe.
If foreclosure proceedings have started against you, a very important point with regard to Chapter 13 bankruptcy is that the sale of your home will be stopped provided you can file for bankruptcy before the foreclosure sale date. Herein lies a problem, because changes to US bankruptcy law introduced in 2005 can sometimes make it impossible to file bankruptcy in time. The change in legislation introduces the requirement that you cannot file for bankruptcy until after you have had credit counseling, and the counseling must be for not less than 180 days. The principle of undergoing counseling is not a bad idea, but if the foreclosure process results in a foreclosure sale of your home in less than 180 days, you will simply not have time to file for bankruptcy to stop it.
When the foreclosure process has started, your options are limited. Main choice for you, is not you pay off in full (this seems less likely) or file Chapter 13 bankruptcy to stop this process. But, you know, filing for bankruptcy does not mean your home, then safety. You must make your financial house in order to truly correct your debt situation.
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