Home » Articles » Finance / Wealth

Avoiding Foreclosure With Bankruptcy

Avoiding Foreclosure With Bankruptcy
"""The housing bubble in the United States, spawned by the Great Recession, shows no signs of abating in the near future. Despite the fact that millions of homeowners are frantically attempting to prevent home foreclosures for obvious reasons, many have no viable income sources to pay their delinquent accounts. If you are a homeowner on the verge of foreclosure, there is hope for you in the form of bankruptcy.

Bankruptcy Definition

Before assuming that bankruptcy is the only solution to your homeownership woes, you should always be aware of its rights and responsibilities. Consequently, you will be better equipped to maximize its benefits and deal with its consequences.

In the first place, bankruptcy is a legal procedure in which an individual or organization files a petition for the declaration of bankruptcy or insolvency, primarily to protect both the debtor and the creditors, although in different ways. All of the debtor's assets are assessed and used to repay a portion of the outstanding debt.

In the case of a householder who faces imminent foreclosure, court-filed bankruptcy can halt the banks' efforts to recover their property. This is known as an automatic stay, which will be discussed in greater detail later.

You can petition for either of these two types of personal bankruptcy as an individual:

- Chapter 13 bankruptcy affords you the chance to make up on past-due payments.

- Chapter 7 bankruptcy provides the aforementioned stay, thereby preventing the creditor from taking immediate action to recover the subject property.

Insolvency's Automatic Stay

Therefore, which of the two is more effective in preventing a foreclosure? It is always advisable to consult a legal professional, such as a lawyer, for advice on the matter, as the answer depends on the specifics of your situation.

In general, however, both types of bankruptcy filings will automatically place a temporary hold on the foreclosure proceedings. We must emphasize, however, that the bank will eventually be able to take the necessary measures to recover the foreclosed property. It is only a matter of time and the ruling of the judge presiding over the case. If you want to retain your home, Chapter 13 bankruptcy is preferable to Chapter 7 bankruptcy if you want to keep your home.

What advantages can be obtained by staying? By filing for bankruptcy, you are protected from the following:

- Lawsuits, whether commencing or ongoing

- Collection calls of any kind, notably those from overzealous dent collectors that border on harassment

- Repossessions

- Foreclosure transactions, which may have been your primary objective to begin with.

- Garnishments against your earnings

However, you should not assume that the automatic stay will prevent the bank from recovering the subject property indefinitely. The judge may lift the stay upon the creditor's request or upon your discharge.

You must then take all other measures possible to stop the foreclosure, especially considering that bankruptcy is a black mark on your credit report. This red mark will remain on your credit report for the next seven to ten years, making it extremely difficult for you to obtain a new mortgage or even a decent apartment.

" - https://www.affordablecebu.com/
 

Please support us in writing articles like this by sharing this post

Share this post to your Facebook, Twitter, Blog, or any social media site. In this way, we will be motivated to write articles you like.

--- NOTICE ---
If you want to use this article or any of the content of this website, please credit our website (www.affordablecebu.com) and mention the source link (URL) of the content, images, videos or other media of our website.

"Avoiding Foreclosure With Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 190 times and generated 0 comments. The article was created on and updated on 01 June 2023.
Total comments : 0