Foreclosure Defense

Avoid Foreclosure with Bankruptcy

Homeowners can face financial struggles beyond their means, especially when the state of the economy is down and money is tight. Strapped with high mortgage payments on top of their other bills and personal living expenses, many homeowners have found it particularly difficult to stay on top of their financial commitments. When this is the case, many individuals default to late mortgage payments, unintentionally jeopardizing their homes in the process.

Not all mortgage companies and lenders are willing to help struggling homeowners work out a deal to alleviate this kind of stress. Although some are willing to consider a loan modification or short sale, many more are stubborn in their refusal to make accommodations of any sort. In such circumstances, the prospect of foreclosure becomes more than a possibility; it becomes a reality. Rather than losing their home and everything that's been invested in it, homeowners can instead file for bankruptcy to avoid the process altogether.

How Foreclosure Works

Home foreclosure is a lengthy process that will not be completed quickly. Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy immediately prompts the court to place an Order for Relief, in other words, an "automatic stay." The "stay" acts as an automatic directive to any creditors that may have been pursuing your foreclosure. Under the conditions of an automatic stay, creditors must immediately seize their collection attempts, no matter what the extenuating circumstances might be. This seizure also applies to foreclosures, meaning that all sales must be postponed for the time being.

Chapter 7 vs. Chapter 13

A Chapter 7 bankruptcy effectively cancels the debt that was secured by the home. This includes home equity loans, mortgages and more. Recently, a new law was enacted that also excuses indebted homeowners for tax liability connected to the losses incurred by the mortgager or lender that was helping the debtor prior to their default. Chapter 7 forgives a person of their debt; however, it does not automatically protect their home. In fact, many homeowners who file for Chapter 7 will still lose their homes because their lien has not been lifted. Their debt has merely been forgiven.

Chapter 13 bankruptcy is commonly referred to as reorganization bankruptcy because it allows debtors to set up a repayment plan for all of their past due payments. These debtors are expected to repay past due payments and mortgage payments simultaneously, during a predetermined amount of time (typically a couple of years). Assuming that the debtor is able to make timely payments in the amount specified, the home foreclosure can be avoided entirely. To enact this process, we encourage you to contact Adams Law Group today. The legal advice and support you need to successfully avoid foreclosure through bankruptcy will be provided to you by experienced professionals that know what it takes to get the job done.