Many people facing foreclosure ask, “Can Bankruptcy Stop the Foreclosure of My Home?” Chapter 13 bankruptcy is a reorganizational plan that can be a good way to save your home from foreclosure. It will allow you to pay off a mortgage “arrearage” that includes late and unpaid payments over the course of the repayment plan (usually lasting 3 to 5 years). In order to file for Chapter 13 bankruptcy, you will need to have a source of income large enough to meet your current mortgage payment plus the arrearage.
During Chapter 7 bankruptcy, the court-appointed trustee may sell your home to repay creditors if there is enough equity in the property. However, this does not happen very often. More likely, the Chapter 7 process will include the lender continuing with the foreclosure as planned. Not an optimal strategy to use if your main goal is to avoid foreclosure.
If your only concern is stopping the foreclosure of your home, you should consider other options first. You might be able to negotiate with your lender to modify the arrearages, such as accepting partial payments for a certain amount of time, accepting a late payment, or redoing the terms of the loan. It’s also possible to get government help with modifying your loan agreements. The Home Affordable Modification Program (HAMP) attempts to help homeowners in financial hardship get their loan terms modified and their monthly payments lowered.
If you are suffering from financial hardship and the possibility of losing your home, you must be especially careful of scam artists who love to prey on people at their most desperate times. Be very careful when signing any documents, and always get a professional opinion first. Scam artists have been known to provide documents that essentially sign the property title over to them, making you a renter instead of an owner.
If you have any questions concerning your home’s foreclosure and whether or not bankruptcy is right for you, call Hathaway Law today. The legal team at Hathaway would be happy to help you through this difficult time and figure out the best solution for your problem.