Author: Peter Baptiste Added: August 8, 2008
Copyright (c) 2008 Peter Baptiste Is filing bankruptcy my only option for avoiding foreclosure? In some instances, the answer would be yes. When you have tried everything else - talking to your mortgage company, trying to negotiate a payment system, refinancing, and borrowing against the equity in your home - it may be time to think about filing bankruptcy. If your debts are piling up and you have no where else to turn, this may be your only option if you want to keep your home. If you have been following the news lately, you cannot miss the fact that the economy is not in very good shape. More homeowners than ever are facing the cold, hard reality that foreclosure is imminent and bankruptcy may be their only answer. Filing for bankruptcy relief can help you to save your home and keep you from literally being homeless. There are different types of bankruptcy so you will have to know which one is right for your situation. Before making the decision to consult with a mortgage assistance company, think about this - they will be charging a fee for telling you something that you probably can figure out on your own. When filing bankruptcy, if you decide this is your only option, it will stay on your credit report for several years. However, if the creditors are hammering on your door, you already have black marks against your credit. If you have tried everything else and you cannot possibly figure a way out of the mess that you are in, it may be time to file bankruptcy. Especially if you do not want to lose your home. Families with small children facing foreclosure may just be steps away from having no where to live. In this case and many others the only way they can continue to provide a home for their children and themselves is to file for bankruptcy relief. When you file bankruptcy, Chapter 13 is the one most people choose because with the approval of the court, you are allowed to keep your home, your vehicle, and your personal belongings. This is extremely important especially if you have a family. When you submit a proposal to the court of how you are going to get your debts straightened out, they will usually allow you to keep your primary assets. However, you must be able to make payments against the debt you owe, you must be employed and have enough income to make these payments. This does not release you from making the payments that you owe on a regular basis either. The theory behind bankruptcy is to give you extra time to pay on the debt for which you are behind. The plan that is approved by the court must be adhered to for the bankruptcy to stay in effect. Chapter 7 bankruptcy is another option if you want to get out from under the debt you have and start fresh. Although it does remain on your credit report, you can get relief from credit card debt, garnishments, medical bills, and usually personal loans. Liquidation (selling) of your assets is one way Chapter 7 can help. However, if you do not have assets that you can get enough money from to pay off at least part of your debts, your appointed trustee will not worry about doing this. This is just for the non-exempt assets that you may have which many people do not even have enough to make it worthwhile. This would make the process of putting it up for sale more costly than what it would bring at sale. You can file Chapter 7 and still be able to keep your home and your vehicle as long as you promise to make the payments. The main purpose of a Chapter 7 is to allow you to have relief from unsecured debts such as credit cards, which are the main debt for most people. Judgments are another debt. Payday loans and garnishments can drain you financially making it impossible for you to pay the bills that need to be paid to keep from losing your home and vehicle. It is important that you understand the difference between Chapter 7 and Chapter 13. The main difference is in Chapter 7 Bankruptcy you are asking the court to discharge your debts. Any property that you have that is not exempt from being collected can be taken and sold. With Chapter 13 you sit down, decide on a plan that will allow you to pay your creditors over a certain amount of time. The payments will depend on how much you make, the amount that you owe, and the property you own. When filing bankruptcy although you may have an automatic stay to keep your creditors from seizing your home or your vehicle, you will need to talk to them and set up an agreement to pay what you owe. They can also go to the same court you have gone to and ask for relief from your automatic stay. That is why to avoid losing your home to foreclosure, you need to work out a deal with the mortgage company that allows you to keep your home. Often times this can be done without filing for bankruptcy. However, if you want to play things safe go ahead and file. Even when you file for bankruptcy relief, that does not excuse you from making payments on your home or car. The payments have to be made and the arrangements you make are for the past due amounts. When you get ready to talk to your finance companies, make sure you have already written out a hardship letter. This explains to them how you got in the financial mess that you are in (whether it be through the loss of a job) or illness or death in your family. It also tells them that you what you are going to do to make sure this does not happen again. As you can see there are various ways to try and save your home from foreclosure. The best way for you should be discussed with someone who is knowledgeable in this type of matter. Remember you are not an attorney and the last place to be when you find that out is in court.
--- Peter Baptiste is known as the Foreclosure Doctor Online. Feel free to visit his blog where he provides a wealth of information on a regular basis. http://www.foreclosuredoctoronline.com/2008/07/29/can-filing-bankruptcy-stop-foreclosure/
Comments
| 
