Stopping Foreclosure With Chapter 13 – Is It Possible To Save Your Home By Filing Bankruptcy?

stopping foreclosure with chapter 13Over the past decade foreclosure rates in America have reached percentages that are close to pandemic levels. Millions of foreclosures have occurred during the past several years. The high levels of foreclosures have been compared to the same numbers that were recorded during the Great Depression. Many homeowners wonder if there is a way to stall or even stop a foreclosure from happening to them. The answers are not as cut and dry as many would like, however, stopping foreclosure with Chapter 13 is an option that many homeowners can consider.

 

What Is Chapter 13?

Chapter 13 is usually not the first option an individual considers when filing for bankruptcy. Most individuals attempt to file Chapter 7 first and only file for Chapter 13 after they find out that they are not eligible to file for Chapter 7.

Debt reorganization and debt payment restructuring are other names for Chapter 13. An individual has the opportunity to repay their debts over a period of time which is typically three to five years. However, stopping foreclosure with Chapter 13 will not be possible if you do not have steady income. An individual must maintain this income during the repayment period.

If you do not have a stable income, you will not be able to keep your repayment obligations. This would make your bankruptcy filing futile and you will be in the same position you were in before you filed for bankruptcy.

How Can Chapter 13 Stop A Foreclosure?

Once a debtor has filed for Chapter 13, the bankruptcy court will file an automatic stay against all foreclosure proceedings. The court may also order an automatic stay on collections for any other secured debts you may have as well.

However, your debt to the lender will not be discharged. The automatic stay is only temporary so you can set up a restructuring plan that will be approved by the court. The main purpose of the automatic stay is to provide the debtor with some breathing room.  This will lessen the stress  of monthly obligations while getting debts under control.

Unfortunately, there is a not a one size fits all solution for preventing a foreclosure. But, stopping foreclosure with Chapter 13 can make the process easier.

Chapter 13 bankruptcy can provide you with the fresh financial start you need. Contact Douglas Jacobson Law Firm for a free consultation.