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Is Bankruptcy a Way Out of Foreclosure?
By jason | March 12, 2008
For owners, searching for an effective way to stop foreclosure can be quite frustrating. Just like anyone, losing a home can be quite traumatic but sometimes you must really accept your present situation.
Filing for bankruptcy has always been considered as a last resort. This means you must have exhausted all the other options that could stop foreclosure. If not, then you should not even be thinking of bankruptcy at all. You must realize that a bankruptcy entry on your credit report can last for ten years.
If in case you are at the end of your rope and seriously considering filing for bankruptcy, here are some information on the two basic types of foreclosure bankruptcy: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
Chapter 7 Bankruptcy
If your financial problems are for long term then a straight up bankruptcy might be better. A Chapter 7 bankruptcy will not involve any repayment plan at all. This means you will be losing your home to foreclosure permanently. All the assets that you have left will be used to pay for all your debts including mortgage loans. Of course, the bankruptcy court will have to determine whether or not you are eligible for this type of bankruptcy.
Chapter 13 Bankruptcy
In this kind of bankruptcy filing, an individual will be able to stop foreclosure without having to leave his home. A Chapter 13 Bankruptcy will involve a repayment schedule that will be spread from three to five years. This Bankruptcy filing is ideal for individuals who are still expecting a regular income and just suffered some temporary financial difficulties.
Bankruptcy can be quite effective in stopping foreclosure but there are negative consequences that come with it. You can still try to explore an out-of-court agreement with your debtors before finally deciding on filing for bankruptcy.
Topics: Bankruptcy |