The Facts About Foreclosure: Don’t Lose Your Home!
While many people realize that bankruptcy can be a good way to discharge debt, many do not realize that bankruptcy proceedings can also stall or even reverse foreclosure on a home. It is important to note that bankruptcy is not a magical solution to the problem of foreclosure, but it can help you to restructure your debt so that you can, in some cases, keep your home.
What Is Foreclosure?
Unlike your credit card debt, your mortgage is secured by an asset—in this case, your home. When you have a secured debt, the creditor has the legal right to take that asset away if you do not make your payments. In the case of a mortgage, this takeover is called a “foreclosure”; other types of property are often recovered through “repossession.” A foreclosure is a legal procedure that takes time; in most cases, it takes several months at a minimum to take over a property and evict the residents. Once the house has been foreclosed upon, the lender can resell it to recover the amount of the loan. However, when you file bankruptcy, you temporarily stop the foreclosure process. The lender can petition the court to have the automatic stay lifted, but filing bankruptcy gives you immediate “breathing room” to decide what to do about your home.
Can I Keep My Home?
The good news is that lenders do not want to foreclose on property if there are other viable options. Foreclosure is an expensive process for the lender, so if there is a way to ensure that the money will be paid, most lenders are happy to work with the homeowner. If you file a Chapter 7 bankruptcy but you are current on your mortgage, the lender may be willing to reaffirm the debt with you outside the bankruptcy proceeding. This means that you simply continue to make your mortgage payments and remain in the home. If you file a Chapter 13 bankruptcy, you may be able to include your mortgage in the plan. Sometimes, you can even reduce your interest rate if it is particularly high to make your payments more affordable. If you are facing foreclosure or other financial issues, contact the experienced bankruptcy attorneys at Oswalt Law Group in Phoenix for help today. These lawyers can help you decide if bankruptcy is the right way to take control of your debt.