Saving Your Home From Foreclosure: Filing For Bankruptcy May Not Be Enough

The commercials on television are endless. By filing for bankruptcy, you can help put your life back on track and even protect your house in the process. But, is there truth to this declaration? The answer may surprise you.

We\’ll begin with Chapter 13 bankruptcies first. You can file this bankruptcy as an individual or on the part of a business. If you\’ve seen advertising about how this will cancel out your debts, it\’s not true, as this sort of bankruptcy actually enables you to contact your creditors and suggest a repayment plan. You\’ll probably pay a lot less than you otherwise would have if this payment plan is accepted, which makes filing this bankruptcy a significant benefit. In regards to protecting your house from foreclosure, you can propose new mortgage terms with your lender and, if accepted, you might very well be able to save your home in this way.

In a few situations, filing a Chapter 7 bankruptcy is also a adaptable alternative. Only individuals can file under Chapter 7 and it offers no repayment plan. In a way the option allows you to cancel out existing debts. Do not assume this is as simple as it sounds, however. Several debts like unsecured credit card balances can be canceled out, while others really can\’t be. You can see a good example of this in the lien built-in to property. Since it is considered collateral for the mortgage loan you\’ve borrowed, it cannot be erased by just filing bankruptcy. A homestead exemption may be your way to exempt all or some of the existing mortgage on your house, and it\’s available in several states. Consult with a lawyer to determine whether or not this is a realistic approach by which to protect your property.

Chapter 7 and 13 bankruptcy options are not without flaw, however. There is no assistance offered in either option if you start missing payments on your house again after filing bankruptcy. Your situation could actually get worse, because this will result in the loss of your house and a dramatic reduction of your credit score at the same time.

Prior to filing any type of bankruptcy in an attempt to save your property from foreclosure, it is imperative to consider your options carefully. You should consider speaking with a bankruptcy lawyer, both about whether bankruptcy is an appropriate decision for you and about any other options that may be out there.

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