If you have been unable to pay your mortgage obligations for some time, this means that you’ll likely be facing foreclosure proceedings. Foreclosure means that your lender is taking action to cease possession of your home so that they can gain back at least some of the debts they are owed.
If you are worried about facing foreclosure, you may be wondering what the most effective ways to stop it are. Many people choose to file for bankruptcy when they are facing foreclosure. Doing so may be able to prevent you from losing your home.
The automatic stay
When filing for Chapter 7 or Chapter 13 bankruptcy, an automatic stay is put into place. This means that creditors must stop all debt collection activities with immediate effect. Therefore, filing for these bankruptcy chapters will guarantee that the foreclosure proceedings will stop for a certain amount of time. This can buy you enough time to get your finances in better order.
Why could Chapter 13 bankruptcy be preferable?
In Chapter 7 bankruptcy, you will need to liquidate a certain amount of your assets to be able to pay off your debts. This will likely mean that you will need to sell your home. However, by filing for Chapter 13 bankruptcy, you will be able to restructure your debts over time so that you can satisfy creditors while potentially being able to keep your home.
If you are currently going through financial difficulties and you want to make sure that you do not lose your home to foreclosure, you must take action to explore the options available to you.