This blog recently discussed the different types of foreclosure so it is also helpful to understand how bankruptcy protections may be able to help struggling homeowners who are facing foreclosure. Chapter 13 bankruptcy is a bankruptcy protection option that can provide relief to struggling consumers and may be able to also provide relief for struggling homeowners worried about keeping their home.
Chapter 13 bankruptcy is a reorganization bankruptcy process that allows the filing party to reorganize their debts into a more manageable repayment plan that can be repaid over time. The filing party can repay their debts over what is usually a more manageable period of time, typically 3 to 5 years. At the end of the process, if the filing party has complied with the repayment plan they can enjoy a debt discharge.
The repayment plan is worked out with the assistance of the bankruptcy court and also has to be approved by the bankruptcy court. Chapter 13 bankruptcy can help with the debts the filing party is facing and the stress associated with them. It may also provide possible foreclosure help as well. The automatic stay that goes into effect once bankruptcy protection is filed for can prevent further foreclosure proceedings while the filing party’s repayment plan is being worked out and confirmed by the bankruptcy court. Once the repayment plan has been confirmed, the filing party may then be able to repay missed mortgage payments over the life of the repayment plan and get caught up that way to avoid foreclosure.
In addition to foreclosure protections, there can also be complications concerning foreclosure protections through the bankruptcy process so filing parties should ensure they understand how the process can protect them. Bankruptcy options may be able to protect a family home and help the filing party enjoy a better financial future.
