When you take out a mortgage loan to finance the purchase of a home, you put up the property itself as collateral for the sake of protecting the lender’s interests. If you struggle to keep up with your mortgage payments, then, the lender has every right to force the sale of your house in a process known as foreclosure.
Filing for bankruptcy is one way to stop the foreclosure process, but you might feel hesitant to choose this as your course of action. You can make the best decision by fully understanding your options when facing foreclosure and how bankruptcy might benefit you more than you realize.
Paying off your mortgage
The only way to guarantee a stop to the foreclosure process aside from bankruptcy is to pay off your mortgage in full. Commonly known as the “equitable right of redemption,” your right to cancel a foreclosure through a full payoff is valid as it provides the lender with the full amount owed to them. This differs from a loan reinstatement in that reinstating implies future mortgage debts which may once again leave you vulnerable to foreclosure.
The benefits of bankruptcy for stopping home foreclosure
As explained by the United State Courts, filing for Chapter 13 bankruptcy comes with the advantage of stopping foreclosure procedures. This provides you with the opportunity to cure delinquent mortgage debts over an extended period of time as per your Chapter 13 plan. Chapter 13 bankruptcy also includes the benefit of allowing you to reschedule secured debts in addition to your primary mortgage.
The most straightforward way to stop a home foreclosure is by fully paying off the mortgage. This may not be possible in many situations, however, so Chapter 13 bankruptcy provides an accessible solution that also provides relief from other forms of debt.
