The housing bubble in the United States, which was borne of the Great Recession, shows no sign of stopping any time soon. Millions of homeowners are desperately trying to stop foreclosures on their homes for obvious reasons and yet many have no viable sources of income to meet their delinquent accounts. If you are one such homeowner on the verge of a foreclosure, you have hope in the form of bankruptcy.
Bankruptcy Definition
But before you even think that bankruptcy is the be-all and end-all answer to your homeownership problems, it is always best to know its rights and responsibilities. This way, you are better prepared to maximize its benefits and face its consequences with an informed attitude.
Chapter 7 Bankruptcy Rules, Bankruptcy Attorney Tampa, Bankruptcy Attorney Fees,
First off, bankruptcy is a legal process where an individual or an organization files a petition for the declaration of bankruptcy or insolvency mainly to protect both the debtor and the creditors albeit in different ways. All of the debtor's assets are measured, evaluated and used to repay a certain portion of the outstanding debt.
In the case of a homeowner facing the imminent possibility of a foreclosure, filing bankruptcy in court can stop the process undertaken by the banks to recover their property. This is called an automatic stay, which will be discussed later.
As an individual, you can file for either of these two types of bankruptcy:
- Chapter 13 bankruptcy gives you the opportunity to catch up on your delinquent payments
- Chapter 7 bankruptcy provides you the above mentioned stay, thus, preventing immediate proceedings by the bank to recover the property in question
Bankruptcy's Automatic Stay
So, which of the two is better when it comes to preventing a foreclosure? It depends on your circumstances so it is always best to consult a legal expert like a lawyer on the matter.
In general, nonetheless, both types of bankruptcy filings will put an automatic stay to temporarily stop the proceedings on the foreclosures. But we must emphasize that the bank will still be able to proceed with the steps necessary to recover the foreclosed property sooner or later. It's just a matter of time as well as on the judgment rendered by the judge handling the case. Between Chapter 7 and Chapter 13 bankruptcy, you are better off with the latter if you want to keep your house.
What benefits can be gained from the stay? With your filing of bankruptcy, you have the following protection from:
- Law suits, be it beginning or continuing
- Collection calls of any kind especially those that border on harassment from overeager dent collectors
- Repossessions
- Foreclosure sales, which may have been your primary purpose in the first place
- Garnishments on your income
But you should not bank on the automatic stay forever holding off the bank from recovering the property in question. The stay can be lifted by the judge upon the request of the creditor or upon your discharge.
You must then take all the other possible measures to stop the foreclosure especially as bankruptcy is a red mark on your credit report. You will have extreme difficulty getting another home loan and even renting a good apartment since this red mark stays on your credit report for the next 7 - 10 years.
Albuquerque Bankruptcy Attorney
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