For families facing foreclosure, the stress and worry can be unbearable. Fortunately, there are different options available to help those struggling including Chapter 13 bankruptcy which is one option. The two primary types of personal bankruptcy offer certain benefits and can meet the needs of struggling homeowners in different situations.
One potential benefit of Chapter 13 bankruptcy protection is that it may be able to help with the foreclosure process. The Chapter 13 bankruptcy process may be able to permanently stop the foreclosure process in some circumstances. To begin with, once the filing party files for Chapter 13 bankruptcy protection, and automatic stays goes into effect that prevents creditors from pursuing collection actions while the filing party’s debt reorganization plan is being worked out.
In addition to the automatic stay, which can provide some immediate breathing room for the struggling homeowner, the filing party may be able to repay missed mortgage payments over the course of their repayment plan. This will allow them to get caught up and then repay their mortgage loan according to the terms and conditions of their original mortgage loan agreement. It is important to keep in mind that a reorganization bankruptcy, as Chapter 13 bankruptcy is often called, allows the filing party to reorganize their debts into a manageable repayment plan.
Chapter 13 bankruptcy serves as a resource to protect struggling consumers and homeowners facing the uncertainty and strain of foreclosure. As a result, it is important for those struggling with debt and coping with the possibility of foreclosure to be familiar with their options and what will be best for them.