For homeowners who have fallen behind in mortgage payments and are unable to get caught up, and are facing possible foreclosure, it is important for them to be familiar with the legal resources available to help them which can include bankruptcy protections. Chapter 13 bankruptcy can provide relief for a variety of concerns struggling homeowners are facing.
The first step is that the automatic stay, recently discussed on this blog, prevents creditors collection actions during the bankruptcy process. The Chapter 13 bankruptcy process is a reorganization bankruptcy process. A reorganization plan is worked out with the help of the bankruptcy court to reorganize the filing party's debts and allows them to repay them over time. The automatic stay can help by preventing the foreclosure during the bankruptcy process.
Once the filing party's reorganization repayment plan is confirmed by the bankruptcy court, it then provides an opportunity for the homeowner to get caught up and current on their mortgage payments to prevent a foreclosure. The repayment plan can allow the filing party to repay missed mortgage payments over the life of the repayment plan which will bring them current. Understanding how Chapter 13 bankruptcy can help with foreclosure, and potentially avoid foreclosure, is valuable information for struggling homeowners to have.
Struggling homeowners will want to take a look at the different options available to them to help avoid foreclosure. Bankruptcy may be one option to consider which can also help with other financial challenges the homeowner may be facing and help set them on the path to debt relief.