If a Tennessee resident receives a notice of foreclosure in the mail, it can immediately cause stress and worry. No one wants to lose his or her home; yet, many people encounter severe financial challenges that cause them to fall behind in mortgage payments. Filing for bankruptcy can sometimes halt the foreclosure process.
Chapter 13 might be a viable option
Chapter 13 bankruptcy is a financial tool available to those who meet eligibility, which includes having a reliable means of income. This type of bankruptcy works best in situations where a homeowner was hit by financial problems and has been able to resolve those problems but is still struggling to catch up on mortgage payments because of it. When a person submits an application for Chapter 13 bankruptcy, it automatically prompts a stay in the foreclosure process.
Payments are made within three to five years
If the application for bankruptcy is approved, the homeowner in question will typically be allowed three to five years to pay on his or her back-mortgage debt. During this time, the applicant must also continue to keep up on current monthly mortgage payments. Provided that there has not yet been a foreclosure sale, this program offers a feasible means for curing delinquent payments.
Chapter 13 can be used to sell a home and keep equity
A Tennessee homeowner might determine that he or she is simply unable to keep making mortgage payments once a delinquency has been satisfied. In such cases, he or she may be able to avoid losing equity through foreclosure but can sell the home through the bankruptcy program instead. Before pursuing this avenue, a homeowner will want to make sure that the selling price of the home is enough to pay back lenders. It is helpful to speak with someone well-versed on bankruptcy and foreclosure laws before determining a course of action.