There’s just not enough money at the end of the month for all the bills you have to pay. Maybe it’s due to a layoff or an illness. Whatever the reason, you fell behind on your mortgage and now the mortgage company wants to take your family’s home. If you are facing foreclosure and cannot work out a deal or other alternative with the lender, bankruptcy may help. Two options are available to homeowners; Chapter 7 or Chapter 13. Each provides a very different end-result. If you file for personal bankruptcy under Chapter 7 a so-called “automatic stay” is placed on the foreclosing lender by the court. HOWEVER, the stay is only a temporary fix to the situation. At any time the court can grant your lender’s motion for “relief from the automatic stay.” Once the court grants that motion the foreclosure against your home can proceed to conclusion. Chapter 7 does not permanently stop foreclosure on your house or mobile home. (A Chapter 7 will, however, allow you to surrender the property voluntarily without further obligation.)
Chapter 13 Debt Reorganization can help stop foreclosure on your house or mobile home and give you time to catch up payments. Under Chapter 13 you will propose a plan to bring your mortgage payments current, pay off vehicle loans (often with both principal and interest substantially reduced) over a period of three (3) to five (5) years. Once accepted, all creditors must abide by the terms of the plan.