Foreclosure and Bankruptcy: How Chapter 7 and Chapter 13 Can Help You Save Your Home
Facing foreclosure in Miami can be a stressful and overwhelming experience, as homeowners struggle to find a way to keep their home and avoid losing their largest investment. Fortunately, filing for bankruptcy can provide a solution for homeowners who are facing foreclosure. Both Chapter 7 and Chapter 13 bankruptcy can help homeowners save their home, depending on their individual circumstances.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as a “liquidation” bankruptcy, can provide relief for homeowners who are struggling with overwhelming debt. This type of bankruptcy allows individuals to discharge most of their unsecured debt, such as credit card debt and medical bills. However, it does not provide a way for homeowners to keep their home. Instead, it allows them to sell their home to pay off their outstanding debts.
For homeowners who are facing foreclosure and do not have the means to catch up on their mortgage payments, Chapter 7 bankruptcy can provide a way to discharge their outstanding debt and move on from the stress of foreclosure. However, it does mean that they will lose their home in the process.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as a “reorganization” bankruptcy, is a better option for homeowners who are facing foreclosure but want to keep their home. This type of bankruptcy allows individuals to catch up on their mortgage payments over a period of 3-5 years. During this time, they are protected from foreclosure by an automatic stay, which temporarily stops all collection efforts, including foreclosure proceedings.
In a Chapter 13 bankruptcy, the homeowner will create a repayment plan that includes their mortgage payments, as well as other outstanding debts. The plan is reviewed and approved by the bankruptcy court, and payments are made to a trustee who distributes the funds to creditors. As long as the homeowner makes their payments on time and keeps up with the terms of their repayment plan, they will be able to keep their home and avoid foreclosure.
Which is Right for You?
Whether you choose to file for Chapter 7 or Chapter 13 bankruptcy will depend on your individual circumstances and financial situation. If you do not have the means to catch up on your mortgage payments and are ready to move on from your home, then Chapter 7 bankruptcy may be the best option. However, if you are determined to keep your home and are willing to make the necessary payments, then Chapter 13 bankruptcy may be the better choice.
Consulting with a Bankruptcy Attorney
When facing foreclosure, it is important to consult with a bankruptcy attorney like Michael Brooks Bankruptcy attorney in Miami to determine the best course of action. He can help you understand the process and the pros and cons of each type of bankruptcy, and can help you decide which is the best option for your individual situation. He can also guide you through the process and help you create a plan that will give you the best chance of saving your home.
Foreclosure and Bankruptcy FAQs
- Can bankruptcy get rid of mortgage?
No, bankruptcy does not eliminate the obligation to pay a mortgage. However, it may provide relief through the reorganization of debt under Chapter 13 or the discharge of other debts that may have contributed to the borrower’s inability to pay the mortgage.
- How long is a bankruptcy automatic stay?
The automatic stay in bankruptcy lasts for the duration of the bankruptcy case. It may be lifted by the court for specific reasons, such as if the debtor is not making payments under a plan or if the property is at risk of foreclosure.
- Does Chapter 13 pay off your mortgage?
No, Chapter 13 does not pay off the mortgage. It allows the debtor to reorganize their debt and make payments to creditors, including the mortgage lender, over a 3-5 year period.
- Does Chapter 7 pay off your mortgage?
No, Chapter 7 does not pay off the mortgage. It allows the debtor to discharge certain unsecured debts, but the mortgage debt remains.
- What happens to my house after Chapter 7?
In Chapter 7, the debtor may be able to keep their house if they can continue to make payments on the mortgage. If they are unable to make payments, the mortgage lender may foreclose on the property.
- Do I still own my home after Chapter 13?
Yes, you still own your home after Chapter 13. The debtor is given the opportunity to repay their debts over a 3-5 year period, which includes the mortgage payment. If the debtor completes the repayment plan, they will retain ownership of their home.
- Do I still own my home after Chapter 7?
It depends on the situation. In Chapter 7, the debtor may be able to keep their home if they can continue to make payments on the mortgage. If they are unable to make payments, the mortgage lender may foreclose on the property.
- What happens to my home after Chapter 13 discharge?
After a Chapter 13 discharge, the debtor is released from the obligation to repay certain debts, but the mortgage debt remains. The debtor must continue to make payments on the mortgage to retain ownership of their home.
- Can you file bankruptcy twice to stop foreclosure?
It is possible to file bankruptcy multiple times, but it may not be effective in stopping foreclosure. The automatic stay may temporarily halt foreclosure proceedings, but the underlying mortgage debt remains and the lender may still proceed with foreclosure after the stay is lifted.
- What are the exceptions to the automatic stay?
Some exceptions to the automatic stay include actions to collect domestic support obligations, evictions, and actions to recover possession of property from the debtor. Additionally, if the court finds that the debtor has filed for the purpose of delay, the stay may be lifted.
