If you are facing foreclosure, it’s important to know that there are options available to you. As always, it’s advised that you work with a bankruptcy lawyer such as a phoenix chapter 13 bankruptcy lawyer to help you figure out if bankruptcy is a good option to save your home.
Chapter 13 and Chapter 7
When it comes to saving your home from foreclosure, it’s advised that you file for Chapter 13 instead of Chapter 7. This is because of the way debt is managed in these different bankruptcy forms.
Chapter 7 (also known an straight bankruptcy) is the most common form of bankruptcy and is available to consumers and businesses.
Under Chapter 7, assets are sold off so that the proceeds can go to paying debt. All proceeds from the sales of those assets are handed over to a trustee, who then pays down any and all creditors. After all creditors have been paid off they are no longer able to collect funds directly from you and your debts are cancelled, meaning you are no longer responsible for them.
Chapter 13 reorganizes debt so that you are able to pay back debts over the next three to five years. This pay-back plan is called a debt repayment schedule. Based on your income, and how much you owe, you’ll repay 10-100% of the debt you owe.
File Chapter 13 Instead of Chapter 7 to Save Home
If you are facing the loss of your home to foreclosure, Chapter 13 bankruptcy might be an option that will allow you to stay in your home.
While filing for Chapter 7 will initiate an automatic stay which stops creditors from collecting, this automatic stay does not apply to foreclosures. A lender will need to cease the foreclosure process while the bankruptcy is in progress, but can continue those efforts once the Chapter 7 bankruptcy is completed.
In Chapter 7 bankruptcies, lenders will often ask the court to lift the automatic stay before the bankruptcy is completed to allow the foreclosure to proceed.
Chapter 13 bankruptcy allows a homeowner three to five years to get caught up on missed payments through the restructuring of debt into a manageable repayment plan. During that time no additional interest accrues on the missed payments. It’s important to remember that when you file for Chapter 13 bankruptcy you will still be required to make regular payments as they come due.
Working with a Bankruptcy Attorney
Bankruptcy can be an overwhelming process. That’s why we advise that you work with a phoenix chapter 13 bankruptcy lawyer that is familiar with various debt repayment options. We are committed to helping our clients understand their rights and options under the bankruptcy law and developing the debt relief solution that makes the most sense for each individual. We invite you to call (602) 648-3274 or contact our Arizona office to schedule a free initial consultation.
668 N. 44th St., Ste 320, Phoenix, AZ 85008