Sometimes people have to choose between filing bankruptcy or letting their mortgage lender foreclose on their property. However, it is not as simple as a case of either /or and a decision cannot be made this easily. A mortgage lender will initiate a foreclosure proceeding if the monthly mortgage payments fail to be met. There is only one way to stop this from happening and that is pay the mortgage lender. The loan for a mortgage is similar to an automobile loan; when an individual fails to make his automobile payment, the vehicle is taken from him by being repossessed. If you fail to make your monthly mortgage payments you too, could lose your home to foreclosure.
This actions brings to a stop every civil proceeding involving the debtor during the period of his bankruptcy. So, by law, a mortgage lender has to suspend all legal actions including a foreclosure action. However, a mortgage lender can file for relief from the automatic stay, and when the relief is granted, simply proceed with the aforementioned action. In short, bankruptcy will not allow a debtor to retain a house without paying his debt to the mortgage lender, and it will not halt the foreclosure process. Going into bankruptcy does not solve the problem; it only makes the process proceed more slowly.
While bankruptcy doesn’t mean you don’t have to pay your mortgage, it gives a person time to repay or at least makes it easier to repay a mortgage lender. The debtor has a short time in which to come up with the needed funds, because the lender must suspend foreclosure when the debtor has filed for bankruptcy. In addition, because bankruptcy may get rid of certain unsecured debts, the debtor might be able to free up funds that he can use to make up the back mortgage payments.
If you have no other option, consider declaring bankruptcy to stop collections and give yourself time to get back on track. A Chapter 13 bankruptcy is a court ordered payment plan and allows a debtor to pay the mortgage catch up amount over a period of time.
Not everyone qualifies for bankruptcy and unfortunately if they do qualify, there are legal fees to pay. It may cost you more in legal fees than it does to just buckle down and make your mortgage payment. Talk with a licensed lawyer that specializes in bankruptcy to determine if bankruptcy can really help you avoid foreclosure. Bankruptcy is a complex process that is best handled by professionals.
If you’re afraid that you might lose your home to foreclosure, learn how to stop foreclosure, so you can be informed. Get information about bankruptcy, stopping foreclosure, refinancing, buying and selling homes, different mortgage types and other real estate information at Real Estate – Get In The Know.