Individuals who are faced with the prospect of foreclosure may have legal options to save their homes through Chapter 13 bankruptcy. As with any legal matter, very strict conditions apply, and not everyone may qualify for this option.
When an individual declares bankruptcy, regardless of the chapter, his or her debts are placed in an automatic stay. This means that creditors, including mortgage lenders, cannot seek repayment from the individual, usually for a period of three or four months.
Under Chapter 13 bankruptcy, individuals are allowed to restructure their debts. What this means is that the individual is allowed to work out more manageable repayment plans with their lenders so that they can repay their debts over a period of time.
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Home mortgages are included among the debts that individuals are allowed to restructure. However, individuals may only work out plans to repay their past due amounts. Whatever future payments arise will not change.
Because individuals are allowed to restructure their past due debts, individuals who can work out plans to repay their past due mortgage payments and who can stay current on future payments may be allowed to keep their homes.
It is important to note that individuals wishing to save their homes in this way will have to declare bankruptcy before being served with their foreclosure notices. If an individual has already been served with a foreclosure notice, then he or she may not be able to save his or her home through a bankruptcy filings.
Before deciding on declaring bankruptcy, individuals are advised to seek experienced legal help. Declaring bankruptcy may not be the best option for some individuals wishing to save their homes, but may be incredibly valuable for others.
Foreclosure and bankruptcy are both daunting and stressful. If you are facing both, you should discuss your financial options with the Arizona bankruptcy attorneys of The Harmon Law Office, LLC.
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