Many people who are experiencing financial distress have fallen behind on their bills, including their mortgage payment. If a homeowner becomes sufficiently delinquent on their mortgage, the bank may foreclose on their home. Foreclosure involves a lender repossessing a piece of property and selling it at auction in order to mitigate their losses. A person’s home is often the largest purchase they will make in their lifetimes and also represents a significant emotional investment as well. As a result, many people who are facing foreclosure wonder whether filing for bankruptcy¹ can help them keep their homes. Fortunately, in many cases, the answer to this question in “yes.” As a result, it is highly advisable for anyone who is facing foreclosure to discuss their options with an experienced bankruptcy lawyer as soon as possible.
How can Bankruptcy Help me Keep my Home?
Bankruptcy can help you keep your home in a variety of ways, depending on your financial situation. Below is information about how the two most common kinds of consumer bankruptcy can help you keep your mortgage lender from foreclosing on your home.
Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, all of a debtor’s non-exempt assets are liquidated and the proceeds used to pay off creditors in order of priority. The homestead exemption exempts a certain value of equity from a bankruptcy estate, meaning that if your equity in your home is at or under the exemption amount the bankruptcy trustee will not sell your home. In order to keep your home, however, you must be current on your payments. If you have fallen behind, the protection of the automatic stay, an injunction prohibiting creditors from attempting to collect on debts, may give you time to get current on your payments or negotiate alternative arrangements with your mortgage lender.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy² may be an option for people who have consistent monthly income. Under a Chapter 13 bankruptcy plan, a debtor’s debts are reorganized in such a way as to allow the debtor to make one consolidated monthly payment that is distributed among his or her creditors. As long as debtors consistently make payments in accordance with the Chapter 13 plan, they can keep their property that is included in the bankruptcy.
Contact a Long Island bankruptcy attorney today to schedule a free consultation
Individuals who are facing foreclosure or are experiencing other financial problems should discuss their options with a bankruptcy lawyer immediately. To schedule a free consultation with bankruptcy attorney Ronald D. Weiss, call our office today at (631) 402-5967.
¹ http://www.uscourts.gov/FederalCourts/Bankruptcy.aspx
² http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter13.aspx