Bankruptcy Stops Foreclosure – Really?

Bankruptcy is an action which must be done after a good research and preparedness. It’s clear that filing bankruptcy certainly stops the process of foreclosure but the way it accomplishes this feat must be watched closely. We will concentrate on 13th chapter of bankruptcy which is best for almost 99% of filings. For further assistance with 11th and 7th chapters consult an attorney.

By knowing the process of applying a bankruptcy a person can get clear whether it will stop foreclosure or not. Bankruptcy from the 13th chapter allows the mortgagor to extend his payment period by 3 to 5 years. The repayment capacity plays an important role, and it can clear of some debts. This happens only with some cases where an item is not an asset. This includes the automobiles.

First step is to petition the court to accept the 13th chapter filing. The court is not required to accept it, but if does then an appointed trustee decide the repayment schedule. It is not accepted if the petition is filed in recent time or if it does not qualify. Once the petition is accepted the trustee divides the wealth that the lender can share with the home owner. By doing so the owner loses the ability to sell his / her house without proper authorization. Considering foreclosure this is a far better state and thus you can avoid foreclosure.

If he plans to sell the house then he must sell it in a Fair Market Value. The trustee estimates the houses value so as to stop selling the house below the market values. Even if a sale with low market value takes place then it can be nullified and deal can be cancelled. This will be uncomfortable for both buyer and seller.

The lenders are aware of the bankruptcy filing, since the adverts for the attorneys regarding bankruptcy are so heavy. When this incident happens the lenders attorney files a petition to release from bankruptcy. There may be a delay in the hearing, but the court readily accepts the lenders petition. The problems get worse since the owner now has to fight for bankruptcy and at the same time the house is back for auction / sale by the lender.

If all the parties are interested then the mortgagor can reinstate the amount through bankruptcy pay off schedule. Though if the mortgagor misses a pay then the house will return to the state of foreclosure. At the end the foreclosure was successfully delayed and not abolished.

The bankruptcy will badly affect your repayment capacity and it will be associated to your account for ten years instead of seven. It will also be stored in your public record for twenty years. These records can be accessed by any high authorities so better mention it in any legal forms or job applications. Bankruptcy is a short term fix for the foreclosure and it is not a solution. For more specific assistance, try consulting an experienced attorney if you consider bankruptcy as a safe option to exit.

Original: Bankruptcy Stops Foreclosure