Stop Foreclosure and Eviction with Chapter 13 Bankruptcy
If you want to keep your house, you have 3 options. The first is to enter into a forbearance agreement (I do not recommend this because the banks do not keep their word and continue the foreclosure process.
The second is to refinance your house and the third is chapter 13. Refinancing makes sense if you have enough equity to pay off the note and whatever amount is included in the forbearance.
The third option is chapter 13. The bankruptcy enables you to re-organize your existing debt and pay it off within a 3-5 year period (usually). You'll be able to keep your house and your financial situation won't be as painful for you. You may qualify for HUD approved FHA-insured financing 12 months after your chapter 13 filing date. This will enable you to refinance your house while you're in the chapter chapter 13, concluding your forbearance and chapter 13 plan early. A lot of my customers exercise this strategy if they don't have much equity in their house because the FHA down payment requirements are so low.
Filing for Chapter 7 or Chapter 13 bankruptcy protection sometimes paves the best path for you to keep your house and deal with their creditors.
Advantages of bankruptcy include your ability to stop foreclosure and eviction after the sale without creditor acceptance and encompassing more than just the mortgage debt with a single action. If bankruptcy emerges as your only option, your personal circumstances must be suited for this decision.
In most cases bankruptcy comes as a last resort. While you may file the skeleton for bankruptcy on your own, you will almost always be better served to hire a qualified, experienced bankruptcy attorney.
In Chapter 13 a plan outlines how you will pay creditors over a three to five year period. Only a Chapter 13 can stop a creditor from foreclosing on a delinquent borrower over a period of years. Under a chapter 13 the court retains the right to scrutinize finances of the debtor for the life of the reorganization plan. For a Chapter 13 to work payments under the plan must be kept up or you will lose the court protection and the house will go to foreclosure. To learn more read the chapter 13 bankruptcy FAQ.
In Chapter 7 (not usually recommended) all nonexempt assets are turned over to the bankruptcy trustee and debts discharged. Exemptions (such as homestead exemptions) vary by state. In most cases the debtors possess so few assets that they may keep everything and have all of their debts wiped out completely. If a chapter 7 will not yield this result this may not be the best option.
For more information about bankruptcy see: http://bankruptcytoday.info/