In today's financial climate, an increasing number of people are having difficulties keeping up with a tumultuous real estate market. In the bankruptcy sense, this involves a spike in foreclosure rates. Foreclosure, or the possibility of such, can happen for many different reasons. Maybe someone lost their job, their mortgage rate readjusted, or they simply got in over their head at a time when the real estate market was booming. Whatever the situation, bankruptcy has a solution for you.
If keeping your home is a priority, a Chapter 13 bankruptcy can resolve your foreclosure issues. A Chapter 13 is an individual repayment plan, one that consolidates all of your debts and repays some or all of them with zero percent interest over 3-5 years. This option is often utilized by those who make too much money to file a Chapter 7 bankruptcy, those who have recently filed a Chapter 7 bankruptcy, or by those who have fallen behind on their house and car and want to keep the property. In this instance, you can get current on your foreclosed home by paying back the arrears through the plan and maintaining the regular mortgage on the property. In this way you will get to keep your home even if you are behind on the mortgage payments.
Another option available to you is to file a Chapter 7 bankruptcy and either attempt to work on a loan modification with the mortgage company or surrender your interest in the home. If you choose to surrender your interest through the Chapter 7 bankruptcy, you will not be responsible for the deficiency balance when the home is sold in foreclosure as that debt will be discharged. Even more than that, you can often live in the home rent free while the lengthy foreclosure process is ongoing, as long as you keep the property in good repair, pay any association fees, and keep up with insurance and taxes.
Foreclosure is a stressful and complicated time in anyone's life who has to deal with it. Knowing there are options, and consulting a bankruptcy attorney to discuss these options, can make a world of difference.