If you are considering bankruptcy as a way to clear your financial burdens, there are several types that are available to you. The type of bankruptcy you choose will ultimately depend on the details involved in your specific situation. While Chapter 7 bankruptcy, otherwise known as liquidation bankruptcy, may lead to the repossession of your home, Chapter 13 allows you to keep your home in most cases. This option may be perfect for families who need debt relief but still wish to maintain possession of their property.
Chapter 13 bankruptcy helps people reorganize their debt, and enables them to make monthly payments toward that debt over a three to five-year period. Since you are still making payments toward the loan, the bank will often allow debtors to keep their home as long as they do not default on the terms of the repayment plan, according to U.S. Courts. If your home is already under foreclosure when you file for bankruptcy, the submission of your documents will immediately halt the foreclosure process. In addition, the financial institution may work with you to decrease your interest rate. Chapter 13 bankruptcy helps to make home owners’ mortgage payments more manageable by reducing them to an amount that they can afford.
Filing for bankruptcy can be stressful and often overwhelming when going through the process on your own. When you have all of the information you need, it may simplify the process and ensures that you will not miss any of the benefits that are available to you.
This information is intended to educate and should not be taken as legal advice.