Filing for Chapter 13 Bankruptcy Can Stop Foreclosure
If you are facing foreclosure, you will want to explore all the options available to you to keep your home. Some financial solutions might include filing for loan forbearance or negotiating a modification on your loan. However, if these options are not possible, you should consider filing for Chapter 13 Bankruptcy.
How can Chapter 13 stop foreclosure?
Once you file for bankruptcy, the Automatic Stay is in force which effectively stops all foreclosure proceedings in its tracks.
Chapter 13 bankruptcy lets you reorganize or manage your debt. It allows you to keep your home, and arrange a new repayment plan with your creditors. In some plans, you must pay your current mortgage plus whatever you owed during default, for the agreed period--sometimes up to five years. While other plans you may continue to work towards a modification, sale of your home or other solutions.
You can take advantage of this new period to refinance your loan, or modify it according to terms you can better afford. You might even consider selling your home. This period can buy you time to consider various options for your financial future.
Who is Eligible for Chapter 13?
Not everyone can qualify for Chapter 13 filing. There are two main conditions. First, you must prove that you have enough income to pay the amount agreed in the repayment plan. Second, you should not have more than $1.15 million in secured debt, and no more than $383 thousand in unsecured debt.
How can you file for Chapter 13?
There are a number of steps involved in filing for bankruptcy under Chapter 13. These include mandatory credit counseling, a meeting of creditors, as well as a hefty dose of paperwork and documentation.
If you think Chapter 13 is a valid option for you, consult an experienced bankruptcy and foreclosure lawyer. At the Law Office of Robert W. Kovacs, we offer caring legal assistance for debt relief, bankruptcy and foreclosure in Framingham, Worcester or the surrounding areas in Massachusetts.