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Preventing Foreclosure With Chapter 13 Bankruptcy
Bankruptcy can help those facing foreclosure.
January 08, 2012 /Law and Legal PR News/ -- Preventing Foreclosure With Chapter 13 Bankruptcy
One of the most common questions people have when they file for bankruptcy is whether they will be able to keep their home. The answer, of course, depends upon the particular financial situation of each debtor, but often people keep their home if they can diligently stick to a budget and repay their debt accordingly.
Chapter 7 Provides Temporary Relief
The most common type of bankruptcy is Chapter 7. In a Chapter 7 bankruptcy, the debtor liquidates his or her property to pay back creditors, but he or she is only provided temporary relief in regards to foreclosures.
The relief is temporary because an "automatic stay" goes into effect as soon as a debtor's petition is filed. This prevents all creditors from contacting a debtor to collect on a delinquent account (including mortgages). Once a debtor's bankruptcy case is complete, however, the stay is lifted and creditors may continue collection efforts and foreclosure proceedings. Therefore, while Chapter 7 benefits many people, it may not be the best option for debtors wishing to keep their home permanently.
Chapter 13 Provides Permanent Relief
Chapter 13 bankruptcy is a viable option for those who do not qualify for Chapter 7, as well as those who want to permanently protect a home from foreclosure.
Under Chapter 13, a debtor proposes a repayment plan that will cure any delinquent payments on his or her mortgage over a period not to exceed 60 months. If the Plan is approved by the Court, All creditors must abide by the terms of the plan, and so long as a debtor does so, no foreclosure actions can be brought. Thus, Chapter 13 bankruptcy provides both long-term and short-term benefits because an automatic stay also goes into effect similar to a Chapter 7 filing.
Unfortunately, Chapter 13 is not available to everyone. Because a debtor does not discharge his or her debts, courts make sure that individuals or families have enough income to realistically pay creditors over a number of years. Eligibility requirements include, among others:
-That filing a petition is not barred by a previous bankruptcy
-That a prior filing was not dismissed within the previous 180 days
-Successful completion of credit counseling
-Having less than the maximum allowed secured and unsecured debt
-Sufficient income to pay creditors according to a repayment plan
Chapter 13 bankruptcy is governed by very complex statutes and can be very difficult to successfully complete alone. Anyone considering bankruptcy should speak with an experienced bankruptcy to discuss their options and determine which bankruptcy is appropriate for his or her situation.
Article provided by Terry D Fisher
Visit us at www.durham-bankruptcy.com
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