Is It A Good Idea To File Bankruptcy To Stop Foreclosure

People in all walks of life are facing financial difficulties. If you are in the situation where you are facing losing your home, you are not alone. There are many people who are facing foreclosure. If you are facing foreclosure but want to stay in your home, filing bankruptcy may be the answer.

First, be certain that your house is in foreclosure? Many people are misinformed and believe that as soon as they miss a payment or two, they are in foreclosure. This is not true. There are many things you might be able to do before reaching that point.

Make sure you have tried all other options before carrying out a bankruptcy? If you are less than 90 days late on your payments you may be able to refinance. Most lenders will send you to the loan modification department so you can work out a payback plan to erase the arrears. Usually the loan will be extended by putting the back payments at the end of the loan.

Your lender will try hard to work out a plan so that you can keep your house and keep making payments to them. It's true that they do not want any more houses on their books.

If you've received a foreclosure notice, you should get legal advice and discuss your options. By filing Chapter 13 you get a stay from creditors which will stop foreclosure. When a stay is granted no collector can take further action to try to collect any money owed them - including your mortgage.

The purpose of the stay is to allow you the time to work out a repayment plan for your creditors and submit it to the state trustee. Depending on your financial situation, Chapter 13 will all you to repay your secured and some unsecured creditors.

Your Chapter 13 repayment plan can include your mortgage arrears, past due payments and other bills. Here's an example using just your mortgage arrears. If you owe $6,000 in arrears and fees, you get to stretch that out over 3 to 5 years. It is alot easier to pay back $100 a month for 5 years than to try to pay back $6,000 over a couple of months. Once your plan is accepted and the bankruptcy confirmed, you basically have a fresh start. You might also be able to include other secured debts that you have.

Filing Chapter 13 will be useless if you can't make your current mortgage payments. Filing bankruptcy will do no good if you can't continue to make your payments because once you get behind again your lender will ask to have the stay lifted and your house will be foreclosed on anyway. Bankruptcy will not stop foreclosure if you do not have the income to start back making payments after the bankruptcy.