Wednesday, March 28, 2018

Personal bankruptcy should not be understated

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One option recommended by homeowners for foreclosures is to file Chapter 13 bankruptcy. However, many foreclosures seem to think that this option will automatically terminate foreclosure, and they do not want to return to foreclosure after submission. Unfortunately, the reality is completely different, because the vast majority of people who pass this legal process will eventually fail, rather than complete the bankruptcy plan.

Chapter 13 bankruptcy will stop the redemption process by automatically stopping collection efforts by creditors, so it may be very effective. If the homeowner does not have time before the sale of the house at the county auction, or the bank is unwilling to work with them to complete a loan modification or other foreclosure solution, bankruptcy can give the owner a chance to come up with a better solution. But applying for bankruptcy will not automatically terminate the foreclosure or mortgage default.

The owner will have to make a payment plan through the court and the lender and pay 3 to 5 years on this plan. The purpose of doing so is to allow them to avoid defaulting on mortgages and other possible debt, while reducing the balance of other debt. By the end of the bankruptcy payment plan, the homeowner should have fully repaid the "current" status of the debt and the foreclosure will end. If the housing loan does not lag behind, the bank apparently cannot sue to repossess the property to pay for the mortgage.

Homeowners must realize that many bankruptcy payment plans can be quite expensive and may double their monthly debt payments. For this reason, bankruptcy may be considered merely a short-term Band-Aid, which can postpone months of foreclosure or auction. After filing for bankruptcy to terminate the foreclosure, too many homeowners eventually returned to the legal system, but now their credit status is worse, and if necessary, they will not be able to submit an application to stop Sergeant sales again.

The lawful payment plan in the bankruptcy law aims to provide homeowners with the opportunity to repay the amount they lag behind, while also making regular payments for mortgage loans and other debt they provide. Therefore, their monthly total debt will almost certainly increase. If their financial situation deteriorates until they are unable to pay more to restore default debt, then bankruptcy will not be too long.

Applying for bankruptcy to prevent foreclosure is not a decision that should be made easily. While it may be the most effective solution to prevent the near sheriff from selling or dealing with uncooperative lenders, it may be better for homeowners to treat bankruptcy as the short-term bridge they hope to achieve at home. This may have more time to sell the house or repay some debt to obtain a hard loan loan, but homeowners should carefully consider their ability to complete their statutory authorization payment plan before they rely on bankruptcy as the best way to stop foreclosure.


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