Your home is your prized possession. Huge efforts go into making your house and the mere thought of losing it due to non-payment of dues can be simply devastating. Tough financial times may often result in irregular mortgage payments. However, missing on payments can result in severe consequences. In case you have missed more than a couple of payments and are on the verge of losing your home due to foreclosure, filing for bankruptcy is the best way to get out of this sticky situation. According to Dallas based law firm https://www.bankruptcyreliefcenter.com, there are a number of options to avoid foreclosure, such as:
Chapter 7 Bankruptcy
Mortgage debts cannot be discharged through Chapter 7 but you can wipe out unsecured debts like personal loans, credit card debts or medical bills through it. Without these payments to take care of, you can concentrate on catching up on mortgage payments. The state law offers 2 sets of property exemptions, thanks to which you can hold on certain assets after bankruptcy. With the Homestead exemption, you can exempt the equity of your house to a certain amount. Bankruptcy attorneys can help assess your financial situation to find out if Chapter 7 is ideal for helping avoid foreclosure.
Chapter 11 Bankruptcy
This chapter helps keep struggling businesses afloat while avoiding foreclosure too. Initially, it was intended to help large corporations to file for bankruptcy, it can also be used as an alternative by individuals who cannot qualify for Chapter 13 due to income limitation or debt. Filing for bankruptcy results in the automatic stay which protects all your assets thereby stopping any repossession, foreclosure proceedings, lawsuits, liens or any other collection activities. Bankruptcy attorneys can also help eliminate 2nd or 3rd mortgage through lien stripping.
Chapter 13 Bankruptcy
In case you are too far behind on payments, the best option is Chapter 13 where a reasonable monthly repayment plan can help reorganize your debts. You get 3-5 years’ time to catch up on mortgage payments. With the reorganization of debt, you can catch up on overdue payments over the time frame of Chapter 13 repayment plan. With automatic stay in place, any collection effort of creditors including foreclosure is halted. In case your house is not worth your 1st mortgage and there is no equity in your 2nd mortgage, Chapter 13 can strip the latter mortgages from the loan amount.
It is important that you are aware of your rights especially those regarding your house during bankruptcy proceedings. Consulting with a bankruptcy attorney can put things into perspective as well as making you aware of the options available to you.