Bankruptcy to Prevent Foreclosure | Houma LA Homes.com

Bankruptcy to Prevent Foreclosure

By Guest Author: Lisa M Joness

 

Is there a connection between foreclosure and bankruptcy? The short answer is yes as filing for bankruptcy protection may forestall foreclosure claims. However, filing for bankruptcy is not a “cure all” for foreclosure related problems and issues. In order to understand how the process works, it is best to define what foreclosure is and how filing for bankruptcy can effectively diminish the effect foreclosure can have on your personal and financial well being.

 

Since most are unable to pay for a home in cash, a loan is procured to purchase the home. This loan is known as a mortgage. The mortgage comes with a term (Years in which the loan is to be paid off) and a particular interest rate. The person that takes out a mortgage from a lender is then allowed to live in the home although, technically, he or she does not outright own the home free and clear. The lender will hold the title on the home until it is completely paid off. Once the mortgage is paid off, then the home’s sole ownership reverts to the person that has took out the mortgage and paid it off.

 

This is a relatively simple process but there will come times when bumps in the road occur. Namely, if someone is unable to make all monthly mortgage payments, the mortgage can fall into arrears. Once several months of mortgage payments are missed, the home might go into foreclosure. That means the lender will seek to repossess the home in order to sell it to procure the remaining money owed on the mortgage. Sadly, many would prefer they could pay their obligations but they are unable to because of financial problems.

 

For those who are in a dire financial situation, the only way to circumvent problems associated with bankruptcy would be to file for bankruptcy. This way, the courts can either liquidate debts, restructure debt, or perform a combination of both.

 

Anyone wishing to avoid foreclosure via bankruptcy should discuss options regarding filing Chapter 13 with a qualified attorney. The reason Chapter 13 may prove appealing is when you file for such a chapter of bankruptcy protection, the court may issue an immediate stay on the collection of the debt. This can mean that the court may order the cessation of all foreclosure proceedings on a temporary basis. The purpose of this would be to allow time to devise a clear and legitimate restructuring plan intended to get the indebted person back on the right fiscal track.

 

Please note: this does not mean that foreclosure may be permanently stayed or that a portion of the mortgage will be automatically discharged. Bankruptcy is not a means of eliminating a mortgage. Rather, it is a means of seeking the most appropriate remedy for your debts under the supervision and guidance of the courts.

 

Having to deal with the issue of foreclosure is not something most would ever wish to do. Yet, foreclosure is exactly where they find themselves when financial hardships become too much to bear. For those that would prefer to avoid such problems, it would be best to seek the counsel of a qualified bankruptcy attorney to discuss viable options.

 

The author started FilingBankruptcyNow.Com which is a website that helps individuals with debt problems by putting them in touch with a local bankruptcy attorney that specializes in bankruptcy under Chapter 7 and Chapter 13 bankruptcy. Check our website for more answers to bankruptcy questions and ideas on how to have a debt free future.

Article Source: http://EzineArticles.com/?expert=Lisa_M_Joness

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