Understanding What a Chapter 7 Bankruptcy Can Do For Foreclosure
Delay in making mortgage payments can lead to you losing your home. Your bank waste no time in claiming your property that is so close to your heart. Yet, there is no need to panic as of now because there are various ways you can try and protect your home.
At the same time, you also need to be clear about certain processes, bankruptcy, for example.
There are many people who assume that opting for Chapter 7 Bankruptcy will help them in foreclosure, but that is far from true. Of course, there are some ways it could help. Let’s understand the terms.
Understanding Foreclosure and Chapter 7
Generally, if you miss a couple of payments, the lender will generally not act on it, but if there have been more than a few, then, you could be at a risk of foreclosure. If you are still unable to pay after they have sent you a notice or reminder, then the lender or the bank may apply for a sale of the house. The actual procedure depends on the state and its laws.
Under Chapter 7, if you think you will avoid the foreclosure process; that might not happen. Since the procedure may take some time, you will get some leeway to opt for alternative solutions.
You can discuss with your attorney on the options that you can avail. You should also note that Chapter 7 will only temporarily halt foreclosure.
Points to note about how Chapter 7 can affect foreclosure
With reaffirmation of your mortgage, you will only have your original mortgage and you can relax as there will be no other debt. This means you can now start paying your mortgage. This again, as mentioned before, will work only if your due payments are not significant.
If there are too many missed payments, then the lender or the bank will want to go ahead with the foreclosure once the bankruptcy case gets over. But if you can pay off the pending dues, then you will have a chance to save your home.
With renegotiation of your mortgage, you allow the foreclosure but only if the lender or the bank does not decrease your principal or your interest.
In brief, you are seeking your mortgage option to be more affordable. This can also be done before you file for Chapter 7, but if the debt is too high and if you are not in a position to pay off, then you should file for bankruptcy first and then look at refinancing options.
Since each case is different, you should consult with a bankruptcy lawyer with expertise in this area, who can offer valid bankruptcy advice and suggest measures to help you. If you’re considering filing for Chapter 7, before you do it, give us a call for a free consultation at 215-735-1060.
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