For most people, buying a home is a multi-decade endeavor. They must finance the property with a mortgage and then spend 30 years making monthly payments. If people miss mortgage payments, they could be at risk of losing their homes.
Missing as few as four back-to-back mortgage payments could be enough to trigger foreclosure proceedings. Those hoping to defend against foreclosure attempts may want to consider defending themselves based on issues with the loan or the lender’s adherence to foreclosure processes. If there have been no technical errors, homeowners might consider filing for bankruptcy.
How can a personal bankruptcy filing protect people on the cusp of bankruptcy?
Delaying the foreclosure process
When people file for bankruptcy, the courts provide an automatic stay. That stay eliminates the immediate risk of collection efforts until the resolution of the bankruptcy case. People may be able to catch up on their missed payments before they complete the bankruptcy process, allowing them to bring their mortgages back into good standing.
Adjusting mortgage terms
A timely loan modification can make foreclosure less of a concern. Particularly in Chapter 13 bankruptcy cases, lenders may have an incentive to work with filers to help them avoid foreclosure by changing the terms of a mortgage.
Eliminating financial pressure
The discharge available in a successful bankruptcy filing allows people to eliminate some of their unsecured debts, such as credit card balances and medical bills. Affording the mortgage is much easier when an individual doesn’t have other debts putting pressure on their household budget.
Looking into different solutions for resolving personal debt can help people protect their homes. Foreclosure defense may involve personal bankruptcy, especially in cases where lenders have carefully complied with the law at every step of the early foreclosure process.