Here at Flippin A Renovations, we are very familiar with stopping foreclosures. In many cases we have helped homeowners temporarily halt the foreclosure and give the seller time to sell their home. Some homeowners opt to try to solve the problem themselves and one method they use is filing for bankruptcy. We hate seeing homeowners go down this route because it often leads to them losing their home through bankruptcy court.
If you apply for bankruptcy while facing foreclosure, it may temporarily halt the foreclosure proceedings. This is because, under bankruptcy law, an automatic stay goes into effect once you file for bankruptcy. The automatic stay prohibits most creditors, including your mortgage lender, from taking any action to collect debts, including foreclosing on your property, without first obtaining permission from the bankruptcy court.
However, filing for bankruptcy does not necessarily mean that you will be able to keep your home. That is because the court looks at all of your debts, both secured and unsecured.
Secured debt and unsecured debt are treated differently in bankruptcy.
Secured debt is debt that is backed by collateral, such as a home or a car. If you default on a secured debt, the creditor has the right to take possession of the collateral and sell it to recover the money owed. In bankruptcy, you have the option to either reaffirm the debt (i.e., agree to continue making payments on the debt and keep the collateral) or surrender the collateral and discharge the debt. If you choose to reaffirm the debt, you will be responsible for making payments on the debt outside of the bankruptcy proceedings.
Unsecured debt, on the other hand, is not backed by collateral. Examples of unsecured debts include credit card debt, medical bills, and personal loans. In bankruptcy, unsecured debt is typically discharged, meaning that you are no longer responsible for paying it back. However, there are some types of unsecured debt that cannot be discharged in bankruptcy, such as certain taxes, student loans, and debts incurred through fraud.
In general, secured debt is more difficult to discharge in bankruptcy than unsecured debt because the creditor has a legal right to the collateral securing the debt. If you are considering bankruptcy, it’s important to understand the different types of debt you have and how they will be treated in the bankruptcy process. A bankruptcy attorney can help you determine the best course of action based on your individual situation.
The type of bankruptcy you file, your financial situation, and the value of your property will all play a role in determining whether you can keep your home.
In a Chapter 7 bankruptcy, the bankruptcy trustee may sell your property to pay off your debts, including your mortgage debt. If the sale of the property does not cover all of your debts, you may still owe money to your mortgage lender even after the bankruptcy is over.
In a Chapter 13 bankruptcy, you may be able to keep your home if you can make your regular mortgage payments and catch up on any missed payments over the course of your bankruptcy repayment plan. However, you will need to have a steady source of income to make the plan payments.
If you are considering using bankruptcy as a way out of the foreclosure, please call us first. We would like the opportunity to make you an all cash offer on your home before you go down this difficult road.
Call us today at 903-231-3927
-Flippin A Renovations Team