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Foreclosure, Chapter 7, and Chapter 13

If you are hoping to resolve the risk of foreclosure by filing for bankruptcy, there are some things that you should know. There are two primary kinds of personal bankruptcy opportunities that are offered to the American public. Each of these options is utilized by millions of Americans each year filing as individuals or filing as married couples in a joint capacity. One of these opportunities offers a significant chance to stop the risk of foreclosure. The other option generally does not. However, this alternative option has many benefits worth considering, so it is important not to dismiss it as an option until you have spoken with an attorney about your unique debt challenges.

Chapter 13 Bankruptcy

As an experienced foreclosure lawyer – including those who practice at The Law Offices of Ronald I. Chorches – can confirm, Chapter 13 bankruptcy offers many homeowners a viable opportunity to save their homes from a risk of foreclosure. Chapter 13 bankruptcy, which is sometimes referred to as “reorganization bankruptcy” or “wage earner’s bankruptcy” is an option that is available to just about everyone.

If you choose to file for Chapter 13 bankruptcy, you will benefit immediately from the protections afforded by a legal resource known as the automatic stay. Except under rare circumstances, the automatic stay will keep your lender from acting upon existing collection efforts and from initiating new collection efforts until your case has either been resolved or dismissed. Meaning, if you successfully file for Chapter 13 bankruptcy, you will be granted time to catch up on your outstanding payments without your lender breathing down your neck or repossessing your house.

Note that you will need to fulfill the terms of your repayment plan to keep the protections of the automatic stay active. If you miss payments on your Chapter 13 bankruptcy plan over its three-to-five year lifespan, you will lose the protections of the automatic stay and foreclosure actions can be started or restarted.

Chapter 7 Bankruptcy

Filing for Chapter 7 bankruptcy will likely only help you avoid foreclosure for a few weeks or a few months until your case is resolved or dismissed. While Chapter 7 filers benefit from the automatic stay, their cases are resolved so quickly that the automatic state does not afford them much time to catch up on their missed payments. With that said, there are so many benefits to filing Chapter 7 bankruptcy that it is an option worth considering if you are eligible for this form of debt relief.