If you are unemployed, keeping up with bills payments can be hard. In fact, you may get to the point where you are behind on your mortgage payments and facing foreclosure. You are probably exploring your options to prevent a foreclosure the moment you lost your source of income. In this type of financial situation, the best option may be filing for bankruptcy.

Bankruptcy Options

If you want to stop foreclosure, you have a couple of bankruptcy options: Chapter 7 and Chapter 13. A successful Chapter 7 bankruptcy ends up in a discharge of almost all your and liabilities. When you have no income, Chapter 7 is a practical choice. A Chapter 13 bankruptcy requires a regular income because you have to repay your creditors within 3 or 5 years.

Protection from Creditors

Whether you file for Chapter 7 or Chapter 13, you and your assets are protected from your creditors through an automatic stay order. This court order is issued right after your filing. No creditor is permitted take action against you or your property without the court's authorization.

Homestead Exemption

Almost all states have a homestead exemption for their homeowners. This stops other creditors from attempting to try to get any home equity that you have. The amount of homestead exemption you can claim depends on the state where you live.

The Right of Redemption

In a Chapter 7 bankruptcy, you can make a redemption agreement with your lender. This arrangement will let you keep the house and make payments that you can afford. In a Chapter 13 bankruptcy, you can work out a deal with the creditor to update your mortgage payments through the repayment plan. Whether it is Chapter 7 or Chapter 13 bankruptcy, the foreclosure cases cease permanently when you enter a redemption agreement with a lender.

Hiring a Lawyer

Preventing a foreclosure through bankruptcy necessitates a basic knowledge of the bankruptcy procedures and law. For that reason, your interests are best protected by an experienced attorney.

Normally, lenders do not want to foreclose but in order to protect their interests, they have to. Once you realize that you are unlikely to pay your mortgage, one important thing you should do right away is contact your lender. You should not put it off. Do not be embarrassed or disregard letters from your lender for the reason that those responses are only going to worsen your situation. Filing bankruptcy can still delay or stop the foreclosure process provided that the house has not been sold yet. However, once it is sold, it is no longer yours and even filing bankruptcy cannot help you.

If you have applied for loan modification but it was rejected by your lender, a Chapter 7 or Chapter 13 filing may reduce or discharge your other payments and eliminate the arrearage to your mortgage. At this stage you might have more bargaining power. Seek advice from a good Bankruptcy Attorney San Antonio -- an hour or so with an expert is money spent well.

 


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