When you are facing foreclosure, it is never easy, but while there are several alternatives, if you have other debts then filing for bankruptcy may be able to help you avoid foreclosure. Typically most lenders are willing to let borrowers file for a loan modification or short sales in order to avoid foreclosure. However, if you neglect the alternatives or your lender is not letting you consider such alternatives, then a bankruptcy can help.
First, by filing bankruptcy, it enacts an automatic stay that can slow down the foreclosure process by preventing anyone from trying to collect money from you. This usually takes around three months to go into effect, but if the foreclosure process is already underway, they may be required to give you a certain amount of time before selling your property.
If you go on to file Chapter 13 bankruptcy, this will establish a repayment plan. Providing you make your payments on time, this will help prevent the need for foreclosure. However, Chapter 7 only cancels out your debts with your valuables possibly being liquidated. This could mean your house as well.
If you are looking down the barrel of foreclosure, it is better to take other alternatives if possible than to go right to bankruptcy. However, if you have a substantial amount of other debts, then bankruptcy can be a helpful way to clear your debt and get your life back on track. If you want to learn more about preventing foreclosure as well as if bankruptcy is right for you, contact us today.