Bankruptcy can offer a great solution in times of financial hardship but is often used incorrectly to challenge the foreclosure process.

As a private individual, the most common options available to you are to file a Chapter 7 or Chapter 13 Bankruptcy with the courts. While filing bankruptcy can place an automatic hold on your foreclosure, it is NOT a permanent solution, more a temporary “band-aid” for your situation.

A Chapter 7 Bankruptcy petition, if granted by the courts, can help to solve personal debts such as credit cards, car loans, and other “personal” debts. Your mortgage payments or default amount are not subject to bankruptcy and whether granted or not, your lender is entitled to collect the mortgage payments or continue to file foreclosure.

In a Chapter 13 Bankruptcy petition, if granted, the courts are looking at your ability to plan repayment of your debts. In this case, the courts may allow for the repayment of your mortgage default amount to be split over a set period, say 5yrs, however, this payment is still in addition to your regular mortgage payment. The higher the default amount, the higher the monthly repayments will be. It could be said that this form of bankruptcy is like a loan modification, however, instead of reducing your payments, it will actually increase them.

While Bankruptcy can be a great option for some, it may not be the right option for everyone. Many people receive the wrong advice or believe bankruptcy can help them in a way that it will not. Some having filed bankruptcy, they later find themselves back in foreclosure having not been properly educated about the process.

It is crucial for you to get the right advice and our trained representatives have experience working with several bankruptcy attorneys who we have found to be both affordable and who work in your best interests.