Study Shows Bankruptcy Really Is the Most Effective Way to Stop Foreclosure
Nobody looks forward to filing for bankruptcy. But when it comes to saving your home from foreclosure, bankruptcy really can be your best friend. A recent study by the University of North Carolina concluded that homeowners in foreclosure reduced their chances of losing their homes by 70 percent when they filed for bankruptcy protection.
Bankruptcy has long been an option for struggling homeowners. However, many folks avoid filing out of fear that bankruptcy will harm credit or hurt their reputation. On the contrary, when you’ve been buried under the weight of overwhelming debt, bankruptcy can be just the action you need to begin rebuilding your credit – and your life.
Chapter 13 bankruptcy was created specifically with the idea of helping people hold on to their possessions, including their homes. Unlike Chapter 7, which can require the liquidation of certain assets in order to repay creditors, Chapter 13 helps debtors protect valuable property while they make affordable monthly payments toward debt. In fact, a legal action called the automatic stay goes into effect immediately upon filing to actually pause foreclosure proceedings and other collection activities.
But the main benefit of bankruptcy is that it buys time to catch up on payments, especially if debtors are able to discharge other debts through the Chapter 13 plan, thereby freeing up more money to devote to a mortgage.
While it’s true that bankruptcy will go on your credit record after you file, it can also help you rebuild credit after you find debt relief. With debts discharged, some homeowners find that qualifying for previously unavailable options such as loan modification is now possible.
Of course, bankruptcy isn’t right for everyone. It won’t discharge student debt, for instance – a problem increasingly plaguing young homeowners. But if you also have credit card debts, payday loans, medical bills and other unsecured debts, bankruptcy may be able to provide the breathing room you need to get caught up on payments and back on your feet.
If you’re facing foreclosure and would like to save your home, contact DebtStoppers today to speak to an experienced foreclosure attorney – and learn what bankruptcy can do for you.
Bankruptcy can save your home from foreclosure, by Dan Rafter, HSH.com