Those facing foreclosure fears may wish to consider all options

Those facing foreclosure fears may wish to consider all options

Those seeking to keep a family home or eliminate the burden of debt have options to consider that may help.

Those seeking to stop foreclosure may wish to consider bankruptcy as one of the options available to them. Bankruptcy may be able to help in a couple of different ways. First, filing for bankruptcy causes an automatic stay to go into effect which prevents creditors from taking any further collection action against the filing party until the bankruptcy filing is resolved. The duration of the stay can vary based on the number of times a party has filed for bankruptcy, and possibly other factors, so it is important to understand the terms of the stay after filing.

The automatic stay occurs in both primary types of consumer bankruptcy. According to a Chapter 7 bankruptcy filing, one of the primary types of consumer bankruptcy, the filing party will be permitted to sell non-exempt assets to repay creditors. This type of bankruptcy may hold off foreclosure temporarily for up to few months. The good news is, like Chapter 13 bankruptcy, Chapter 7 bankruptcy also offers the prospect of debt relief.

Chapter 13 bankruptcy, which is the other primary type of consumer bankruptcy, allows those that qualify to reorganize debt into manageable payments that can be repaid over time. Because of this, a filing party may be able to repay missed payments over time and prevent foreclosure; similar to Chapter 7 bankruptcy, the automatic stay will immediately prohibit all collection activities by creditors. Depending on what an individual's goals for the bankruptcy process are, there are different types of consumer bankruptcy to meet the individual needs of the filing party.

Both primary types of consumer bankruptcy offer debt relief and other potential benefits as well. A trained bankruptcy attorney can counsel a party seeking to save a family home or enjoy debt relief as to options that are available.

Source: Fox Business, "File Bankruptcy to Stall Foreclosure?" Justin Harelik, Oct. 2, 2013

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