Not being able to pay off your home loan is incredibly difficult for a person – after all, it could mean the lender has to take the house. This process is called foreclosure. However, if you are desperate, there are two types of bankruptcy that can help a person keep their home. This is something that should come as a last resort, but could prove fruitful for people who have no other options. Below is more information on two reliable forms of bankruptcy.
Chapter 7
If you file for Chapter 7 bankruptcy, all of one’s assets will be sold to pay off everything from banks to credit card companies to former business associates. This type of file could help you save your home. Some states have a homestead exemption policy. Basically, this means that you will be allowed to stay in the house as long as you can make the mortgage payments. Additionally, some states also require that you not have a large amount of equity associated with the home.
Chapter 13
Chapter 13 is another option to consider if you want to save your home but find yourself in a difficult financial situation. Basically, this type of filing means that the debt is reorganized to make it easier to manage. Therefore, each company you owe will work with you to modify payments so you can pay your debts. Therefore, credit card balances can become more manageable so you can keep up with mortgage payments or even lower monthly amounts.
Once you file for bankruptcy, foreclosure will stop, at least temporarily. This could give you the time you need to find a solution. Always stay in touch with banks and other organizations so you can find a payment situation that works for everyone. It is important to be clear about what you can and cannot pay. The more specific you are about your financial situation, the better able lenders will be to work something out with you. Bankruptcy can only work if you take a hard look at your finances and figure out how to make the most of this situation. Be honest with yourself about what you can afford in a home loan and how long it takes to collect your mortgage payment. And you should know that there are always options out there.
