Does Filing for Bankruptcy Prevent Foreclosure?

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Despite what many people may have heard from another source, a Chapter 13 bankruptcy lawyer in Clearwater, FL can tell you that filing for bankruptcy may not be a permanent remedy for home foreclosure. Bankruptcy does temporarily halt the foreclosure process, but it may not be the solution for all depending on the homeowner’s capacity to pay the mortgage installments. If you are considering filing for bankruptcy to hopefully avoid foreclosure, you may want to speak with a Clearwater, FL Chapter 13 bankruptcy lawyer first, to be sure this is in your best interest.

When may filing for bankruptcy not work?

Known for being a common resource for homeowners who are trying to stop foreclosure, bankruptcy can work but it depends whether the person has applied for either Chapter 13 or Chapter 7, among other factors. Filing for bankruptcy may not be successful for those who are not able to keep up monthly payments, and have a bank lender that is aggressive in pursuing the foreclosure sale.

How does Chapter 7 bankruptcy work in regards to foreclosure?

For the homeowner, Chapter 7 bankruptcy is typically a quicker process when compared to Chapter 13 bankruptcy. The majority of Chapter 7 cases are opened and closed within six months. When a homeowner files for bankruptcy, a court instruction called the automatic stay is enforced, which prevents the bank lender from completing the home foreclosure.

What is the downside to filing Chapter 7 Bankruptcy?

Even after the automatic stay has been implemented, the bank lender can request to the court a motion for relief from stay. If approved, the court has allowed the bank lender to continue on with foreclosure proceedings even though the homeowner’s bankruptcy case is still open.

Would filing for Chapter 13 bankruptcy be the better choice then?

A Chapter 13 bankruptcy lawyer for Clearwater, FL can guide you through Chapter 13 bankruptcy, which is a three to five year long case, in which the homeowner must pay back a portion of the debts owed. A homeowner that files for Chapter 13 bankruptcy and has below median income for a family size in that state, may have to participate in the repayment plan over the course of three years. Those who are above the state income median, may have to do the repayment plan over a longer term of five years. The automatic stay can halt the foreclosure for the duration of the repayment plan, assuming the homeowner is able to maintain the monthly mortgage payments during these few years.

How do I know whether filing for bankruptcy is the best choice for me?

A homeowner who is debating filing for bankruptcy, may want to consult with Chapter 13 bankruptcy lawyer serving Clearwater, FL before making any final decisions. Depending on your financial situation, an attorney may recommend filing for Chapter 7 or Chapter 13 bankruptcy, or neither at all. After receiving a foreclosure notice, a homeowner may rush to file for bankruptcy out of sheer panic. By getting legal advice first, the homeowner can feel more confident in their decision and not make a quick decision simply out of fear.  Call The Law Office of Michael A. Ziegler, P.L. today to consult with a Clearwater, FL Chapter 13 bankruptcy lawyer you can trust!