Should I file bankruptcy because I am behind on my mortgage and going into foreclosure?
Most likely no.
There are two common types of bankruptcy cases, Chapter 7 and Chapter 13. There are requirements to each of these types of bankruptcy cases.
Chapter 7 bankruptcy is for elimination of debts, other than property you want to keep. It allows you to eliminate debts such as credit cards and/or medical bills. However, if you want to keep your home, you must be able to make all of your past due and future mortgage payments. Therefore, Chapter 7 may temporarily pause your foreclosure case, but it will not help you keep your home.
Chapter 13 bankruptcy is a reorganization of debt. Basically, the court considers your debts, income, and assets and then creates a payment plan that allows you to make one monthly payment on your debts, including your home. If you are unable to pay each month, you will still lose your home. Although, Chapter 13 bankruptcy does prohibit the mortgage lender from selling your house or trying to collect the debt, there are exceptions to this, and it costs a lot of money to file and go through Chapter 13 bankruptcy. Many people don't understand you don't have to file a Chapter 13 bankruptcy to obtain a payment plan or modification.
Instead, a more cost-effective way is to defend against your foreclosure case. This will give you additional time and you can work directly with the lender to obtain a payment plan or modification without the need for filing bankruptcy. This will save you the added expense and cost of hiring a bankruptcy attorney and filing bankruptcy.
If during your foreclosure case, you have been unable to successfully negotiate with the lender directly to obtain a payment plan or modification, you still have the option of filing bankruptcy to save your home before a foreclosure sale of your home.
In short, most people choose to defend their foreclosure case and work directly with their lender to obtain a payment plan or modification without the additional expense, stress, and paperwork of filing a Chapter 13 bankruptcy case. Therefore, they are able to obtain the same result without the added expense.
To learn more about defending your foreclosure case and working directly with your lender to obtain a payment plan or modification without filing bankruptcy, call Kyle & Kyle Law 24/7 at 877-595-3529 for a free consultation with a foreclosure defense attorney.