Foreclosure and Bankruptcy
You should consider what’s at stake, whether you file for bankruptcy before or after foreclosure. Timing makes a difference in the outcome of these proceedings and your financial future. What you want to do with your home will most likely determine the choice you make. It’s important to consider your total financial picture before deciding the best time to file. Reiser Law Group will advise you on the pros and cons before moving forward and handle every step along the way with care and attention. Speak with us about where you are with your foreclosure, and we’ll take care of filing Chapter 7 or Chapter 13 bankruptcy according to your needs.
What Does Foreclosure Mean?
Foreclosure enforces the sale of a home with the intent of repaying a debt. This legal process happens when a creditor attempts to recover money from an outstanding balance on a loan. Typically, it’s initiated when a homeowner stops making payments on the mortgage loan they took out to buy the property. Before this occurs, a demand letter will be sent to make arrangements for payment, followed by a notice of default and, finally, a reinstatement period. If, at this point, the missed payments have not been made up, the foreclosure will commence.
A court order to pay money owed to an individual, company, or Homeowners Association (HOA) can also cause a judicial foreclosure to take effect. In some places, there only needs to be a non-judicial power of sale clause in a deed or trust to set this process into motion. Homeowners should be wary of companies that scam people out of money, claiming to help but never offering results.
What Does It Mean to File for Bankruptcy?
Bankruptcy allows individuals and businesses to get a fresh start when they can no longer pay their debts. This process can involve liquidating assets, which is referred to as Chapter 7 and usually applies to companies or individuals whose income falls below the median for their household size. When you file for Chapter 13, you’re allowed to follow a repayment plan over a period of three to five years. Essentially, it reduces, restructures, and eliminates money owed. However, it may not clear everything, with some debts such as unpaid taxes, alimony, and child support still requiring repayment.
A petition must be filed to discharge debt, whether it's a mortgage, credit card balance, or other types of loans. While you can file “pro se” without legal representation, it’s almost always recommended to hire a bankruptcy lawyer who will provide expert advice that will prevent long-term financial and legal trouble.
Chapter 7 Bankruptcy
File for Chapter 7 bankruptcy to eliminate debts through liquidation, which basically sells nonexempt assets to pay creditors. A home can be exempt from this, but in other scenarios, a lien may be placed on a residential property and pledged to the creditor. Individuals, corporations, and other business entities are eligible for bankruptcy under this chapter of the law. As long as they are below the income threshold and have more business debts than consumer debts, they should qualify to continue to file their petition with the court. For those considering this path, they may want to see if they qualify for another form of relief before taking this option. Creditors may also offer out-of-court options to satisfy the outstanding balance.
Chapter 13 Bankruptcy
Chapter 13 of the bankruptcy code allows individuals with regular income to adjust debts, either eliminating them or making accommodations for repayment. Debts are sometimes reduced or restructured so that installments can be made over the course of three to five years. Credit card balances, personal loans, and medical bills can be included in a bankruptcy petition. Some assets may be exempt, such as retirement accounts, cars, and household goods. However, principal debts like child support, child support, taxes, and attorney or court fees must be paid back in full. The main advantage of Chapter 13 is that it allows individuals to stop foreclosure and potentially keep their home or at least stay in it longer.
How Does Foreclosure Affect Your Bankruptcy Case?
You may still file for bankruptcy despite the fact that a foreclosure process is taking place. An automatic stay will be implemented, giving you enough time to find other housing or strategize how to stop foreclosure. A Chapter 7 bankruptcy filing may temporarily put a hold on these proceedings while the case is pending. If you file for Chapter 13 bankruptcy, a stay will halt the process, and a repayment plan can allow homeowners to get current on their mortgage. Filing before or after foreclosure can give you different options unless you need it to go through immediately due to other lawsuits and wage garnishment issues.
Benefits of Bankruptcy Before or After Foreclosure
Whether you file for bankruptcy before or after a foreclosure, it will open up different options that can benefit your circumstances. Filing before the process gets going gives you time to make adjustments to the mortgage, which will change the rate and terms to provide long-term relief. If you don’t want to keep the home, it at least gives you more peace of mind and time to decide what to do next. After a foreclosure, bankruptcy will wipe out debt in case of a mortgage deficiency, allow you to keep more assets in lieu of your home, and discharge any HOA fees you may owe.
Consult the Bankruptcy Attorneys at Reiser Law Group
Speak to a knowledgeable bankruptcy attorney who can address your specific situation and apply some strategies to help minimize losses. Reiser Law Group is here to make these important life-altering decisions and provide the guidance you need to have a chance at a brighter financial future. A legal representative is strongly suggested because they have an extensive understanding of relevant laws and many years of experience to draw from when offering advice. Consult a member of our team to receive the most favorable outcome in your case and any long-lasting legal ramifications.
Get Ready to File for Chapter 7 or Chapter 13 Bankruptcy
If you’re facing foreclosure proceedings, getting in touch with a qualified bankruptcy attorney will help you know the best course of action to take. Through our legal expertise, we can tailor our approach based on your unique circumstances and needs. Reiser Law Group is here to listen to your concerns and protect your property with the best game plan for filing a Chapter 7 or Chapter 13 bankruptcy petition. We’re committed to doing what’s best for our clients and their financial well-being. Contact us at (801) 676-1950 to schedule a consultation today.