Facing foreclosure is one of the most stressful situations any homeowner can experience. The fear of losing your home due to financial hardship can be overwhelming, but hope exists at debt relief law firms.
Chapter 13 bankruptcy is a powerful legal option that allows you to reorganize your debts and catch up on missed payments, giving you a chance to save your home from foreclosure. Let’s go over how Chapter 13 bankruptcy works and how it can be used to avoid foreclosure in Aransas.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy, also known as the “wage earner’s plan,” is designed for individuals with a regular income struggling to meet their financial obligations. Unlike Chapter 7 bankruptcy, which involves liquidating assets, Chapter 13 allows you to keep your property while creating a structured repayment plan. This plan typically lasts three to five years and allows you to pay off your debts in smaller, more manageable amounts.
For homeowners, Chapter 13 bankruptcy is particularly beneficial because it allows you to make up missed mortgage payments while continuing to pay your current mortgage. This means you don’t lose your home, even if you’ve fallen behind on payments.
The Automatic Stay and Stopping Foreclosure
When you file for Chapter 13 bankruptcy, an automatic stay is effective immediately. This stay halts creditors’ collection activities, including foreclosure proceedings. This legal protection prevents your lender from progressing with foreclosure, giving you time to work out a repayment plan.
While the automatic stay is in place, creditors cannot harass you or proceed with repossessions. This gives you breathing room to get your finances in order without the constant threat of losing your home.
Catching Up on Missed Payments
One of the key benefits of Chapter 13 bankruptcy is the ability to catch up on missed mortgage payments over time. Instead of requiring you to pay back the total missed payments upfront, Chapter 13 allows you to spread these arrears over the length of your repayment plan. This can make it much easier to manage your financial situation without the stress of trying to come up with a large lump sum.
If you adhere to the repayment plan and continue making your current mortgage payments, your lender cannot proceed with foreclosure. This gives you a path to saving your home and regaining financial stability.
Additional Benefits of Chapter 13
Chapter 13 bankruptcy doesn’t just protect your home from foreclosure. It can also help you address other types of debt, such as credit card balances, medical bills, or personal loans. In many cases, unsecured debts may be partially or fully discharged, allowing you to focus on paying secured debts, like your mortgage.
Additionally, Chapter 13 can stop other negative creditor actions, such as vehicle repossession, giving you even more control over your financial situation.
Filing for Bankruptcy
Chapter 13 bankruptcy offers a lifeline for homeowners facing foreclosure in Aransas. Providing a structured repayment plan allows you to catch up on missed mortgage payments and avoid losing your home. If you’re facing foreclosure, consult an experienced bankruptcy attorney or a debt settlement lawyer to see if Chapter 13 is the right solution.
Don’t let the fear of foreclosure take away your peace of mind. Joel Gonzalez, the bankruptcy lawyer at the Law Office of Joel Gonzalez, specializes in helping homeowners like you avoid foreclosure through Chapter 13 bankruptcy in Aransas.
Contact us today for a consultation and explore how we can help you keep your home and recover financially.
