As the US economy continues to swirl the toilet bowl, many Americans are facing the fact that they might lose their homes to foreclosure if they don't do something quickly. The quickest way to stop a creditor in their tracks by taking any legal action against you is to file for bankruptcy. This is something that no one really wants to hear, filing bankruptcy? Growing up most of us have heard the myths and legends about how a bankruptcy filing will destroy your life forever. Well I'm here to tell you that filing bankruptcy no longer carries the stigma of years past. If you have the choice, would you rather file for bankruptcy or lose your home? I think we all know the answer. Because of the stigma that has been brainwashed into our heads since youth, peoples pride is the main thing that gets in the way of an individual making a good financial decision. The creditors would like you to believe that you are a complete failure, dishonest and can't be trusted because of the bankruptcy filing. They want to do believe this so they can squeeze another dime out of you before you file.
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One of the most freeing meetings a person could have is that trip to the bankruptcy attorney and find out that you're not such a bad person after all and it's possible to save your home from foreclosure by filing bankruptcy. Depending on an individual's income will be the deciding factor on whether the bankruptcy attorney will refer to them to Chapter 7 or Chapter 13 bankruptcy. A Chapter 7 bankruptcy will stop foreclosure, but in most cases only temporarily. As soon as the creditor learns of the bankruptcy filing, they usually will go in and file a relief of stay with the bankruptcy court that will allow them to proceed with the foreclosure. This doesn't mean it's not possible to use Chapter 7 bankruptcy as a way to keep your home, many individuals are overwhelmed with credit card debt and they are unable to make their mortgage payment along with paying all their other creditors. Many of them will play the balancing act trying to give a little bit too everyone and end up not being able to make their mortgage payments putting them in default and starting the foreclosure process. Filing Chapter 7 bankruptcy will wipe out all unsecured debt and in some cases free up enough money by removing all this credit card debt. In this situation, with the new found wealth, the debtor might have enough time to get caught up on payments and work something out to keep the family home.
If the individual makes too much money, the bankruptcy attorney will most likely send them in the direction of a Chapter 13 bankruptcy. Just like a Chapter 7, a Chapter 13 bankruptcy shares the power of the automatic stay that stops all collection and legal activity including, foreclosure, wage garnishments, lawsuits and judgments. With a Chapter 13, the bankruptcy attorney and the debtor will be required to submit a feasible repayment plan to the bankruptcy court that will last 3 to 5 years. In a Chapter 13 bankruptcy, all debts are paid by priority with secure debts at the top of the list and the unsecured debts getting whatever's left over. A Chapter 13 bankruptcy will give the power back to the debtor, allowing them to negotiate with the creditor. With the real estate market in the tank, property values continue to decline and getting loan modifications are next to impossible, filing Chapter 13 bankruptcy puts the debtor back in the driver's seat. Depending on the situation, the bankruptcy attorney might be able to strip off the liens of the second and third by motioning the court to remove the liens if the property value has dropped beneath the amount of the first trust deed, making the second and third in unsecured debt that can be discharged in bankruptcy. Having a bankruptcy attorney on your team to stop foreclosure will also relieve a lot of the stress of the unknown and allow the debtor to get the fresh start that bankruptcy promises.
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