Why File Bankruptcy?
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Why File Bankruptcy

Why file bankruptcy? It’s a fair question, and deciding to file may be a big decision. However, each year hundreds of thousands of people turn to bankruptcy for help in clearing their debts and getting a fresh financial start.

But bankruptcy can offer more benefits than just debt relief. In addition to solving debt woes, one of bankruptcy’s most compelling features is its ability to temporarily stop home foreclosure.

Read below to learn more about bankruptcy’s effect on foreclosure. Or, if you’d prefer to ask a local bankruptcy lawyer whether you should file bankruptcy, fill out the brief form below.

Take advantage of your free consultation to ask what bankruptcy can do for you.


How Bankruptcy Can Stop Home Foreclosure

Struggling homeowners looking to save their homes from foreclosure often find a very specific answer to the question of why they should file bankruptcy.

Chapter 13 bankruptcy is often the primary type of bankruptcy used to halt foreclosure in the following manner:

  • When a homeowner files bankruptcy, in most cases, foreclosure proceedings against that person are immediately stopped by a tool known as the automatic stay.
  • While this puts a temporary halt to foreclosure, Chapter 13 then allows a homeowner to reorganize all of their debts in a single payment plan.
  • Bankruptcy filers make payments on this single plan over the course of a few years which is designed to allow them to catch up on overdue mortgage payments.
  • At the end of the Chapter 13 process, other debts, like credit card bills, may be discharged. At that point the filer may be caught up on their mortgage and clear of other debts,and can get a fresh financial start.

Stopping home foreclosure is a primary reason why many people file for bankruptcy.

Other Benefits of Chapter 13 Bankruptcy

When people file for Chapter 13, there are several other benefits that come with the restructured debt payment plan. These include:

  • Trusty trustee. The bankruptcy court appoints a trustee to whom you will make lump payments every month. The trustee then deals directly with your creditors so you can worry about more important things.
  • Save your wheels. In addition to stopping foreclosure, the automatic stay may also prevent your car from being repossessed.
  • Dead debt. If you make regular payments on your plan, you may be able to discharge unsecured debts at the end of the bankruptcy process.

These are just a few of the many reasons why people file bankruptcy. Contact a local bankruptcy attorney today to ask if bankruptcy is right for you.

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