Steps to Stop Foreclosure - Total Bankruptcy
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Steps to Stop Mortgage Foreclosure

Mortgage Foreclosure in the United States

Mortgage foreclosures continue to crash down on Americans at an alarming rate. Banks are calling in their mortgage notes and if you fear that you'll lose your home, you're not alone. $330 billion in adjustable rate mortgages have adjusted or will adjust upward in 2006 as the housing bubble came to a dramatic burst. Each year, millions homeowners may face dramatically increased mortgage payments.

If you're like most consumers, you may not know that bankruptcy may be able to help you save your home in the face of a looming foreclosure. Chapter 13 bankruptcy is a very powerful tool if you have fallen behind on your mortgage payments and want to save your home from foreclosure.

Mortgage Foreclosure and Chapter 13 Bankruptcy

Chapter 13 bankruptcy may stop foreclosure. In fact, stopping mortgage foreclosures is the driving force behind many Chapter 13 bankruptcies, and it was designed to stop a mortgage foreclosure proceeding in its tracks. However, the Chapter 13 bankruptcy must be filed before the mortgage company sells your home. The bankruptcy filing gives homeowners the time they need to cure delinquent mortgage payments.

A Chapter 13 bankruptcy plan provides for the repayment of the mortgage arrears and other secured debts from future income rather than from the current sale of your assets. Under Chapter 13 bankruptcy, the payments you make are fixed so that you can meet all your necessary living expenses first and then pay any surplus income to creditors. A consumer bankruptcy attorney can help you structure a repayment plan that works for you and your creditors.

Homeowners must make all mortgage payments that come due during the Chapter 13 bankruptcy repayment plan. Your mortgage company cannot contact you in regard to your pre-filing mortgage arrears while you are in the Chapter 13 bankruptcy. However, if you fail to make your post-filing mortgage payments, the mortgage company can ask the bankruptcy court to lift the protection of the bankruptcy code and resume the foreclosure proceeding. The possibility of refinancing your mortgage after you have gotten back on track with your Chapter 13 plan is realistic for many consumers.

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Mortgage Foreclosure and Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a liquidation bankruptcy. If you are facing foreclosure on your home, the automatic stay created by your Chapter 7 filing only serves as a temporary defense against foreclosure. As opposed to Chapter 13 bankruptcy, Chapter 7 bankruptcy may give you a fresh start, but will not provide you with the opportunity to repay your mortgage arrears over time. Chapter 7 bankruptcy is an option you might consider if you know that you will not be able to keep up your mortgage payments, and simply need some breathing room to make alternate plans and the ability to move forward without a deficiency judgment against you. If you find yourself unable to continue making your mortgage payments due to job loss or other life circumstance, and you want to surrender your home to the mortgage company, Chapter 7 bankruptcy may help to resolve your mortgage debt.

A local bankruptcy attorney can help you decide if Chapter 7 bankruptcy or Chapter 13 bankruptcy is appropriate for your situation.

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Looking for a Solution Besides Bankruptcy?

Although Chapter 13 bankruptcy can be a manageable, effective way for many people to stop foreclosure and get their mortgage payments back on track, bankruptcy isn't the only way to stop foreclosure. For homeowners with significant equity, who are not more than 90 days past due, there may be other options.

By speaking with a local bankruptcy attorney, you can learn more about your options to stop foreclosure, and whether filing bankruptcy may be the best option for you. Simply fill out the form on this page or call 877-349-1309 to connect with a bankruptcy lawyer in your area today.

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The above summary is for informational purposes only and is not legal advice.  Speak to a local bankruptcy attorney for more information on your state's laws.

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