Christopher Todd
Morrison, P.C.

Christopher Todd Morrison, P.C.

Affordable Bankruptcy
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phone answered 7 days a week

Affordable Bankruptcy Call now – phone answered 7 days a week

Will bankruptcy stop a foreclosure?

There is no immunity from debt issues, so if and when you experience them, you should feel no different than any other resident of Texas. Yet the fact that you are not alone in your struggles with debt does not change the concern you feel over the impact that turning to personal bankruptcy for a potential solution might have on your financial situation.

Indeed, one of the greatest fears that many in your situation have is whether they might lose their homes should they seek bankruptcy protection while facing foreclosure. If you share the same worry, you should not that the answer lies in the choice between a Chapter 7 and a Chapter 13 bankruptcy.

Distinguishing Chapter 7 from Chapter 13

A Chapter 7 bankruptcy is typically the most popular due to the benefit offers of having debts discharged. Yet this very reason serves to make a Chapter 7 bankruptcy a less attractive option if you hope your own bankruptcy will stop the foreclosure pending on your home. When determining what assets you have available to you to repay creditors before the discharge of your debts, the bankruptcy trustee assigned to your case may sell your home in order to free up funds for repayment. The only way to prevent this in a Chapter 7 case is if the equity in your home is less than the state’s homestead exemption amount.

Stopping foreclosure with a Chapter 13

Yet a Chapter 13 bankruptcy (per CreditKarma.com) offers a pathway to stopping foreclosure. Because you repay your debts over time in a Chapter 13 case, you can include your mortgage arrears in your repayment plan. This allows you the time needed to catch on those payments while keeping your home. While making these repayments, you still will need to stay current on your monthly mortgage payment.