Bankruptcy Can Prevent Foreclosure

If you are behind on your mortgage and facing foreclosure, bankruptcy may offer you relief.  For most filers, the instant your bankruptcy case is filed, the automatic stay goes in to effect.  Once your creditors are notified about your case, foreclosures and other collection activities by your creditors are halted.

Filing Chapter 7 bankruptcy can temporarily stop a foreclosure for a few months. This may give you time for a loan modification or to receive assistance from the North Carolina Foreclosure Prevention Fund. However, if neither of those solutions work, your mortgage lender may eventually succeed in foreclosing your home. At most, this may only stall the process for six months because Chapter 7 does not cure the arrears on your mortgage loan.

On the other hand, Chapter 13 bankruptcy is an effective way to prevent your home from being foreclosed because it gives you time to catch up on missed payments.  This is done by filing your Chapter 13 plan with the court, which allows for up to 60 months to pay off your past due mortgage payments.  Unlike a loan modification, your lender does not have to agree with your plan.  As long has you make your plan payments and your plan complies with the bankruptcy laws, the court will approve your plan.

But don’t wait until it’s too late.  It is much better to talk to an Asheville Bankruptcy Attorney sooner than later.  If your mortgage company starts a foreclosure, it can typically add $2,500.00 or more that you will have to pay back in the bankruptcy just to pay your lender’s foreclosure attorney fee.  Also, if you wait until after the foreclosure sale and upset period, the foreclosure will be final and bankruptcy may offer you no relief.  Contact Mosley Law Firm today to get started.

Are You Thinking About Filing Bankruptcy? Don’t Try These Three Things First.

When a client comes to me seeking help to file bankruptcy, many times they have tried something else first.  Whatever they tried didn’t work.  It was also time, money, and headache that could have been avoided.  Sometimes there are strategic reasons to wait to file bankruptcy.  But usually, the sooner you file bankruptcy, the sooner you eliminate your debts and begin making a financial recovery.

If you are considering doing one of these three things to try and get out of debt, call me first.  It may do more harm than good:

 

  1. Don’t try to make a debt settlement program work.

Bankruptcy is cheaper, takes less time, and stops lawsuits from your creditors.  If you sign up for a debt settlement program, your creditors aren’t getting paid and after a while they are likely to sue you.  This is usually about the time many of my clients decided debt settlement was not worth it.

 

  1. Don’t borrow money from friends and family.

You’ll feel morally obligated to repay them, and if you do, the court might view the repayment as fraudulent and your friends or family may have to give the payments back.  Do this and you may have to wait before you can file bankruptcy.

 

  1. Don’t use your 401(k) to pay down debt.

You’ll need the money for retirement and you’ll get to keep all of it when you file bankruptcy.  Use it to fend off your creditors before filing bankruptcy and you won’t get that money back.  It may also trigger tax consequences, and if you can’t afford the tax bill when it comes due, you may not be able to discharge the debt in a Chapter 7 bankruptcy.  If you file a Chapter 13 bankruptcy instead, it may increase the amount of your monthly plan payments.

 

Talk to me first.

Don’t try figuring it out on your own.  I will tell you if bankruptcy is the best option or if there is another solution that would work better.  These solutions might make sense if bankruptcy isn’t a workable solution.  Usually, it just delays the inevitable.  The longer you take until you file bankruptcy, the longer it will take to get a fresh start.