How can Bankruptcy help me avoid foreclosure?
Bankruptcy does not help avoid foreclosure. If a loan is in default, a foreclosure is inevitable.
If a borrower has income, a chapter 13 bankruptcy might facilitate getting a loan modification done, lowering the borrower’s mortgage payment. Of course, a homeowner can save money by applying for a mortgage modification without the help of a bankruptcy attorney. A mortgage modification may help a borrower keep their home. Or the borrower may realize they would be better off selling their home and downsizing.
If a borrower has no income, they can only file a chapter 7 bankruptcy, which turns all of the homeowner’s assets to the courts for disposition, including the borrower’s home. Eventually the home will be sold off to pay back the secured creditors.
Lenders want to avoid bankruptcy due to considerable delays and additional legal costs.
It is best to consult an attorney to find out if bankruptcy is a good fit for what you are trying to achieve.
If you have any further questions about bankruptcy, please contact us.