Can Bankruptcy Stop Home Foreclosure?

With the recent downturn in the economy, millions of people have lost their homes to foreclosure. Frequently, people do not realize that there may be a way to avoid home foreclosure.

If you are at risk of losing your home to foreclosure, take immediate action. Contact an experienced bankruptcy lawyer at Robertson, Oswalt and Associates. With office locations in Little Rock, Benton and Heber Springs, we serve clients throughout Arkansas.

Do Not Delay

Through a Chapter 13 bankruptcy, you may be able to save your home from foreclosure. Even if you are behind on your monthly mortgage payment, a Chapter 13 bankruptcy may be able to help you save your home. Even if you have received notice that your home mortgage lender has initiated the foreclosure process, help may be available. The sooner you contact an attorney, the better.

How Can Chapter 13 Bankruptcy Stop a Home Foreclosure?

With a Chapter 13 bankruptcy, you may be able to pay back your mortgage arrears (past-due payments) gradually in a three- to five-year Chapter 13 debt repayment plan. In addition, once your Chapter 13 bankruptcy petition is filed with the court, an automatic stay goes into effect which may temporarily halt your home mortgage lender from proceeding with a foreclosure as your bankruptcy case proceeds.

Once your plan is approved, you can pay back your past-due payments gradually over the term of your Chapter 13 plan. To be eligible for Chapter 13 bankruptcy, you must have a regular source of income that will enable you to make a monthly payment in accordance with the terms of your Chapter 13 plan.

Second Mortgage Lien Stripping

Chapter 13 bankruptcy has an additional benefit which can be very significant for certain individuals who are upside down on their home mortgages. The concept is sometimes referred to as second mortgage lien stripping.

You may be able to strip a second home mortgage lien if the value of your home is less than the amount you owe on your first home mortgage. Once you complete your Chapter 13 bankruptcy, the debt may be treated as an unsecured debt. All or part of the debt can potentially be discharged as part of your Chapter 13 bankruptcy.

Chapter 7 Bankruptcy

While many people use a Chapter 13 bankruptcy to stop a home foreclosure, Chapter 7 bankruptcy may offer potential relief as well. With a Chapter 7 bankruptcy, you may be able to discharge credit card debts, medical bills and other unsecured debts. By doing so, you may be able to gain the financial footing necessary to afford your home mortgage payment and avoid a home foreclosure.

Contact Us

To schedule a consultation with a Little Rock bankruptcy attorney at our firm, call 501-588-4451 or contact us toll free at 866-311-3815. You may also contact us by e-mail.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.