Can Bankruptcy Stop Foreclosure ?
After the recent recession it has become common thing to come across bankruptcy and foreclosure cases. There are two types of bankruptcy cases that have been filed and are common. They are Chapter 7 and Chapter 13. Several people, who have lost their jobs and could not afford to keep up their payments, have filed for bankruptcy. However, the courts are concerned that many people who need not file are also filing for bankruptcy for various reasons.
Filing for bankruptcy cases has become a refuge from avoiding making payments and also cash in on real estate losses. After the real estate prices started falling people have their homes evaluated and if the prices have fallen below their expectations then filing for bankruptcy will prevent them from paying the mortgages further. Also, it makes more sense to surrender the house rather than paying a price that is higher than the sale price to the mortgage. The real estate bubble is dependant on this cycle.
When a person files for bankruptcy the court issues an order to the mortgage company to stop collecting the payments and also stop impending foreclosures. However, Chapter 7 and Chapter 13 bankruptcies operate in different ways and people who plan for such things should do it after considering all options carefully. Also, when a person files for bankruptcy, they should start making payments sooner to avoid a permanent closure.
Fling for bankruptcy is just an immediate measure a person wishing to save their property have to resume payments as soon as they can.
A point to remember is that the bankruptcy status stays for nearly seven years on the credit report.
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