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subject: Should You Stop Foreclosure By Filing For Bankruptcy? [print this page]

Knowing that your home is facing foreclosure is one of the most stressful events you can experience. Chances are, you would do almost anything to be able to stop worrying and know that your home is safe. When you file for chapter thirteen, you are able to stop foreclosure on your home.

As soon as you file, the foreclosure must be stayed and the bank cannot pursue any further collection action until the bankruptcy is dealt with. This allows you to come up with a plan to save your home by offering a modified schedule for paying your debts. The plan does not have to cover all of your unsecured debts, but it does have to get the approval of a bankruptcy judge before it can go into effect.

Before you file for bankruptcy, you will be required to attend a credit counseling session. This can help you determine whether you really need to file for bankruptcy or if your debts can be repaid in some other way. If the credit counseling agency prepares a debt repayment plan for you, it must be submitted to the court along with your bankruptcy filing.

Within fourteen days after you file for chapter thirteen, you must file your repayment plan. This is usually done at the same time as the original filing, but it can be done later if you are not quite ready yet, as long as it is on file with the court within fourteen days.

You will be required to attend a creditor's meeting, and all of the companies and people you owe money will have a chance to ask you questions. The purpose of this meeting is to give your creditors a chance to object if they do not feel you will be paying as much as you possibly could under the proposed plan.

After the meeting has been conducted, the bankruptcy judge can take up to 45 days to approve or deny your proposal. In any case, you are required to start making the payments proposed under the plan within 30 days, so that means you may have to start paying on the plan before you know whether it will be accepted.

The biggest drawback to using chapter thirteen bankruptcy to stop foreclosure is that if you are unable to pay the payments as agreed, you could still end up going through foreclosure. The judge can dismiss your case or make you go through chapter seven, where your assets are sold to cover your debts, if you don't pay everything as agreed. For this reason, you should consider all of the potential risks and benefits before deciding to go ahead with filing for bankruptcy.

Janian & Associates

by: Ginger Taylor

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