Financial hardship comes in a variety of ways. While it may be temporarily falling behind on bills, if not managed, it can result in losing your home you have worked so hard for. However, when those debts keep you from making your mortgage payments, you may be wondering if bankruptcy will offer you the foreclosure protection you need to stay afloat. The Jones Law Firm has the information you need to make the decision.
The quick answer to this is that filing for bankruptcy will temporarily stop a foreclosure from occurring. However, this is only temporary. The foreclosure process is halted under the automatic stay. But once the bankruptcy process is over, you are still accountable for the mortgage.
But there are exceptions you need to be aware of.
Under Chapter 7 bankruptcy, you are given the protection of an automatic stay for the months in which your bankruptcy case is pending, which in many cases is only three to fourth months. However, once your case has closed and your bankruptcy discharge is issued, you are no longer protected by the automatic stay.
Once the discharge has been issued, you must again make mortgage payments. Remember, the Chapter 7 filing does not erase your mortgage, it just gives you the value of the home equity.
In Chapter 13 bankruptcy, your debts are arranged into manageable payments to be paid off within three to five years. Because of the repayment structure of Chapter 13, even old, past payments will be configured into the plan.
Unlike Chapter 7 where once discharge is issued, you are no longer protected under the automatic stay, in Chapter 13, you are protected under the automatic stay for the duration of the Chapter 13 repayment plan, which is typically three to five years.
Depending on the state of your financial situation will determine your ability to keep your home. In Chapter 7, you are typically able to keep your home, so long as you can maintain mortgage payments once the automatic stay is over.
For many homeowners, Chapter 13 is the better financial option when faced with foreclosure as your monthly payments are more manageable and in turn, are less likely to lose the home to foreclosure.
Remember: Just because you file for bankruptcy does not mean you get a free home. Rather, it is a second chance to evaluate your finances and get back on track. If you are unable to maintain mortgage payments, you may still end up losing your home.
But that doesn’t have to happen. Let the Jones Law Firm help you through the bankruptcy process so we can evaluate your unique situation and get your financial life back on track.
If you are facing foreclosure in Ohio and are contemplating bankruptcy, let the Jones Law Firm guide you through the process. We can evaluate your debts and see which form of bankruptcy is right for you. Contact us today for a free consultation. With offices in Reynoldsburg, Ohio, The Jones Law Firm works with clients in and around Columbus and throughout central Ohio.