Foreclosure and Bankruptcy

When you find yourself deep in debt, with bills piling up and the threat of foreclosure looming, things may seem hopeless. You still have options, though. We do not take bankruptcy lightly as it can have long-lasting effects on your credit score and finances. For this reason, our bankruptcy attorneys will help you explore debt relief options and determine if bankruptcy is the right method for your situation or if there is an alternative way.

Does Bankruptcy Stop Foreclosure?

The short answer: yes. Bankruptcy temporarily stops foreclosure whether you file under Chapter 7 or Chapter 13 bankruptcy. The court will order an automatic stay that prevents the bank from foreclosing on your house. However, lenders may make a motion for relief from the stay that allows them to continue the foreclosure. This motion means your relief could only last a few months, depending on the actions of the lender. Mortgage lenders will often choose to work with you because the foreclosure process costs them money.

What’s the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

Chapter 7 is faster than other bankruptcy processes and is the most common. This type of bankruptcy requires you to liquidate your assets to pay back creditors. Most cases close within six months.

Chapter 13, on the other hand, lasts between three to five years. With this relief period in place, you have the opportunity to pay back your debts in smaller increments during this time. If your income is less than the state’s average for your family size, you are given a five-year payment plan. If your income is more than the state’s average for your family size, your payment plan extends to three years. 

If you file a Chapter 13 bankruptcy, it is essential to stay on track with your payment plan. Providing you keep up with the smaller and more manageable payments, the bank cannot foreclose during the period dictated in your Chapter 13 bankruptcy. Using Chapter 13, bankruptcy to take care of your past-due payments enables you to halt foreclosure permanently.

Which Is Better?

Chapter 7 provides a quicker and generally more affordable method for relieving debt. If you own little property, have a lower income, and have mostly unsecured debts, Chapter 7 is probably the better choice.

Chapter 13 is a more appropriate choice for those who want to save their home from foreclosure or have debts that will not be discharged, such as unpaid income taxes. 

Discover Your Options

Bankruptcy is generally a last resort. It may provide essential relief to your financial crisis, but there may be better options too. We believe it is vital to know your alternatives before recommending bankruptcy. Our bankruptcy attorneys have experience in both bankruptcy and non-bankruptcy relief options. Talk to one of our attorneys to discover your options and find out how bankruptcy can either benefit or hurt your situation. 

Our bankruptcy specialists service several locations near Los Angeles, California. Locations include:

  • Bankruptcy Attorneys in Chatsworth, CA
  • Bankruptcy Attorneys in Santa Barbara, CA
  • Bankruptcy Attorneys in Ventura, CA

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