Monday, October 25, 2010

File for Bankruptcy, Save Your Home?

By defaultresearch Published: October 25, 2010

There is a lot of advertisement and talk about how, if you file for bankruptcy, you will be able to save your home and avoid a looming foreclosure. While this may seem like a good plan, it very well could be the law offices that are touting it more than anyone else, because it brings them a lot of business in this current economy. Even so, it is worth exploring, if you are in a position of needing to take action that will save your home from foreclosure.

When it comes to filing for Chapter 13 bankruptcy, it is important to realize that this route is one that still has you paying off all your debt. So, if not being able to afford all your bills was an issue, then this route may not be all that helpful. This form of bankruptcy is for individuals and businesses, and allows the person to propose a repayment plan on all their debt.

While it will usually save the debtor money in the long run, it does not eliminate any debt that they may have. All in all, Chapter 13 bankruptcy could help to save a person’s home from going into foreclosure.

Chapter 7 bankruptcy, an option only individuals can file for, will eliminate outstanding debt so that the person never has to pay it off. However, not everything is included in that debt, some things, such as school loans for example, cannot be included, so those will still need to be paid off. When it comes to the person’s home, some states do allow for a home exemption, which would keep the home from being lost in the bankruptcy.

Bankruptcy, whether Chapter 13 or 7, is not a perfect system. For those who are considering this option as a way to save their home, the best route is to speak with a bankruptcy attorney to explore the options. The bottom line, however, is neither will save a home if a mortgage continues to go unpaid.

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