Common Foreclosure Issue Regarding Chapter 7 vs Chapter 13 Bankruptcy
By filing bankruptcy in Chapter 13, foreclosure is stopped, and you’re allowed to repay and catch up the late amount of your debt by following a detailed bankruptcy plan. At the same time that you stop the foreclosure, you’ll be able to wipe out all or most of your other unsecured debt such as credit cards, payday loan debt, medical debt, and some older IRS debt, as well as other unsecured debt. This is dependent on your income.
Issue With Chapter 7 Bankruptcy
For those who file Chapter 7, and who receive a discharge of debts, it is important to note that this does not necessarily take care of the process of getting the property out of your name if you choose to abandon the property. While most people want to keep their home and stop foreclosure, there are some homeowners who simply want to walk away from their homes permanently. It’s much less common for someone to want to walk away from their home as opposed to working with a dallas bankruptcy attorney to prevent the foreclosure. If you do not address this situation, you could end up having a bankruptcy, then later, even sometimes years later, having a situation where a slow-moving bank eventually foreclosed, hence dragging out the impact of the events on your credit report and also impacting your liability for tax and other associated property costs.
Getting Property Out Of Your Name If Abandoning The Home
Most homeowners don’t understand that there are very specific processes for foreclosure. The bank is required to follow these procedures to take ownership for the home, and if not, then it remains in your name and your liability could continue. The lender can take possession and ownership of the home through 2 methods, deed-in-lieu or through foreclosure. If not, then the home could still stay in your name, leaving you open to a more drawn out process and a slower financial recovery.
Two Types of Foreclosure – Non-judicial and Judicial
Foreclosure comes in two normal types in the US, being judicial through the court system and non-judicial outside of court. Judicial foreclosure is required in some states, providing for the lender being required to use the courts to retake ownership of the home. Non-judicial methods of foreclosure are allowed in some states, which means the bank can sell your home or property through foreclosure, absent the court’s explicit approval. The process of non-judicial foreclosure is state-specific, meaning that it will vary from one state to the next.
Bankruptcy Stops Foreclosure And Can Provide Long-term Relief
If you are facing foreclosure, you would be wise to contact an attorney right away to review your options for stopping foreclosure. An experienced bankruptcy lawyer will know what it takes to handle the specific requirements in foreclosure. They will also be able to tell you more about the process and how it can help you.