How Does Filling For Bankruptcy Affect Foreclosure? SellQuickForCash.com Investigates!

SellQuickForCash.com Investigates Common Questions How Bankruptcy Affects Foreclosure!

When Facing Foreclosure, it is very important you understand how bankruptcy works and we suggest you meet with a bankruptcy attorney before considering this option. Many people use bankruptcy as a scare tactic. There are several different “chapters” of bankruptcy. Some are work-out others are wipe-out, but here is the general idea. When someone files bankruptcy it’s almost like someone builds a temporary “bullet-proof” barrier around the house. No one can touch you! However, you are not free of all responsibility and most people do not understand that. We are not bankruptcy attorneys, but you need to know the difference between a Chapter 7 and a Chapter 13 bankruptcy so you know what happens. Like we mentioned earlier, some bankruptcies are “work out” others are “wipe out”. The two that we will focus on are the Chapter 7 and Chapter 13. These are the most common in your situation. Chapter 7 is the “wipe out” and Chapter 13 is the “work out”. Bankruptcy is a federal court action designed to help individuals repays their debts or eliminate their debts depending on their circumstances. Chapter 13 bankruptcies are designed to reorganize debts in an effort to repay all debt. Chapter 7 bankruptcies are geared more towards liquidation of assets. Both Chapter 7 and Chapter 13 immediately stop the foreclosure process and any creditors from taking further action against you.

How A Chapter 7 Bankruptcy Works:

When someone files a Chapter 7 bankruptcy, all assets and creditor collections are technically frozen which is called an automatic stay. The person filing bankruptcy cannot buy or sell anything, nor can they give away their property. If they try to sell their home, the court could order the receiving party to return it to the custody of the court appointed Trustee. Unsecured debts such as credit cards, unsecured loans, etc. are typically eliminated, although you should confer with your attorney on the rules regarding this. Then the trustee or attorney who represents the court and the creditors will look at all the assets (house, car, furniture, and equipment) a thing of value and decide what must be liquidated to pay some of the debt that was wiped out. The statute provides that there are some minimal assets a person filing bankruptcy may keep. If the homeowners are involved in a pending foreclosure, a Chapter 7 will stop the foreclosure process temporarily. Usually, your lender will request the court appointed Trustee to release the property from the automatic stay so they may continue with the foreclosure process. Once the property has been released from the bankruptcy, the foreclosure process starts up again.

Chapter 13 Bankruptcy Is a Little Different:

When someone files a Chapter 13, they usually keep their assets and repay their debts in a debt consolidation plan. Whatever amount is agreed upon has to be paid to the Bankruptcy Court every month for the next 3-5 years. The homeowner usually keeps their house, car, and other assets. The homeowner is required to stay current with the mortgage payments and pays the amount agreed upon. If any payments are missed, the trustee will dismiss the bankruptcy and the foreclosure process will begin again. Bankruptcy is usually a last resort and should not be used to stop foreclosure unless you have no other option or else you need the protection of a bankruptcy due to other circumstances. If you feel this may be your best option, please seek legal advice.

Bottom Line: To take advantage of this solution you should consult an experienced bankruptcy attorney. We are not in the business of giving legal advice and in no way are we bankruptcy experts. This information is deemed reliable but no guarantees or warrantees are expressed or implied!

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Some Commonly Asked Questions About Bankruptcy & Foreclosure:

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What exactly is bankruptcy?

Bankruptcy is a federal court process designed to help people eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as "liquidation" or "reorganization."

Will filing for bankruptcy protect me from creditors' efforts to collect what I owe?
When you file bankruptcy, an "automatic stay" goes into effect. The automatic stay prohibits most creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections.

What is the difference between Chapter 7 and Chapter 13 bankruptcy?
In Chapter 7 bankruptcy, you ask the bankruptcy court to discharge most of the debts you owe. In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection, sell it, and distribute the proceeds to your creditors.

In Chapter 13 bankruptcy, you file a repayment plan with the bankruptcy court to pay back your debts over time. The amount you'll have to repay depends on how much you earn, the amount and types of debt you owe, and how much property you own.

What might I lose if I file for bankruptcy?

• You may be able to exempt up to $17,425 of your homes equity. Some states have no homestead exemption; others allow debtors to protect all or most of the equity in their home.(this is only an estimate and to please consult a local Bankruptcy Lawyer to discuss your individual situation)

• Insurance. You usually get to keep the cash value of your policies.
  Retirement plans. Pensions which qualify under the Employee Retirement Income Security Act (ERISA) are fully protected in bankruptcy. So are many other retirement benefits; often, however, IRAs and Keoghs are not.

• Personal property. You'll be able to keep most household goods, furniture, furnishings, clothing (other than furs), appliances, books and musical instruments. You may be able to keep jewelry only worth up to $1,000 or so. Most states let you keep a vehicle with more than $2,400 of equity. And many states give you a "wild card" amount of money -- often $1,000 or more - that you can apply toward any property.

• Public benefits. All public benefits, such as welfare, Social Security, and unemployment insurance, are fully protected.

• Tools used on your job. You'll probably be able to keep up to a few thousand dollars worth of the tools used in your trade or profession.

• Wages. In most states, you can protect at least 75% of wages that you have earned but not yet received.

How Creditors Can Get Around the Automatic Stay.
Usually, a creditor can get around the automatic stay by asking the bankruptcy court to remove ("lift") the stay, if it is not serving its intended purpose. For example, say you file for bankruptcy the day before your house is to be sold in foreclosure. You have no equity in the house, you can't pay your mortgage arrears, and you have no way of keeping the property. The foreclosing creditor is apt to run to court soon after you file for bankruptcy, to ask for permission to proceed with the foreclosure - and that permission is likely to be granted.

Will bankruptcy stop a foreclosure?
Yes and No… A home is an asset usually secured by a deed of trust. The mortgage company is entitled apply to the court for relief from the automatic stay, the order preventing creditor action by virtue of the bankruptcy. Depending upon several factors, you may be able to prolong a foreclosure until you have received your discharge from bankruptcy. Usually, to keep a home that is in foreclosure you will have to make a deal with the Mortgage Company. This is the key, you still must work something out with the Mortgage Company to repay the past due amount. This is why we say filing for Bankruptcy is like putting a band aid on a bullet wound… it may help you at first but major surgery is still required.

Bottom Line: Bankruptcy may buy you a small amount of time but negotiations will still need to be made with the Mortgage Company to enable you to keep your home. Most people who file Bankruptcy to save heir home from Foreclosure wish they had not because in most cases they are in a worse position that when they started. Filing Bankruptcy removes your leverage and places your fate in someone else’s hands. Your best option is for you to stay in control, and allow SellQuickForCash.com work something out for your prior to filing.

Pros for filing Bankruptcy to Stop Foreclosure

• The Foreclosure proceedings will be temporarily suspended.
  
  

Cons for filing Bankruptcy to Stop Foreclosure

• There will be a bankruptcy on your record for 10 years.

• The Mortgage Company can work around the Bankruptcy and still Foreclose.

• You lose any leverage and control you once had.

• A deal must still be worked out with the Mortgage Company to repay the past due amount. If you are 1 day late on any trustee payments your case "may" be dismissed, the stay will be lifted and you will be back in Foreclosure.

• SellQuickForCash.com can negotiate on your behalf with the Mortgage Company to keep your Home from Foreclosure and get your loan back in good standing.

About The Author:

WWW.SELLQUICKFORCASH.COM has a team of highly trained short sale experts who have established fantastic relationships with most banks. We will handle your short sale transaction for you giving you the peace of mind you are searching for. The short sale process is NOT a "do it yourself" project. To successfully negotiate a short sale with a bank takes an experienced and highly trained real estate agent as well as a skilled negotiator. Our advanced process is extremely organized and we conduct these short sales in the quickest time possible relieving you of the fear of foreclosure! We are Arizona’s Premier Short Sale and Foreclosure Experts!

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