Many Californians face financial hardships as a result of soaring living costs, wage stagnation or just those random life events, like illness. These life events make our finances crumble, and as a result, the decision we face to file for bankruptcy is one many are thinking about today.
Alongside that big question of, should we file for bankruptcy, is whether the bankruptcy filing save your family home from foreclosure.
Chapter 7 and Chapter 13 refresher
Bankruptcy is a major financial and personal decision, and it is important to understand the two major types of personal bankruptcy available: Chapter 7 and Chapter 13.
Chapter 7 requires a means test and offers a discharge or dismissal of debts. Chapter 13 has certain debt limits and offers repayment plans to give filers a chance to catch up on payments.
What do the chapters mean for foreclosure?
Typically, Chapter 7 means we are wiping our hands of certain types of debt. This filing usually only halts foreclosures short term for a few weeks, if you want to discharge the mortgage debt.
But, there are options with Chapter 7, and you can structure agreements with mortgage lenders, if you want to keep the debt. With nuanced bankruptcy cases, you can always discuss your options with an attorney.
Since Chapter 13 is more comparable to giving us a chance to create a more flexible payment plan that works for creditors, this filing can generally stop foreclosure on your home. Essentially, this type of filing is not asking for the debt to be wiped away. Instead, it just alters the debt so that filers can catch their breath financially and get back on track.
What if we need help applying?
If you were reading the federal codes on bankruptcy right now, you might get a headache, so seeking help with applications is completely understandable. Bankruptcy comes with pros and cons, and it is important to have a full picture. Attorneys who are familiar with bankruptcy can help.