Chapter 13 bankruptcy: Is it a savior in disguise if you are facing foreclosure?

With the requirements for getting your house refinanced becoming more strict, a low mortgage rate refinance can be quite useful. It is also becoming more costly as pre-mortgage penalties, refinancing fees and so on are increasing. Thus, even if you are facing difficulties in making your mortgage payments, it may not be convenient for you to refinance your current mortgage into a new loan. Thus, in order to save your house, bankruptcy becomes one of the most viable options. You can use Chapter 13 bankruptcy in order to save your home from foreclosure. In order to do so, you would need to file a bankruptcy petition well before the selling date of your property. After you file for bankruptcy, you have to propose a plan in order to repay the amount of mortgage in which you fell behind. After this, you will again begin to make your regular mortgage payments - this has to be accepted by your mortgage company under the law.

The law regarding Chapter 13 is very powerful as it can stop house foreclosure by allowing you to make up for payments that you have missed and keep your home. This can also stop reposition and in most cases would allow you to recover a vehicle that has already been repossessed. Chapter 13 also stops interest from accumulating on personal debt including back taxes. This kind of bankruptcy basically can stop all collection activities with the help of a law known as automatic stay. This automatic stay will last throughout the lifetime of the case unless the court orders something contrary. This kind of bankruptcy helps you to pay all or some portion of your debt with the help of a repayment plan.

The Chapter 13 bankruptcy will basically protect your real and personal assets while helping you to pay through a repayment plan. This concept is similar to that of debt consolidation, apart from the fact that it allows you to pay your unsecured debts down without any interest rate accumulating. You also don't have to deal with calls from debt collectors. The only exception to this is student loans. A typical plan will require you to make monthly payments to a bankruptcy trustee which the court has appointed for a span of three to five years.

Thus you can see that if you are facing foreclosure, repossession or wage garnishment, then Chapter 13 bankruptcy can help you to rearrange your financial affairs and get your hold back on your finances.