Bank finance articles and tips

Facing the threat of foreclosure is scary. There are many concerns and decisions to be made about how to proceed. Walking away from the house is one option that can quickly resolve the process; however, it is not recommended for most people. There are many ways to handle foreclosure that involve not walking away from the house and actually getting to keep it. Although these options may take more time and effort, but the payoff of keeping the house is worth the extra effort.

One option for keeping the house and resolving mortgage debts is to file for bankruptcy. Many people fear the word "bankruptcy", which prevents them from ever seeking the benefits it has to offer. In fact, one of the biggest reasons people decide to file for bankruptcy is to prevent a foreclosure.

Keeping The House

One of the quickest ways to stop a foreclosure proceeding is to file for Chapter 13 bankruptcy. Once a case has been filed with the court an automatic stay is issued. This order immediately halts all collection efforts and delinquency actions, such as a foreclosure. Not only does an automatic stay stop the foreclosure proceedings, but it prohibits creditors from attempting to resolve or collect on the debt.

There are two main ways that a Chapter 13 bankruptcy can resolve mortgage debt issues. First, once a Chapter 13 case has been filed, the debtor develops a court approved repayment plan. This plan is includes repayment of missed mortgage payments and any delinquency fees associated with the mortgage. Once the plan is approved by the court, the creditor must adhere to the plan and cannot enter the property into foreclosure or collect on the debt in any other way. The debtor is granted an extended time period, generally three to five years, to get caught up on the missed payments and keep the house.

A Chapter 13 bankruptcy can also resolve mortgage debts through a process called lien stripping. Lien stripping is a legal process that removes second mortgages or home equity loans by converting a portion of the debt into an unsecured debt. The unsecured debt portion is then eliminated in the bankruptcy and the debtor is not liable for repaying this portion as part of their Chapter 13 plan. Lien stripping is a process that is commonly used on properties in which the home's appraisal value is less than what is owed on the first mortgage loan. The idea is to eliminate the amount of debt owed on a home over what the home is actually worth.

Christopher understands that financial hardships can affect honest, hard-working people. Growing up in a very blue collar family and rural area of Indiana, money didn't always come easy for his parents. The struggles his family faced in his childhood made a significant impression on his business philosophy today. As a Fort Worth bankruptcy attorney his practice has given him the opportunity to directly impact the lives of many people.

By Christopher M
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