You’ve owned your home for the last five years, and you’ve always made your mortgage payments on time. However, you can see that that’s about to change. Based on the fact that your income decreased this year, you’ve run into a month where you don’t have enough money to pay the mortgage.
You’re trying to decide what to do, and you certainly want to keep your house for yourself and for your family. Should you declare bankruptcy? How could it help?
Rearranging your debt
First of all, bankruptcy may simply be a way to rearrange your debt so that you can pay your mortgage again. Your lender is probably not going to try to foreclose after one missed payment. You have some time to get back on schedule.
For instance, maybe you’re still making money, but it’s not as much as you were before. A Chapter 13 bankruptcy filing could give you a repayment plan that works with your new income. Once you’ve reorganized all of that debt and you can afford to make those monthly payments, it may free up enough money for you to make your mortgage payments on time again. Your home doesn’t even necessarily have to be part of this repayment plan for you to make your finances work.
Pausing a foreclosure
Another benefit is that an automatic stay is used whenever you file for bankruptcy. This means that you cannot conclude a foreclosure case until you have finished your bankruptcy case. It doesn’t cancel the foreclosure, but it essentially pauses it. This can be helpful if you’re already in the foreclosure process.
If you just feel like you need more time to get things sorted out and get back on your feet financially, this is one way to do it, and it can at least buy you a few more months in your home. And many cases, this automatic stay can combine with the reorganization of your debt to make everything affordable again.
Taking the right steps
It is certainly stressful to find yourself in this type of financial situation, but rest assured that you do have options. You just need to know exactly what legal steps to take.