Bankruptcy is rarely a thought in someone’s mind as they are signing closing documents for their first home. However, when financial setbacks occur after the ink is dry, bankruptcy may be the best way to prevent foreclosure. When a family purchases a home, they have to prove they are financially stable enough to make the mortgage payments and also cover other living expenses. Unfortunately, things like a job loss, divorce, and illness can cause a person to fall behind on their bills and risk losing their home.
Temporary Financial Problems
It can be hard to bounce back, even when financial problems are only temporary. Homeowners who miss more than two mortgage payments are often referred to the foreclosure department. If they cannot make an arrangement with their lender to make up the missed payments or renegotiate the mortgage, they could lose their home. To avoid Foreclosure in Lawrence KS, people in this predicament could file for bankruptcy protection.
By filing for Chapter 13 bankruptcy, a homeowner who is in financial trouble but who has a steady income may be able to reorganize their debts so they can keep their home. This type of bankruptcy requires a long-term financial commitment, and homeowners could lose their property if they have another setback and aren’t able to make their monthly payments. However, once an attorney files the documents the court, a lender must stop Foreclosure in Lawrence KS.
Permanent Financial Problems
Sometimes, homeowners have problems that aren’t easily resolved. They may have become seriously ill and unable to work. It takes time to collect Social Security disability payments, and the mortgage company may not wait until they have an income again. In these cases, Chapter 7 bankruptcy might be a better option. Chapter 7 won’t allow most homeowners to remain in their house, but it could help ease the burden of their debts.
Anyone struggling to make mortgage payments should talk to an attorney as soon as possible. Joewlaw.com is an excellent resource for information about preventing foreclosure. Whether the financial issue is short- or long-term, it’s important for homeowners to be proactive in trying to resolve it.
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