Many homeowners are reluctant to file for bankruptcy because of its effect on their credit score, and it can indeed damage your credit score. However, if you hire a foreclosure lawyer who is an expert in state laws to help you with the process, the damage done will be minimal. There are more than five different chapters of bankruptcies. However, when it comes to filing for bankruptcy to stop foreclosure, two major chapters are used most: chapter 7 and chapter 13.
To know which one is best for you, you need to research in-depth on each of these two to know the advantages they offer and the disadvantages that come with them. You can also talk to your lawyer(hire one if you don’t have) about your financial difficulties and the situations that lead to it, to determine which chapter is best for you. A lawyer will be able to see further than you and help you make the right choice. Below is the overview of both chapters:
Chapter 7
Filing for chapter 7 bankruptcy will immediately stop foreclosure; however, the relief period is usually below six months. It also entails that your properties, including your home, are sold to pay off your debts. If you are not ready to let go of your home, you should not consider chapter 7 bankruptcy.
Chapter 13
Chapter 13 bankruptcy also helps you stop foreclosure immediately and allow you to keep your home. With chapter 13 bankruptcy, you can reconstruct another payment plan and negotiate with your lender. The relief time is usually between 3 to 5 years, and you should pay your debt with ease.
Don’t make the mistake of filing for bankruptcy yourself, have an experienced lawyer do that for you, and you will be able to manage the effect of bankruptcy better.
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