Most of us have had financial troubles at least once, it’s a natural part of the ebb and flow of life. Nevertheless, there are options to alleviate the financial burden no matter how terrible your situation is.
Ask any financial expert or Salt Lake City chapter 13 bankruptcy attorney out there, and they will tell you that one of the best options is to file for Chapter 13 bankruptcy. But what can this type of bankruptcy do to your financial situation?
Or, if you’re facing foreclosure and could lose your property, let’s answer the question “will chapter 13 bankruptcy stop foreclosure?” Well, we have both good and bad news.
Let’s start with the good news, right? If you choose to file for chapter 13 bankruptcy, the risk of losing your property to the bankruptcy trustee disappears. Moreover, this type of bankruptcy does NOT affect your mortgage in any way.
But it’s not all sunshine and roses, our chapter 13 bankruptcy attorneys at JMM Legal warn. The thing is: you could still lose your property, including your home, through foreclosure.
So answering your question, no, chapter 13 bankruptcy does not stop foreclosure. Meaning: bankruptcy filing doesn’t free you from the obligation to make your mortgage payments, and if you want to keep your home, you should be consistent with the payments even during bankruptcy.
But don’t assume that filing for chapter 13 bankruptcy is useless and does not help you in any way to reduce the risk of losing your home. Our Salt Lake City attorneys say that this type of bankruptcy allows you to make up mortgage arrears.
By contrast, chapter 7 bankruptcy does not let you do that. Better yet, chapter 13 is a good option to avoid foreclosure as it allows you to remove second mortgages and HELOCs. However, you may need legal help from a skilled chapter 13 bankruptcy lawyer to make it work in your case.
If you choose to file for bankruptcy, you will have to make your mortgage payments directly to the mortgage lender. However, there are some cases when a bankruptcy trustee may require you to pay through your bankruptcy plan.
Obviously, however, paying your lender directly is always a more cost-efficient option, our best bankruptcy attorneys in Salt Lake City say. Why? Because the trustee’s fee is based on a percentage of payments made through your chapter 13 plan.
So in order to avoid high trustee fees, make payments directly to the lender. If the trustee prohibits you from paying your lender outside of your plan, speak to an attorney to negotiate a fair deal for you. When you’re dealing with bankruptcy, every dollar matters, which is why saving costs on trustee fees is important.
Under the chapter 13 bankruptcy plan, as we’ve mentioned above, you’re allowed to pay back all of your mortgage arrears by the end of the specified time of the repayment period.
Typically, this translates to up to five years to make up mortgage arrears. To tell you the truth, this is the main reason why Salt Lake City residents facing foreclosure choose chapter 13 over chapter 7 bankruptcy.
However, Chapter 13 bankruptcy can stop foreclosure due to its automatic stay. Our Salt Lake City chapter 13 bankruptcy attorney explains that as long as you stay consistent with your mortgage payments make up mortgage arrears, the risk of losing your home in foreclosure is reduced to zero.
Consult our attorneys at JMM Legal to find out what type of bankruptcy you should choose in your particular case. Let us walk you through the entire list of pros and cons of chapter 13 and chapter 7 bankruptcy plans.
Call our offices at 1-801-505-9679 or complete this contact form to get a free consultation today.