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Will Filing a Chapter 13 Bankruptcy Stop Foreclosure?

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By : John Cutts    99 or more times read
While it shouldn't be your first option, filing a Chapter 13 bankruptcy will stop a foreclosure from proceeding on your property. If you file for Chapter 13 bankruptcy, all foreclosure proceedings will be stopped, and you will have time to deal with your lender to work out a plan for how to deal with your mortgage default.

However, keep in mind that a bankruptcy is not something to be taken lightly. You should only declare bankruptcy to stop foreclosure if you have exhausted all your other opportunities and options. Be sure to look into alternatives like refinancing your mortgage or working out an alternate payment plan with your lender before you file bankruptcy, because once you do, it will take years to reestablish your credit. However, if you're facing an imminent foreclosure and have no alternative to losing your home, Chapter 13 bankruptcy is the only kind of bankruptcy filing that can stop foreclosure indefinitely.

Once you file, you will have the opportunity to work out a plan to pay off your debt to the lender within the next three to five years, instead of right away. The lender must agree to this plan, and cannot sue to have the foreclosure reinstated before the term of three to five years. However, be sure to keep up with this new payment plan. If you miss payments or fall behind again after a Chapter 13 bankruptcy filing, foreclosure will be reinstated and you will not be able to declare bankruptcy again.

Filing a Chapter 7 bankruptcy can also stop foreclosure, but it will only work for a limited time. If your financial situation is bad enough for you to consider bankruptcy in order to keep your home, then filing for a Chapter 13 is the method to choose, because it affords you the security of time.

Be sure to weigh all the pros and cons before filing for bankruptcy, as it can have a serious effect on the course of your life. However, if it's your only option for remaining in your home and you're willing to commit to a payment plan for your debt, it can be an effective way to stop a foreclosure.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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