Two of the most feared financial words are bankruptcy and foreclosure. However, in certain circumstances, the former can prevent the latter, so it may not be as terrible as some folks believe.
Pittsfield, MA -- (SBWIRE) -- 01/29/2013 -- Answering the Question
The simple answer to will bankruptcy stop foreclosure is yes… sometimes. It depends on how much debt one has and if other methods have been applied to remedy one’s situation. If one files for Chapter 7 bankruptcy, it can only delay the foreclosure, not prevent its occurrence. Filing for Chapter 13 bankruptcy can actually stop the foreclosure process. Check with a bankruptcy attorney to find out which will suit one’s particular circumstances.
- An answer to the question
- Mortgage modification
- Contacting one’s lender
- Requesting government assistance
Look into Mortgage Loan Modification
Can bankruptcy stop foreclosure has already been answered, but try some other options before filing for it. Most financial institutions have an in-house loan modification program set up. What this means is that changes can be made to one’s original mortgage loan by reducing the interest rate or allowing more time to repay the past due amount and become current on the modified mortgage. Apply for modification with one’s current lender.
Talk to the Original Mortgage Servicer
Will bankruptcy stop foreclosure has an answer of yes, more or less. However, prior to actually filing for bankruptcy, talk to the original loan servicer to find out what he can do to help one out. Set up an appointment to meet with the lender that services the mortgage. Make a list of specific things to ask for, such as forbearance, in which one makes reduced or no payments for a set amount of time; loan modification, which was outlined above; or loan reinstatement, in which one agrees to make up the late payments by a certain date. Any of these options can help prevent the foreclosure from going forward.
Ask the Government to Help
The Obama administration chose to answer can bankruptcy stop foreclosure with a resounding “don’t file before contacting us!’ There are several federal government-sponsored choices to look at, including HARP (Home Affordable Refinance Program) and HAMP (Home Affordable Modification Program). The Dept. of Housing and Urban Development (HUD) also offers help. Apply for this type of assistance through one’s loan servicer.
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