Bankruptcy may be the only tactic available for many people who hope to save their homes from foreclosure. For those who have been out of work for an extended period of time, but have now returned to the workforce, the time without pay may have lead to what may now seem to be an insurmountable burden. Even though the income flow has started again, the creditors are all still piling up late fees and collection agents are calling.
If you are truly able to make the payments on your debt as long as you can keep the creditors off your back while you catch up, then bankruptcy may be a great option. Filing bankruptcy immediately stops any foreclosure action and all your creditors are required to stop contacting you while the case is moving through the court system. However, bankruptcy is not some easy solution. You will have to pay attorney fees and subject yourself to intense financial scrutiny. You will have to demonstrate that you truly can now afford to make the payments and you must stick to your agreed upon plan. If you don’t or can’t do so, then all your problems will pop right back into your life. Only this time they’ll be bigger.
Bankruptcy is much harder than it used to be. Because so many people were abusing the process, in 2005 Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act. This set of changes to the bankruptcy laws made it easier for creditors to get your bankruptcy protection lifted if they can make a case that you are simply using the bankruptcy procedure to delay paying creditors or worse simply to defraud creditors. In the past, many debtors would run the balances up on their credit accounts and then file bankruptcy in order to avoid paying. This is much more difficult today.
There are many different types of bankruptcies, but if you want to save your home you will be filing a Chapter 13 bankruptcy. When you file a Chapter 13 bankruptcy, the court will require you to submit al your financial records along with a plan showing how you intend to repay your debts over a 3 to 5 year period while keeping all your present payments current. If your plan makes sense, you will make your bankruptcy payments to the court’s trustee. While you make these payments, you are also required to stay up to date with all your current payments. As long as you do this, your creditors are not allowed to harass you or to proceed with foreclosure. If you fail to make either of these sets of payments, your case will be dismissed and all your creditors will once again be allowed to pursue their ordinary collection procedures.
If you decide that bankruptcy is the correct option for you, you will need to hire a bankruptcy attorney. Many people attempt to file on their own. This is a serious mistake. The process is very complicated and a minor mistake could get your case thrown out. Find a good attorney who specializes in bankruptcies and hire them.