Chapter 13 Bankruptcy Can Prevent Foreclosure and Save Your Home
Many families are going through rough times due to the slow economy and stagnant job market. However, even those who are considering bankruptcy protection might be able to retain their homes.

November 18, 2011 /24-7PressRelease/ -- Chapter 13 Bankruptcy Can Prevent Foreclosure and Save Your Home

Many families are going through rough times due to the slow economy and stagnant job market. However, even those who are considering filing for bankruptcy protection might be able to retain their homes.

Most individuals are familiar with Chapter 7 bankruptcy, which liquidates a debtor's non-exempt property to repay creditors. Once the Chapter 7 is complete, most (if not all) remaining debt is discharged. Unlike Chapter 7, however, Chapter 13 bankruptcies allow a debtor to keep all of their property and repay creditors over a three to five year time frame.

Chapter 13 Eligibility

According to the U.S. Courts, not everyone is eligible to file for Chapter 13 bankruptcyprotection. Individuals must show they have enough consistent income to abide by a court approved repayment plan and:
-Not file as a business or corporation
-Not be barred by a previous bankruptcy filed within the previous two years
-Must fulfill the credit counseling requirement
-Owe less than $336,900 in unsecured debt and less than $1,010,650 in secured debt
-Provide proof that all income tax returns have been properly filed with the IRS

Determining eligibility can be a complex process, especially given the detailed analysis of a person's future income and his or her debt totals. Anyone considering filing for Chapter 13 bankruptcy should speak with a qualified bankruptcy attorney to assist them throughout this detailed process.

Benefits of Chapter 13

One of the most common worries for people facing foreclosure is whether they can keep their home if they file for bankruptcy. As previously mentioned, Chapter 13 allows debtors to retain their possessions, rather than liquidate them to repay their creditors -- this often includes the family home.

The first benefit individuals receive is that an "automatic stay" is put into effect once their bankruptcy petition is filed. This stay prevents any creditor from maintaining or initiating any collection efforts. There are severe consequences for creditors who violate the stay, thus bankruptcy filers can receive immediate relief from creditor harassment.

Next, a Chapter 13 debtor and his or her attorney (with creditors' input) draft a 3 to 5 year repayment plan. The debtor then slowly repays debts over time after the creditors and the court approve the repayment plan. Upon completion of the plan most (if not all) remaining dischargeable debt is eliminated.

This structure benefits both the creditor and the debtor. Debtors often desire to pay off their debts and creditors receive more money than if a debtor used the Chapter 7 liquidation process.

Anyone who is contemplating bankruptcy but fears losing his or her home should contact a qualified bankruptcy attorney immediately to discuss their eligibility and potential options.

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