Many times, individuals will need to choose between filing for insolvency or allowing their home loan lender to foreclose on their property. If monthly home loan payments are not received as agreed, the financial institution will eventually file for a foreclosure on the property. You can interrupt the house foreclosure process by paying the lending bank on schedule. Foreclosure is essentially the same for everyone who has not paid their home loan, the mortgage holder will likely foreclose on the loan. Home loans are much similar to automobile loans, if you cannot pay your payments you will get it repossessed.

Bankruptcy is a legal act that is filed by an individual who cannot pay their debt as agreed. If the debtor is in bankruptcy then all the civil proceedings associated with the home loan will be put on hold. Therefore, a home loan bank must interrupt all collection actions. But, a mortgage loan company might ask for relief from the required stay, and if it is permitted, can go on with the previously mentioned action. Filing for Bankruptcy will not stop foreclosure and you have to pay back your mortgage. Going into bankruptcy just makes the foreclosure process go forward more slowly; it can not resolve the original problem.

While insolvency does not stop a foreclosure for good, it could give an individual enough time to pay back the over due or at a minimum it does make it bit easier to pay back the mortgage lender. Since bankruptcy requires that a mortgage to freeze a foreclosure action, a debtor will have a bit of time to produce the money necessary to pay the lender. It is the last resort for any home owner to declare bankruptcy when the home owner is completely unable to satisfy their lenders’ minimum commitments. Under bankruptcy, some debts will in all probability be dismissed but the real estate loan will not. The home owner must be willing to pay back the mortgage inside the required time frame as the debt is guaranteed by tangible assets. In addition, Chapter 13 insolvency has a schedule of payments that is court ordered, and will permit the borrower make payments on their home loan to get up to date on their balance.

Before the borrower successfully files for bankruptcy, they must meet the conditions. If they do qualify, there are legal fees to pay. Possibly, it may cost the borrower more in legal fees than if they were to just knuckle down and make your home loan payment. If you are considering that declaring bankruptcy will help to solve the problem, a good lawyer might be able to answer whatever questions you have. Simply put, insolvency proceedings are really complicated, the home owner ought not set about to do it by themselves.

This is not legal advice. Find a bankruptcy attorney in your particular state for legal advisement.

This entry was posted on Saturday, April 18th, 2009 at 4:16 pm and is filed under Aid, Credit Matters, Online Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.