Bankruptcy saves many people from outstanding debts. When you feel like you are suffocating under the weight of your debt and if your home is on the line, you need a way out.
If you face foreclosure but still have a stable income, then Chapter 13 bankruptcy may help you save your home, explains Credit Karma.
How Chapter 13 bankruptcy works
Chapter 13 bankruptcy is for those who have a steady supply of income. It is a type of bankruptcy that allows you to keep your assets under the condition that you make payments according to a repayment plan. Generally, a Chapter 13 plan lasts for about three to five years. If you meet all of the conditions and follow the repayment plan, then you can receive a discharge of your debts within the plan. You can even include your missed house payments into your repayment plan.
How Chapter 13 bankruptcy protects your home
Filing for Chapter 13 bankruptcy puts an automatic stay on the foreclosure process. Calls from the mortgage lender have to stop and you receive some room to analyze your situation and assess your options. An automatic stay does not reverse the foreclosure process. If the lender completes the foreclosure sale before you file bankruptcy, your house may still go into foreclosure.
However, if the lender did not complete the process, your mortgage payments may become a part of your Chapter 13 repayment plan. If your home becomes a part of your plan, you have to keep up with every payment to keep your lender from continuing the foreclosure process.