If you are behind on your mortgage or car payment you have probably been reviewing your options for debt relief. There aren't many options available to help you get out from under your debts and allow you to protect your home or car from being taken by creditors. However, bankruptcy protection can, in most cases, stop a foreclosure or repossession while you get caught up on your debts.
When you file for bankruptcy, an automatic stay is issued prohibiting creditors from collecting on debts. It also will prevent you mortgage lender from pursuing a foreclosure or car loan creditor from seizing your car through repossession. As you go through the bankruptcy process, you can rest assured knowing that the majority of your property and assets will be protected from the hands of creditors. This protection results from the federal, or state-level, bankruptcy exemption laws that outline how much of your property is protected during bankruptcy.
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Keeping Your Home
For most people, your home is your biggest asset. Losing your home to foreclosure can cause many more problems with your finances and credit than you would think. If you are experiencing financial troubles that are preventing you from making your mortgage payments, you may be able to keep your home through the federal bankruptcy exemption laws. A home valued up to $125,000 will be protected from foreclosure during the bankruptcy process. Several states allow for a home of an unlimited value to be protected. Contact a qualified bankruptcy attorney to find out the exemptions provided by your state.
If you file Chapter 13, you will be able to keep your house and stop a foreclosure regardless of the exemption laws in your state. As long as you are making payments through a payment plan that is approved by your mortgage lender, your home will be safe. The best way to keep your property and protect your credit is to repay your debts. Many lenders are very forgiving when it comes to negotiating repayment plans with homeowners.
Keeping Your Car
When trying to protect your car from repossession, there are a few things to consider. First, try contacting your car loan lender as soon as you begin to miss payments. This should be done before you file for bankruptcy. Many times creditors are willing to negotiate a loan modification that can reduce your monthly payments. The lender loses considerable amounts of money through repossession and they would rather modify the terms of your loan than risk losing more through repossession. However, time is crucial when attempting to negotiate a loan modification with your lender, don't wait until it's too late.
Second, federal bankruptcy exemption laws allow for the protection of one vehicle up to $3,450. This may not seem like much, so review the exemptions available in your state. Some states will allow for the protection of one vehicle, of unlimited value, per member of the household.
Third, if your state exemption laws do not offer enough protection of your vehicle consider filing for Chapter 13 bankruptcy rather than Chapter 7. In Chapter 13, you will be able to negotiate a debt repayment plan with your car loan creditor. This repayment plan will allow you to space out your debt repayments over the span of several years. As long as you are under an approved repayment plan and making consistent payments, you will be able to keep your car.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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