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The automatic stay is a very important protection given to debtors once they file for either Chapter 7 or Chapter 13. The automatic stay prevents creditors from continuing any and all debt collection activities once an individual has filed a bankruptcy petition. This means no more harassing phone calls, letters or notices saying that the creditor is going to take legal action – which can be a huge relief for those who are being tormented by creditors who want their money now. In general, the automatic stay remains in effect until the bankruptcy is finalized.
However, neither a Chapter 7 nor a Chapter 13 bankruptcy filing will completely stop a lender from foreclosing on a home if the foreclosure. If the filing is a Chapter 7, the lender may file a Motion for Relief from Stay and obtain the courts permission to continue with the foreclosure or the lender may wait until the discharge is entered and then continue with the foreclosure. At the most, the bankruptcy filing will slow the process down and will give the homeowner more time to try to negotiate a new deal with the lender, such as a lower interest rate.
On the other hand, a Chapter 13 bankruptcy will allow the homeowner to resume making his regular mortgage payments and develop a plan to pay back the mortgage arrearages over a three to five year period. This will also give the homeowner time to negotiate a loan modification with the lender to obtain a more affordable payment.
Work with an Experienced Bankruptcy Attorney
Bankruptcy laws are complex and difficult to understand. An attorney experienced in handling bankruptcy filings can explain the process to you, file the necessary paperwork on your behalf and help you get through the process as quickly and efficiently as possible.
For more information on Chapter 7 and Chapter 13 bankruptcies, contact a knowledgeable bankruptcy attorney today.