For those who are behind on most or all of their bills, filing for Chapter 7 bankruptcy may provide a fresh start. Except for a few types of debt, such as income tax and child support, filing Chapter 7 can clear the slate of unsecured financial obligations. Some of the filer’s property may have to be sold to pay off the debts, but Florida maintains a liberal list of exemptions from the bankruptcy process. In many cases, filing for bankruptcy can stop a foreclosure.
There are a few steps that need to be taken when using Chapter 7 bankruptcy to stop a foreclosure. By following these steps, a person can confidently proceed with taking measures to get a clean financial start. The first step is to speak with a credit counselor. This is required within a certain time period, so it is important to get it out of the way first.
The second step in stopping foreclosure with Chapter 7 is to go to the local bankruptcy court, pay the filing fee and file the necessary paperwork. This is best accomplished with the assistance of a savvy bankruptcy attorney. There are a few tests which a debtor must pass in order to file. For one, the debtor’s income must be below the median for the state. The filer will also have to provide detailed information for the court regarding his or her assets and what is owed.
At the time that bankruptcy is filed, an automatic stay is issued which keeps lenders from being able to collect or foreclose until the further order of the court. It is important for the filer to keep paying the mortgage on the home if he or she is not in default. It the loan is in default, the filer should make every attempt to catch up with the payments, or the lender will be able to foreclose once the mortgage holder is authorized by the court to proceed.
A filer should also create a financial plan for staying on his or her feet after the bankruptcy. Since medical bills, credit card bills and other debts will be erased by a Chapter 7 discharge, the Florida homeowner may be able to put that extra cash toward the mortgage payments. An experienced bankruptcy attorney can walk a client through the steps of a Chapter 7 bankruptcy and explain just how to prevent foreclosure on his or her home.
Source: homeguides.sfgate.com, “How to Stop Foreclosure With Chapter 7 Bankruptcy“, Accessed on July 8, 2107