Does Bankruptcy Protect a House from Foreclosure?
The short answer to the question of “does bankruptcy protect a house from foreclosure?” is yes, it does. You can retain ownership of your Traverse City home for the short-term and potentially for the long term by filing for bankruptcy. The most effective way to save your home is with the help of bankruptcy lawyers in Michigan who are familiar with Michigan’s foreclosure process and the bankruptcy process. Retaining a Traverse City Michigan bankruptcy lawyer is the best option in terms working with a legal advocate that understands the local area along with state and federal laws for foreclosure and bankruptcy. Here’s a look at how bankruptcy and a bankruptcy attorney Traverse City can help you save your home:
How Bankruptcy Stops Foreclosure From Progressing
Filing for bankruptcy with the United States Bankruptcy Court in the Western District of Michigan has the immediate effect of stopping all collection activity. Once the bankruptcy attorney Traverse City files your bankruptcy petition with the federal court, it triggers an injunction, also known as the automatic stay, that prevents creditors from making attempts to collect on debts. The purpose of the automatic stay is to give the court and bankruptcy trustee the time they need to examine your petition. That means the bank that holds your mortgage cannot make further attempts to foreclose on your home.
What Happens to Your Home During Bankruptcy
Once you’ve gone through with filing for bankruptcy in MI, you get to stay in your home for the foreseeable future. You are less likely to have the opportunity to keep your home with a Chapter 7 bankruptcy, especially if you have a significant amount of equity in the home that can’t be shielded behind bankruptcy exemptions. However, a Chapter 7 bankruptcy filing puts you in a better position to negotiate what ultimately happens to your home and your ability to live in it in the event you decide you want to let go of your home. This is a process that’s best done by a bankruptcy lawyer Traverse City MI as the lawyer has the training and skill needed to negotiate with the lender.
Chapter 13 bankruptcy, also known as a wage earner’s plan, enables you to reorganize your debts and pay them down over a period of 36 to 60 months. If you have significant equity in your home, you’re better served by filing for Chapter 13 with help from bankruptcy lawyers in Michigan. This chapter of bankruptcy allows you to retain your assets, including your home, and prevents the bank from foreclosing on your Traverse City home as long as you maintain your payments to the bankruptcy court.
You May be Able to Keep Your Home After Bankruptcy
Filing for bankruptcy with the help of a bankruptcy lawyer Traverse City MI opens up the potential for you to keep your home for the long term. When you enter into Chapter 7 or Chapter 13 bankruptcy, you are in a better position to get the bank to negotiate terms with your Traverse City bankruptcy attorney. As previously mentioned, you are less likely to retain ownership of your home in Chapter 7 even with the help of a Traverse City bankruptcy attorney. The reason is due to the fact there is no mechanism in Chapter 7 to allow you to catch up on the missing payments, but there is one in Chapter 13.
Chapter 13 gives you the opportunity to pay down your outstanding mortgage payments as long as you’re capable of keeping up with the current payments. The bankruptcy court that covers the Traverse City area has a mortgage modification mediation program for petitioners who are looking to keep their home through Chapter 13 bankruptcy. A Traverse City Michigan bankruptcy lawyer can explain how the process works and give you an idea of how it may apply to your situation.
Call Patrick S. Fragel for Help With Filing for Bankruptcy in MI Today
Patrick S. Fragel is a Traverse City Michigan bankruptcy lawyer who can help you retain control of how you handle the ongoing ownership of your home. Time is of the essence when it comes to stopping a foreclosure on your home with bankruptcy, and you shouldn’t delay calling a Traverse City bankruptcy attorney for help. Patrick S. Fragel is here to help you navigate the uncertain waters of going through foreclosure and bankruptcy.