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TERMINOLOGY
A common question for many homeowners in financial peril is can bankruptcy stop foreclosure? There are two main types of bankruptcy, Chapter 7 and Chapter 13. The Chapter 13 bankruptcy was originally created to stop foreclosure. In the event the date of the bankruptcy case is filed before the date of the foreclosure, the bankruptcy will prevent the foreclosure sale from taking place. A Chapter 13 bankruptcy will establish a reasonable amount of time to resume making monthly payments and bring the loan to a current standing. This will allow you to save your home and continuing living there.
A Chapter 13 reconfigures your debts based on your take-home income, with an allowance for living expenses. As such, the payments will be reduced to a manageable amount you can afford. If your credit rating is already bad and only risks getting worse, filing bankruptcy will not do anymore harm. Eventually, it will help your credit score improve, because it will clear or reduce your debt, making it possible for you to handle more at a later date.
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