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Home Equity Loans in Chapter 13 Bankruptcy

The down economy over the last few years has led to many home foreclosures, as homeowners borrowed against their homes with home equity loans, hoping for a rise in property value. Homeowners facing foreclosure, however, may have a way to delay the process via Chapter 13 bankruptcy.

Chapter 13 bankruptcy has a feature called the automatic stay. The automatic stay is a legal process that halts any creditors from continuing to seek payment on debts after a debtor has filed for bankruptcy. The stay can also delay a home foreclosure. For those who may face foreclosure, it may be best to file for bankruptcy before the mortgage company forecloses, as waiting too long can hinder the process.

Once you have filed for bankruptcy, the Chapter 13 bankruptcy repayment plan will be an important factor. Missed mortgage payments are reorganized along with other debts as a part of the plan. Your payments on that bankruptcy plan will be spread across a three-to-five year period, allowing you to catch up on debts over time.

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If you would like to talk to one of our sponsoring bankruptcy attorneys about your case, and how Chapter 13 bankruptcy might benefit you, please fill out the free case evaluation form below.

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Home Loans and Foreclosure

The foreclosure process has typically stemmed from creditors giving aspiring homeowners loans that turned out to be unaffordable. As long as homes continued to rise in value, homeowners could continue to borrow against their home equity. Borrowers assumed that the price of homes would continue to rise, and they acted accordingly. Creditors were happy to help, coming up with more creative ways to get loans to people who would not have qualified for them in the past.

When the bottom fell out of the housing market, the unaffordable loans that came due went unpaid, and homeowners fell behind on payments.

Bankruptcy and Foreclosure

Chapter 13 bankruptcy can provide a way to get a bit of breathing room for those who might face the prospect of foreclosure. But it may not necessarily cure the problem. Bankruptcy filers will want to stick to the guidelines mentioned above, and may want to consult a bankruptcy attorney for additional information.

If you would like to speak to one of our sponsoring bankruptcy attorneys, please fill out the form below. You can arrange a free, no-obligation case evaluation with a bankruptcy lawyer in your area.

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