subject: Bankruptcy May Be A Lifeboat For Those Facing Foreclosures [print this page] In some instance seeking shelter under bankruptcy may be a lifeboat for those facing foreclosure at least it will buy some time. Many are unaware of the fact that bankruptcy is an honest and familiar legal tool to try and save the house from the jaws of foreclosure. In non-judicial states it is of special importance as the borrower gets some time to breathe. In these states the foreclosure clock moves fast as soon as the notice is handed over.
In judicial states the foreclosure process may run into six months. Reed Allmand of Allmand & Lee and author of the book The Truth about Bankruptcy said, So you can really see it coming. But in non-judicial states once you are notified its very difficult to negotiate a deal with your lender because there is not enough time.
Foreclosure is stayed as soon as the borrower files for bankruptcy. All the creditors and debt collectors have to put on hold their collecting activities. It results in power shifting from the creditors to the borrower even if it is for a short time.
But the act of filing for bankruptcy cannot be decided on the spur of the moment. In October 2005 a change in law took place that stipulated that before filing one has to go through credit counseling from any non-profit body that has been approved by the USA Trustee Programme under the Justice Department. State by state information can be obtained from its website - www.usdoj.gov/ust/ eo/bapcpa/ccde/index.htm.
At the counseling session the financial condition of the borrower will be evaluated and alternatives discussed. Then a budget plan would be chalked out to help the borrower to stand on a more solid financial footing no matter what you decide to do said Stephanie Osterland of GreenPath Debt Solutions of Farmington Hills, Michigan.
Counselors can collect fee of $50 but under special circumstances they are liable to waive it. The counseling can be face to face or over phone or via Internet. It should not be more than 90 minutes. A certificate of completion will be issued at the end of the session.
When all other alternatives are exhausted one can opt for bankruptcy. The intention is to give a new start to those who can no longer meet their bills.
There are two types of bankruptcies Chapter 7 and Chapter 13. Chapter 7 absolutely liquidates the debtors property to clear unsecured debts. In Chapter 13 an intermittent payment plan is set up with the creditors to clear dues in part or whole. The choice of the two alternatives depends upon the income ratio of the borrower.
by: Adam Sanderson
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