When you get behind on your bills, it can put your property at risk. While you can take out a loan to buy nearly anything, perhaps the most commonly financed assets in the United States are vehicles and real estate. Both auto loans and mortgages are types of secured loans, which means that the item purchased acts as collateral for the loan. As such, if the borrower defaults on the loan, the creditor may take possession of the property and sell it in order to recoup some of the money loaned to the borrower. In the case of real estate, this process is referred to as “foreclosure;” otherwise, it is known as “repossession.”
If you have fallen behind on your payments on your house or car, it is possible that you are facing foreclosure or repossession. In some cases, you may feel that such action is inevitable as you see no way that you will be able to catch up on your payments before you default. Fortunately, bankruptcy may be able to help you keep your home and care – specifically, Chapter 13 bankruptcy.
Chapter 13 and Arrears
In Chapter 13 bankruptcy, a debtor reorganizes his or her debt and makes regular payments on a court-approved payment plan. So long as repossession.
Chapter 13 can help people who have fallen behind on their payments in that it allows debtors to take their arrears (the part of a debt that the debtor stays current on his or her payments, creditors are barred from engaging in any collection activity – including foreclosure or is overdue) and make it part of their repayment plan. As long as the debtor continues to make regular payments on his or her mortgage or car loan, he or she can stay in their home or keep their vehicle. Chapter 13 payment plans can last anywhere from 3 to 5 years, allowing people to cure their delinquencies a little bit at a time.
Talk to an Attorney Before Making Any Decisions
While Chapter 13 can be used to protect assets from foreclosure or repossession, that does not mean that it always should. In some cases, it may be better to walk away from the asset entirely in a strategic default or to file for Chapter 7 in order to discharge other debts. The most effective way to determine which type of bankruptcy is right for you (if any) is to consult with an attorney and discuss your financial situation in detail.
Call JLT Law Today to Schedule a Free Case Evaluation with an SLC Bankruptcy Attorney
If you are at risk of losing assets to repossession or foreclosure, you should speak to an attorney about Chapter 13 as soon as you can. Attorney Jory Trease has been practicing law form more than 30 years and focuses his practice on helping people who are in debt obtain relief through bankruptcy. To schedule a free consultation with Mr. Trease, send us an email through our online contact form or call our office at (801) 896-9444.