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Facing losing your home in foreclosure is a nightmare for any family. Having to leave a home you fell in love with, due to losing a job, or rising interest rates, or large unexpected bills can leave you feeling like a failure with no way out. Fortunately there are ways to avoid foreclosure, one of which is bankruptcy.

The good news is bankruptcy CAN stop foreclosure, but it may not be the right choice for you. A chapter 7 bankruptcy will not stop foreclosure unless you are able to pay the back mortgage payments you owe or negotiate with your mortgage lender. A ch 7 can of course wipe out your other debts giving you more of your income to pay your mortgage, so it can be a good option if you are facing foreclosure due to other credit payment issues.

If you are behind on your mortgage and can’t make up those payments or have had a problem negotiating a solution with your lender, a chapter 13 bankruptcy can stop foreclosure. In a chapter 13 you will create a payment plan which will be approved by the bankruptcy trustee. You can include your back mortgage payments and any legal fees that have been assessed by your mortgage company, as well as legal fees for filing the bankruptcy, so you can catch up on your mortgage and stop or avoid foreclosure proceedings.

There is also currently legislature that may be passed that will allow bankruptcy trustees to change the terms of your mortgage to get you affordable terms so you can keep your home. At the time of this writing, they cannot yet do that, but you may want to speak with an attorney to see if this has changed. If you are considering filing chapter 13, we highly suggest hiring a bankruptcy attorney that has experience with foreclosure and ch 13 as it can be quite complicated.