For some Tennessee residents, filing for bankruptcy may seem like a desperate final option. However, many individuals may be unaware of how helpful Chapter 7 or 13 bankruptcy can be in certain situations. In many cases, significant debt can lead to homeowners facing foreclosure, but filing for bankruptcy may be able to bring those proceedings to a halt.
Depending on the situation, an individual may qualify for Chapter 7 or Chapter 13 bankruptcy. It is important to understand that both forms of bankruptcy cause foreclosure proceedings to stop until the case is concluded. It was reported that Chapter 13 may be the more effective form when it comes to saving a home from foreclosure. This is likely due to the fact that this form develops a payment plan that could eventually result in mortgage debt being repaid.
Chapter 7 bankruptcy could also be effective when it comes to saving a home. This form results in unsecured debt potentially being eliminated, which in turn allows for more available funds that could be put to use for mortgage payments. Unfortunately, it was also reported that very few individuals actually opt to file for bankruptcy in order to save their homes.
This lack of filing could be due to a lack of information on the benefits of Chapter 7 and Chapter 13 bankruptcy. Therefore, it may be prudent for a Tennessee resident who is suffering from a debt burden and facing foreclosure to gather more information about this potentially home-saving option. There are resources available that can help an individual determine whether they may qualify for this type of assistance.
Source: mortgageloan.com, "Study: Bankruptcy a Big Help in Saving Home from Foreclosure", Peter King, May 27, 2014