If you are unable to pay your mortgage in Tennessee, you may end up defaulting. When this happens, the lender may choose to foreclose the property, repossessing it and forcing you to vacate.
Understandably, this can be incredibly stressful for you and your family; and moving out may not even be feasible. While filing for bankruptcy may be a difficult choice, one advantage that it provides is that it can stop the process of any active foreclosures on your home.
Chapter 13 bankruptcy and foreclosure
CNN provides an overview of the way bankruptcy affects a foreclosure. If you choose to go the route of chapter 13 bankruptcy, you start by paying off secured debt, followed by unsecured debt. You can work out a payment plan that you can afford by going this route, though you will still end up paying off your other debts afterward.
Chapter 7 bankruptcy and foreclosure
Filing for chapter 7 bankruptcy under a foreclosure will actually rid you of unsecured debt, allowing you to focus on paying down the mortgage. However, chapter 7 is only available to people who make a low enough income to qualify.
Comparing the two
One warning to take heed of is that homeowners will sometimes still lose their homes through chapter 7 bankruptcy, while they are more likely to keep them with chapter 13. This is because instead of working out a payment plan, you are just discharging other debt, while still owing money on the mortgage. Whichever option you choose, it can still have the effect of delaying a foreclosure and saving you valuable time.
This is an informative article that is not intended as legal advice.