Either a Chapter 7 or a Chapter 13 bankruptcy can help a Florida family that is facing the loss of their home through foreclosure.
However, only a successful Chapter 13 plan can directly stop a foreclosure since, in a Chapter 13, a family can make catch up payments to get out of default.
Personal bankruptcy will be helpful to most people with foreclosure issues
Those who file a bankruptcy, whether it is a Chapter 7 or a Chapter 13, will ordinarily be entitled to an automatic stay.
An automatic stay requires a bank or other lender to stop foreclosure proceedings until the bankruptcy is over. This is true even if the lender already has a foreclosure sale scheduled.
At a minimum, this will give time for a family to calm down and think carefully about their financial situation and what they can do to improve it.
A Chapter 7 bankruptcy also offers some longer term relief. For one, a family may be able to discharge some other debts so that they can focus on paying back their house loan, assuming of course the bank is willing to negotiate.
Even though Chapter 7 bankruptcies may ultimately not stop a foreclosure, they do at least prevent the bank from pursuing a debtor personally if the bank does not make its money back in a foreclosure sale.
A Chapter 13 bankruptcy may be the best option to save the family home
Provided a family in the Miami area has enough regular income and can otherwise qualify, they may want to consider using a Chapter 13 to protect their family home.
Chapter 13 bankruptcy will involve a family submitting a monthly payment plan to the court for approval, with the monthly payments going to pay off all or part of their debts.
As part of the plan, the family can offer a monthly payment to make up any delinquency in their loan payments.
If they continue to make payments going forward and make catch up payments according to the approved plan, then they should be able to save their home.