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For Homeowners Facing Foreclosure, Chapter 13 Bankruptcy May Still Be Best Solution

Foreclosures may not be making headlines like they once did, but losing a home is still a very real threat for many Americans – one that appears to be on the rise.

According to RealtyTrac, nearly 52,000 U.S. homes were set for foreclosure auctions this August, up 1 percent from a year ago. Though the rise is modest, it marks the first year-over-year increase in four years.

Home experts don’t expect another tidal wave of foreclosures like the one the market saw in 2010. However, they do warn the uptick in foreclosure activity is a sign the housing recovery isn’t as strong as once believed. Despite new legislation and court rulings intended to protect homeowners, Americans are still falling behind on their mortgages.

Some are homeowners who were once able to afford their mortgage payments, but have suffered significant pay cuts in the years following the recession. Others are folks overwhelmed with credit card debt, medical bills or divorce proceedings that have taken precedence over home loan payments. Still, others are underwater homeowners with houses worth much less than their mortgages.

Whatever the cause, the situation is the same: Falling behind on a mortgage triggers a nightmare scenario of lender phone calls, foreclosure notices and – if you don’t take immediate action – your home being sold out from under you on the auction block.

But even when the foreclosure process has started, it may not be too late. Chapter 13 bankruptcy has helped millions of homeowners hold onto their homes in tough economic times – and it remains the most effective solution to stopping foreclosure today.

Filing for Chapter 13 bankruptcy enacts the automatic stay, a legal action that forces creditors to cease collection activities – including the foreclosure of your home. Meanwhile, you’ll propose a Chapter 13 repayment plan to pay past due and current mortgage bills over the next 3 to 5 years.

So long as you keep up with your monthly installments, you can stave off foreclosure, get rid of any other debt included in your bankruptcy case, and emerge in better financial shape than before bankruptcy.

Neither foreclosure nor bankruptcy is a situation anyone hopes to find themselves in. But of the two, only bankruptcy has the power to protect assets and eliminate debt – wiping out the underlying cause of many debt struggles and paving the way for a brighter financial future.Wondering if bankruptcy is right for you? Call the attorneys at DebtStoppers today or visit us online to schedule your free personal debt consultation.

Resources:

Home Foreclosure Activity on the Rise in August, by Elvina Nawaguna, DailyFinance

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