Bankruptcy, particularly, Chapter 13 bankruptcy is a useful tool in stopping a foreclosure and getting your loan caught up.
If you fall behind on your mortgage, the mortgage lender will eventually consider the loan in default, demand the full balance of the mortgage, and give notice of foreclosure proceedings.
In most cases, the lender will not accept payments to reinstate the loan and you will told that you either need to pay the FULL BALANCE of the mortgage or give up your home.
However, there is a third option: you can file for bankruptcy protection to stop the foreclosure. Filing a Chapter 13 bankruptcy will allow you to continue to live in your home and give you a chance to catch up on the payments you have missed. The lender is required to accept these payments and cannot foreclose on your home as long as you make the required payments.
If your lender is threatening foreclosure or has initiated foreclosure, bankruptcy may be your best option depending on your other circumstances. You should consult with a bankruptcy attorney right away to make certain that you are making the best decision for yourself.
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