The financial conditions of individuals or businesses can vary from time to time. On certain occasions, financial challenges may compel someone to default on their mortgage payments, especially if they are faced with overwhelming debt. A situation like this may make the life of an individual or a business rather difficult, with creditors demanding their money back or threatening to seize mortgaged assets or even garnish wages. For debtors who have mortgaged their house to secure a debt, default may bring along the threat of foreclosure.
One option available to stop foreclosure is to file for bankruptcy under Chapter 7 or Chapter 13. Not only does that allow for a fresh financial start for someone who is struggling with debt, it also provides one of the easiest and most preferred avenues of obtaining debt relief.
A recent report has revealed that more than nine million homeowners in the U.S. are struggling to come to terms with foreclosures, with banks and other creditors unwilling to provide any other option such as principal reductions for them. If homeowners in Maryland are faced with such a situation, one of the two ways they can try to escape is by liquidating all unsecure debts through Chapter 7 or reorganization through a new repayment schedule by way of Chapter 13.
At the same time, one should also remember that bankruptcy only offers a temporary reprieve from foreclosure and it is seldom a long-term solution. It may, however, be used as a tool to bring the creditors to the negotiation table in order to achieve loan modifications. If that is an appealing option for a debtor, expert legal advice from a College Park Maryland foreclosure lawyer may be of some help.
Those struggling with debt should understand their options. If they are considering options to alleviate their financial hardship, it is important to be knowledgeable about the process and possible outcomes. The process could affect them greatly in the beginning, but if they are able to work through it, filing for bankruptcy could be the answer to their financial troubles.
Source: Huffington Post, “Bankruptcy: The Foreclosure Kill Switch,” Jorge Newbery, April 22, 2014.