If a person loses a job and is facing unemployment, that person often has to cope with difficult issues such as repayment of debts. At the same time, the person must have confidence that the bills will be paid on time. Unemployment may not be the only issue that is threatening the person’s financial stability, as the threat of escalating debts and foreclosure because of defaulting on mortgage payments may also occur if the person’s debts exceed income. On certain occasions, the person may be collecting unemployment benefits, in which case income, while reduced, would not come to a full stop.
Under such circumstances, the person may consider filing for a Chapter 13 bankruptcy, which does not involve selling all assets to pay off the creditors but involves a repayment plan that would help the debtor to reduce debt and, if possible, eliminate it altogether in a gradual manner over time. Debt relief in the form of a Chapter 13 bankruptcy process is an accepted practice in the U.S., including in Maryland. Always seek the opinion of a qualified Chevy Chase Maryland foreclosure lawyer before entering into any official filings.
However, the person must remember that if the source of the reduced income fails to yield the necessary money, it may prove difficult to sustain the Chapter 13 proceedings. An example would be that of unemployed people in Maryland, who have been struggling to meet their mortgage payments following the federal government’s decision not to renew the support provided to the unemployed. This decision exposes the vulnerability of such debtors to losing their homes to foreclosure. For those people who had hoped to reorganize their loan repayment terms because of their reduced income, there may be a real issue if the unemployment benefits stop.
Source: msnbc.com, “Unemployed, and heading toward foreclosure,” Suzy Khimm, March 25, 2014