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Chapter 13 bankruptcy may stop foreclosure

When financial problems begin to spiral out of control, the possibility of losing one's home can become a reality for some Kentucky families. Thoughts of foreclosure can lead one to not even know how to begin to tackle the overwhelming financial dilemma. For some, filing for Chapter 13 bankruptcy may be the answer.

If problems making mortgage payments are a temporary issue, it may be possible to work out a solution with the mortgage lender. However, if the problem is a long term one for which there is no end in sight, foreclosure could be in the future if nothing is done to solve the problem. Typically, the foreclosure process begins once the homeowner is approximately three months delinquent in payments.

The benefit of a Chapter 13 bankruptcy is that it allows the borrower to arrange a repayment plan and can even stop the possibility of foreclosure. Typically, secured debts such as a mortgage are considered first. Many times, second mortgages on the home are treated as unsecured debt and may not require repayment if there is not enough equity value in the home.

One fact that must be kept in mind is that in addition to honoring the repayment plan established through Chapter 13 bankruptcy, the borrower will also need to be able to make the normal mortgage payments to remain current. This is more likely to be a possibility since Chapter 13 bankruptcy takes into account the majority of debts owed and establishes a court-approved repayment plan for those that are required to be repaid. Discussing options with an experienced bankruptcy attorney can assist the Kentucky individual or family in deciding if bankruptcy is the answer to the problem.

Source:, "Facing Foreclosure? How Bankruptcy Can Help", Accessed on Dec. 12, 2016

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