When Bankruptcy Can Stop Foreclosure.

If you've gotten in over your head, and are now looking at foreclosure on your home or property, you may be able to use bankruptcy to stop foreclosure. It's important that you understand how bankruptcies work and the different types of bankruptcies that are available in order to stop foreclosure on your home or property.

Bankruptcy by the legal terms is a court ordered statement of your inability to pay your debts or financial obligations. There's a long process to go through and it's much more complicated than the above statement, but bankruptcy is an option for many who are in over their head.

Bankruptcy comes in two different types, one is considered an involuntary bankruptcy filed by the lender against the debtor trying to prove that their inability to pay their obligations. The idea behind this is to allow the lender to liquidate the assets of the debtor and recoup some money.

When the debtor files for bankruptcy it's considered a voluntary bankruptcy and they are the ones who filed a petition to the court. They are trying to prove that they are unable to pay off their debts.

Within these two types of bankruptcies there are different chapters or types of filings. One, chapter 7 and another chapter 13. In Chapter 7 bankruptcy, you will liquidate your assets to start fresh. Your liquidation or money resulting from the sale of your assets will go partly to pay off your debtors and partly to give you a fresh start. Chapter 13 is a stay of debts that allows you to reorganize in order to pay your debtors within the next three to five years the full amount due.

Most bankruptcies will not cover all debts, but can help with credit cards, unsecured promissory notes, and loans, medical bills and other types of debts. It's important before you file for any bankruptcy no matter the chapter that you consult with a professional financial advisor.

There are qualifications you must fulfill an order to file for any bankruptcy. And each type of chapter has its own types of qualifications. Losing all of your equity in any of your assets can be expected for Chapter 7, but if you really need a fresh start, it's one way to go. If the market is good and your property is increasing in value than perhaps Chapter 13 and reorganization is your best bet allowing you a five-year extension.

It's important to understand that if you have filed any type of bankruptcy within the last six years your not allowed to use the same type of bankruptcy filing again. It's vital that before filing for any bankruptcy of any type that you consult with a professional so that you thoroughly understand exactly what's going to be required, whether you can meet the requirements, and whether it will actually help stop foreclosure.