What Happens During the Bankruptcy Process?

What Are the Benefits of Filing for Chapter 7 Bankruptcy? Bankruptcy occurs when a person or a business is unable to pay their debts or meet other financial obligations. It is a legal method for getting relief from the situation. Bankruptcy is typically the last option for people who are unable to renegotiate payments for loans or make other arrangements with their creditors. Though it stops the collections processes, it may require you to liquidate your assets, and it will affect your credit score. That said, the goal of bankruptcy is to give yourself a fresh, debt-free start and a chance to rebuild your credit. Types of Bankruptcy There are several types of bankruptcy: Chapter 7 uses a liquidation process to pay off creditors using the debtor's assets and other available funds. This option is most common for individuals. Chapter 11 allows businesses (and some individuals) to restructure their debt so that they can pay it off without liquidation. Chapter 13 is another restructured debt option for individuals with regular income who will be able to pay off their debt but need different terms than they currently have. Most individuals will opt for Chapter 7 because it is the only practical option available to them. Though it is possible to file the necessary documents yourself in Utah, you can also hire a bankruptcy lawyer to assist with the process. How Chapter 7 Works The process of Chapter 7 bankruptcy starts when you file a petition with a bankruptcy court. These courts are all part of the federal legal system, so the process is similar no matter where you live. The entire process can take about four to six months. Once your petition gets accepted, the court issues a stay to your creditors. This order requires them to stop collections activities. A trustee will take over your case. They will oversee the process, communicate with creditors, and liquidate your assets. You must submit supporting documents to show your assets and income. You attend a meeting of creditors during which all your creditors can ask questions and request documentation. Creditors can, but rarely, attend the meeting. You must complete financial management courses during the bankruptcy process. Your debts won't be fully discharged until you do and submit evidence to the trustee. The trustee will oversee the liquidation of your assets and the distribution of proceeds to your creditors. Once you complete all requirements, the debt is discharged and creditors can no longer pursue you for additional repayment. However, it can take up to 10 years to remove the bankruptcy from your credit report. The Advantages of Chapter 7 Bankruptcy Most debtors focus on the negative aspects of bankruptcy, such as liquidation and the impact on credit scores. However, bankruptcy also brings benefits. It is essential to understand these advantages to help decide whether chapter 7 is best for you. Chapter 7 bankruptcy brings an automatic stay on all unsecured debt. Creditors must immediately stop contacting you for repayment. If you complete the process correctly, they will never contact you after you file for bankruptcy. You will have a clean financial slate after the discharge of your debts. Unlike other forms of bankruptcy, which require repayment plans, chapter 7 completely dismisses all debt and gives the debtor a new start. The process is much faster than other bankruptcy options. The process, from filing to discharge, usually takes six months or less. You will get rid of unsecured, consumer debt. Credit card debt, hospital bills, and personal loans will get discharged after liquidation. Chapter 7 allows you to keep necessities exempt from liquidation. This property may include your home, vehicle, or tools necessary for your job. Exemptions can vary, so it is typically best to ask an attorney about claiming them. You will take a financial planning course, which can help you set up a plan for the future and avoid excessive debt. Filing for bankruptcy prevents creditors from taking any further legal action against you for non-payment. Future income and assets acquired after bankruptcy are not affected by your debt. You can immediately start building a savings account. You typically deal directly with a trustee instead of appearing in court, making the chapter 7 process less stressful than other options. A lawyer is allowed to help you with the bankruptcy process and can argue on your behalf for exemptions or other issues involved in chapter 7. Qualifications for Chapter 7 Bankruptcy You need to meet specific requirements to file for chapter 7. This option is available to individuals or small businesses. Your average monthly income for the previous six months needs to be less than the average income for a similar-sized household in the same state. Alternatively, you could pass a means test to prove that you do not have disposable income to pay creditors. You have not filed for bankruptcy in eight years (six years for chapter 13 bankruptcy). If a court dismissed your previous bankruptcy petition, you must wait six months (181 days) before trying again. You can support claims of assets with financial documentation. You can complete a credit counseling course. Chapter 7 is best for unsecured debts, like credit card debt. With secured loans, the lender has the right to repossess your property if you do not make payments, so chapter 7 may not provide relief in these situations. Exemptions for Chapter 7 Also, some types of debt are exempt from discharge during bankruptcy. These include: Child support and alimony payments Student loans Court fees and fines Taxes (with some exceptions) Debts from accidents for which you were liable Fees for condo or homeowner associations How an Attorney Can Help with Chapter 7 Bankruptcy You can technically file for chapter 7 bankruptcy without an attorney. However, the process has long-term financial consequences, so you should seek legal advice if you have any concerns, questions, or uncertainties about the process. If you need to defend your petition or claims, a lawyer in Utah can represent you. The US Court System website strongly recommends consulting a lawyer during bankruptcy. Reach out to us if you are considering filing for bankruptcy. 

Your Guide to Stop Vehicle Repossession in Provo, Utah Do you need help with potential repossession of your vehicle in Provo, Utah? If so, you're not alone, and it's not too late. Like most people, you probably took out an auto loan to finance your vehicle, and it has become increasingly difficult to keep up with payments. Failure to pay over time leads to one inevitable consequence: repossession of your vehicle by the lender. This typically becomes a problem anywhere from 45 to 75 days after delinquency depending on the terms of your loan. Again, this problem has affected many people trying to make their way through these difficult times. The good news is that even if you’re behind on your payments, you may not have to deal with repossession with the right strategy. Use this guide to explore your options for halting vehicle repossession. How to Potentially Stop Vehicle Repossession in Provo, Utah. Your exact situation will determine which options may be the best for you to pursue. But you can use this list to better understand what sorts of avenues you could pursue to prevent repossession. To get started, use these five tips as a launching point. 1. Get Your Payments Caught Up The primary reason you're facing repossession is that you have failed to make some of the required monthly payments. This should not suggest that you can't catch up with missed payments and get back on track, though. The terms of your loan will specify when and how your loan will fall into default. Default means that you haven't made your payments based on the terms of a loan and will usually mean you require the full loan amount. In some cases, even a missed payment or two may not immediately place your loan into default. For example, you may need to be first notified by a creditor or loan issuer in writing before you officially enter default status. If you can catch your payments up and pay any incurred fees, you could still potentially rescue your vehicle from being taken. 2. Redeem Your Car Once your vehicle has been repossessed, like many people you might think that it's too late and there's nothing else you can do. Despite the theatrics of the process though, not all options are exhausted (even at this stage). Your last-ditch step to regain your vehicle is to redeem it from the lender. Lenders will retake their property, and it will often go for sale through an auction. You can stop the auction and redeem your vehicle if you can fully pay the balance of your loan. This guideline may seem unrealistic given the nature of vehicle repossession. You already fell behind and couldn’t make prior payments. How could you expect to pay the full balance of a loan if this is your current reality? The truth is that there are all sorts of circumstances that may have led to the problems you’re experiencing. For instance, you may be awaiting some sort of lump sum payment to get your outstanding bills paid up. In those cases, redeeming your car is certainly a possibility for you. 3. Negotiate with Your Vehicle Lender Many repossession cases have been resolved by a simple line of communication between you and the vehicle lender. Your loan provider may even offer programs to help distressed people find a way out of their current situation. Contacting your lender could help you find an amicable strategy to get your payments back on track. Depending on your circumstances, this could include making changes to the terms or finding a way through fees, penalties, and other setbacks. Considering how much you still owe on your vehicle, you could also sell it to obtain the money required to settle the loan. Finally, you can surrender your car voluntarily to the lender. While the outcome is the same for your vehicle, a voluntary surrender may lower the overall credit impact and deficiency liability you would otherwise face. 4. Refinance the Vehicle or Loan Terms If the original terms of your loan were not good, or you're finding your monthly payments too high, you could also pursue a loan modification with your lender. Some providers are willing to offer terms more in line with a person's current situation to prevent the extreme of repossession. However, these terms vary, and you'll need to check with your automotive lender. Another route to follow is to seek a loan from a different lender altogether. You may find better terms that help ease the strain you're feeling in your current loan repayment structure. 5. File for Bankruptcy Filing for bankruptcy could protect your vehicle and other assets from being seized through debt collection and default judgments. When you first make the filing for bankruptcy, all lenders are issued a stay on collecting debts from you. During this stay, debtors cannot continue to contact you, sue for missing amounts, or pursue other court filings. In other words, it can provide you with some time to figure out how to resolve your financial issues. Based on your predicament, you could opt to file for either a Chapter 7 or Chapter 13 bankruptcy. You will want to work with an experienced bankruptcy attorney to assess your precise circumstances and develop a plan to move forward. Get Bankruptcy Help Today Facing vehicle repossession or other financial issue? Need help understanding your options for bankruptcy filing? If so, get in touch with our team today. Our experienced bankruptcy attorneys are ready to help you develop a path toward a more stable financial future.

What Are the Main Reasons People File for Bankruptcy? Bankruptcy is a legal process that an individual, a married couple, or a business can take. By filing for bankruptcy, you are stating that you cannot pay your creditors. It offers a long-term solution for getting out of debt without lifelong consequences. While bankruptcy allows you to discharge most of your debts — there are a few exceptions — it can have consequences for your credit score and ability to borrow in the shorter term. Therefore, it is important to understand the process and potential drawbacks before you file. Details of Bankruptcy in Provo, Utah County, Utah. You file bankruptcy in the federal court in your area. All bankruptcy cases are handled in federal courts, so the rules are similar regardless of your location. You can file for bankruptcy without a lawyer, but the potential consequences and delays make it advisable to retain legal counsel during the process. At the very least, an attorney can make you aware of your rights and prepare you for the process. The most common form of bankruptcy, Chapter 7, stays on your credit record for 10 years. So though it provides a solution to overwhelming debt, it will have a significant impact on your ability to borrow. When and Why to Declare Bankruptcy If you are falling behind on your mortgage, have other significant unsecured debts, and are about to face foreclosure, filing for bankruptcy can be a solution to help you avoid the full impact of defaulting on your debts. Filing for bankruptcy can limit or eliminate monthly payments and even save your home from foreclosure or liquidation. Here are some of the situations when filing for bankruptcy can be a good idea. If you are unable to make mortgage payments or if your debt payments exceed your monthly income or your income after you have purchased necessities for the month. If a mortgage company threatens foreclosure on your home. If you have excessive unsecured loans, such as credit card debt or personal loans. If you need to take out additional loans to meet your financial obligations. Why would you want to declare bankruptcy? It immediately stops creditors from trying to collect from you. It may allow you to keep some assets, such as your residential home, vehicle, and work equipment. It will give you a fresh start and allow you to begin building a positive credit history. The process of bankruptcy is relatively straightforward. However, you need to be prepared to take specific steps, such as handing your property over for liquidation and meeting your creditors. What Happens After Filing for Bankruptcy? Here are the steps you can expect once you file the necessary documents with the federal bankruptcy court. A trustee is assigned to your case to oversee the liquidation of your assets or the repayment of debts. The court will select the trustee, so you have no say in who gets appointed. You get an automatic stay. This is a legal order that stops all creditors from collecting money from you during bankruptcy. It will prevent calls, emails, or visits from collections agents. The trustee schedules a meeting of creditors. All the lenders to whom you owe money are notified of the meeting and are able to attend. Some creditors will come, and some will not. The goal of this hearing is to establish your assets and all debts. During the meeting, you have to testify under oath, so you need to be truthful about debts and assets. Failure to be honest can negate the protections of bankruptcy. Creditors or their legal representatives can ask questions and look over documents during the meeting. They may be looking for a reason to contest the filing, but most often they are looking for evidence that can help them get a full share of the proceeds from the liquidation of your assets. The trustee will order you to attend a financial management course. The judge cannot grant debt discharge until they see evidence of completion of such a course. Therefore, it is best to handle this requirement early in the bankruptcy process. A trustee will sell your non-exempt assets. Then, they will distribute the proceeds to your lenders according to a priority established after the meeting of creditors. Non-exempt assets are any possessions not needed for basic living. The judge discharges your debts. After your creditors get paid, the judge will discharge your debts. Your creditors can no longer pursue you for any discharged debts. Bankruptcy does not cover debts related to child support, alimony, or back taxes. You can expect the entire process from first filing for bankruptcy until final discharge typically takes four to six months. Chapter 7 Bankruptcy Chapter 7, also known as liquidation bankruptcy, is the most common form of bankruptcy for individuals and families. This type of bankruptcy allows debtors to start afresh, free of debt, after liquidation. Other types of bankruptcy, such as Chapters 11 and 13, require repayment under an alternative plan. The obvious disadvantage of Chapter 7 is that you lose your possessions and assets, though you are allowed to keep certain necessities. This may include being able to keep your home. Another advantage is that creditors cannot pursue you for additional payments once the debts are discharged. For this reason, most individuals prefer Chapter 7 to other forms of bankruptcy. When Do You Need a Lawyer for Bankruptcy Cases in Provo, Utah County, Utah? First of all, a bankruptcy attorney can help you decide if Chapter 7 is the best option or if you would be better off filing for a different form of bankruptcy that doesn't require liquidation of assets. An attorney can also help you prepare for the different steps and ensure your rights get respected throughout the process. Creditors can contest some of the details of the bankruptcy or the entire filing. In these cases, you will need a lawyer to argue your case or negotiate with the creditors to find a solution to the contested debts. If you are facing bankruptcy, reach out to our attorneys today.

Bankruptcy is a legal process that offers relief to people who cannot pay off their debts. Once a person or business files for bankruptcy, their creditors must stop trying to collect debts. Bankruptcy benefits debtors because it allows them to discharge their debts. Although the filing will be on their credit report for up to 10 years, people in debt can get a fresh financial start and avoid the stressful collections process. What if you are a lender and someone who owes you money files for bankruptcy? Though you may think that bankruptcy means you will never be repaid, it's possible you will see some or all of your money returned by the end of the process. Creditors must take specific steps when notified of a bankruptcy filing involving their debtor. As a lender, you have privileges in bankruptcy cases, including the right to make your case for complete repayment. However, your rights can vary depending on the details of your loan and the debtor's overall financial situation. Types of bankruptcy  When a person files for bankruptcy, the court puts their debts on hold. However, they still have to pay as much as possible of the total amount owed. Chapter 7 bankruptcy is the most common form of insolvency, while you may also encounter debtors who file for Chapter 13 bankruptcy. Here is a look at what you can expect as a lender if you get bankruptcy notice involving one of your debtors. Chapter 7 bankruptcy is also called liquidation bankruptcy. This process allows debtors to start afresh by discharging all of their debt. A bankruptcy court pays off as much of the debt as possible by liquidating the bankrupt person's assets and giving the proceeds to lenders. A trustee handles the sale of assets and the distribution of the profits. This court-appointed representative pays lenders based on priority. For example, secured loans get paid first, followed by unsecured debt. In many instances, a debtor can keep necessities, such as their residential home, work equipment, and vehicle needed for transport, during the liquidation process. Chapter 13 bankruptcy is also known as reorganization bankruptcy. This process is different because there is no liquidation of assets. The debtor starts the process by going to credit counseling and making a plan to repay existing debt. However, instead of paying lenders directly, the debtor deposits money into an account managed by a trustee. The process can take three to five years, with the trustee paying off debts in order of priority. Chapter 11 is the other well-known type of bankruptcy, but it is only available to corporations, who can use the process to restructure and repay existing debts without having to stop operations. Unless you are a large shareholder or institutional lender, you will likely not be confronted with a Chapter 11 bankruptcy. The importance of priority for creditors during a bankruptcy case A lender's hopes of repayment after a bankruptcy filing depend on the loan agreement and terms. A bankruptcy court treats creditors differently depending on the priority of debt and the type of debt security or collateral. If the debt was unsecured, such as a medical or credit card bill, you will typically have a lower priority for repayment. Creditors who have secured loans, such as mortgages or vehicle loans, typically have a higher priority. The trustee will attempt to give them the value of the security assets from the liquidation proceeds. Depending on the assets and financial situation of the debtor, a lender waiting for compensation for an unsecured loan may only receive partial repayment or no reimbursement. Can creditors reject a bankruptcy discharge plan? As a creditor, you have the right to reject part of the bankruptcy discharge. You can do so by filing an adversary proceeding. This case will require a lawyer because you need to prove that the debtor purposely misled the trustee and court to avoid repayment or engaged in another fraudulent activity to hide assets or avoid repayment. The alleged fraud could be in the bankruptcy filing itself or in any activities related to the debt before the bankruptcy filing. Many of these cases involve people intentionally running up credit card debt or taking out loans in the months before declaring bankruptcy or signing property over to relatives to avoid liquidation. What should a creditor do after they receive a bankruptcy notice? If you receive a bankruptcy notice involving one of your debtors, there are specific steps you need to take to abide by the law and give yourself the best possible chance of getting a partial or full repayment. Stop any collection efforts or follow-ups about the debt. Once the debtor files for bankruptcy, they are protected from additional collection efforts. It is against the law to contact the borrower after you receive a bankruptcy notice. File your proof of claim with the court before the deadline. In most cases, you can submit your documents up to 70 days after the bankruptcy filing. Make sure to identify assets associated with secured debts. This is an important step because, in most cases, debts secured by property move to the front of the line for repayment. Accept or reject the debtor's discharge plans. The trustee will hold a "meeting of creditors," during which you can assess the bankruptcy discharge plan. In most instances, the trustee collects and verifies all supporting documentation beforehand. Except in some special cases, creditors or their legal representatives do not attend the actual meeting of creditors. You have 60 days from the meeting to reject the discharge plan. When a debtor files for bankruptcy, the court tries to ensure they pay as many debts as possible through liquidation or a long-term repayment plan. However, you may want to hire a bankruptcy lawyer to represent your interests during the process. In addition to advising you about timeframes and proof of claim, they can review documents and supporting evidence to ensure the debtor is accurately representing their total wealth and not purposely hiding property or misrepresenting its necessity.

Bankruptcy is a legal process that helps people or businesses pay debts by selling assets or getting a court-ordered repayment plan. There were 544,463 bankruptcy filings in 2020 alone. Typically, the bankruptcy process starts when a debtor goes to court. The debtor can be a company, a group of people, or an individual. A bankruptcy case can only be filed at a federal court. The court will audit the liabilities and assets of the accused entity. It will then decide to either declare the entity bankrupt or dismiss the case. If you feel that your loan terms are becoming a financial hindrance, you can file for bankruptcy. Your creditors will have to renegotiate the loan terms and restructure the repayment schedule. Bankruptcy and Employment Status or Opportunity Generally, filing for bankruptcy does not have any impact on your job. Nevertheless, it may reduce your chances of getting employment in the private sector. Public and private employers can't legally terminate your employment contract just because you are facing financial challenges. Similarly, filing for bankruptcy cannot lead to the changing of your employment terms. For example, your employer can't slash your wages or change your responsibilities. Therefore, you can seek legal compensation if your employer terminates your employment just after you file for bankruptcy. Bankruptcy and Discrimination Laws The US Bankruptcy Code prohibits any person or entity, including your employer, from discriminating against debtors. This is clarified in the Bankruptcy Code's Section 525 . This section states that federal and state authorities can't: Refuse to hire a person because of bankruptcy Fire an employee due to a recent bankruptcy filing Reduce wages or change responsibilities of an employee who filed for bankruptcy. Unfortunately, the Bankruptcy Code doesn't prevent private employers from failing to hire people based on their bankruptcy status. Will Your Employer Know About Your Bankruptcy Filing? Your employer is unlikely to learn about your bankruptcy filing. However, the employer may become aware in some situations, such as: Wage Garnishment: You may file for bankruptcy after receiving a wage garnishment. Your employer can stop the wage garnishment provided that you notify them of your bankruptcy filing. The good thing is that your employer may suggest ways to improve your financial situation. Chapter 13 Bankruptcy: While it is difficult for employees to know of your Chapter 7 bankruptcy filing, they are likely to know of your Chapter 13 bankruptcy filing. That is because the court may direct that your Chapter 13 payments be deducted from your salary. Your employer essentially will become a collection agency for the bankruptcy court. You Have a Loan from Your Employer: A bankruptcy filing must disclose all outstanding debts. The court will then send a notice to everyone you owe money. If you have a loan from your employer, they will also receive notification of the bankruptcy filing. Security Clearance Many employers won't hire you if you don't have a security clearance. The security clearance is a must-have for people working for federal or state security agencies. Fortunately, you can still get your security clearance even after filing for bankruptcy. In fact, filing for bankruptcy reduces your debt and vulnerability to blackmail. Government agencies do not look at the bankruptcy status when hiring employees. However, private employers may fail to hire you if they discover your bankruptcy filing. This can happen when the employer conducts a credit check. Although the employer can't run a credit check without your consent, they may become suspicious if you refuse to give permission. The bankruptcy filing may be seen as a potential problem, especially for an employee who will be handling large sums of money, such as an accountant. Types of Bankruptcy The primary purpose of bankruptcy is to settle debt, but bankruptcies have different procedures and regulations. The two types of personal bankruptcies are Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 Bankruptcy During Chapter 7 bankruptcy, the court will hire a trustee to liquidate your assets and give the proceeds to your creditors. If the proceeds can't pay all your debt, the court will erase the outstanding debt. Chapter 7 exempts necessities from liquidation, such as retirement accounts, personal vehicles, and houses. Chapter 7 can postpone a foreclosure but can't stop it. If you want to delay a foreclosure, you must reaffirm your loan terms and promise to resume payments. You will be eligible for Chapter 7 bankruptcy debt relief after the court determines that you cannot repay all your loans. Before then, your creditors will meet you in person to examine your debts and general financial situation. Also, the Chapter 7 bankruptcy becomes part of your credit report and will remain there for a decade. Chapter 13 Bankruptcy Chapter 7 bankruptcy erases debt, but Chapter 13 restructures it. The court will mandate a new repayment plan that will last for three to five years. You must pay all your secured loans and a certain percentage of your unsecured loans during the repayment period. The monthly payment will be based on your income, loan amount, and expenses. In most cases, the courts will place limitations on your expenditure and prohibit spending on certain services or products. Chapter 7 bankruptcy's main benefits are the preservation of your assets and legal protection from creditors. Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy can halt home foreclosures by extending mortgage repayment periods. However, your Chapter 13 bankruptcy filing will only be valid if you have been paying all your taxes. Also, your credit report will continue to show your Chapter 13 bankruptcy filing for seven years. Finally, you can only file one Chapter 13 bankruptcy every 24 months . What to Do if You Are Fired After Filing for Bankruptcy? Despite the bankruptcy laws prohibiting employment discrimination, you can still get fired after filing for bankruptcy. When this happens, you should first know if your employer doesn't have another reason for terminating your employment. Regardless, it is challenging to prove that you were fired because of your mounting debts. Consequently, you may need to seek the assistance of an employment lawyer and get legal redress. You can contact us for more information. 

So, you’ve received a foreclosure notice. Should you file for bankruptcy? Will a bankruptcy proceeding help you hang onto your home? If you are successfully discharged from your mortgage debt, will you still have to make payments in the future? Bankruptcy is serious business and has many significant repercussions that can impact your life in the short and long term. In some cases, filing for bankruptcy can help you prevent foreclosure – sometimes permanently, so long as you make your payments, and sometimes temporarily. There is no one-size-fits-all solution. How bankruptcy will impact your impending foreclosure will depend on several factors, such as the type of bankruptcy you file for and how much equity you have in your home. In this article, we’ll explore the relationship between bankruptcy and foreclosures. If you have any questions about your individual situation or bankruptcy and foreclosure more broadly, please contact our friendly team. We’d be happy to walk you through your options and guide you toward your desired outcome. What is an Automatic Stay? An automatic stay is a provision under United States bankruptcy law that enables a bankruptcy filing to prevent foreclosure for a period of time. It stops creditors, government departments, and collection agencies from pursuing owed funds from debtors that have filed for bankruptcy. In practice, if you file for bankruptcy before your lender begins or finishes a foreclosure, an automatic stay will postpone your foreclosure. Your stay applies from the day you file for bankruptcy and ends after court proceedings. If you do not pay your mortgage or are behind on payments, your lender may file a motion that allows them to execute a foreclosure during your bankruptcy proceedings. If the court grants your lender’s motion, they are permitted to continue with your foreclosure. Bankruptcy Discharges and Mortgage Debts For many, a discharge from debt is the goal of filing for bankruptcy. If you are granted discharge from a debt, you are no longer personally liable for that debt. In some cases, you can pursue a discharge from your mortgage debt. Individuals can file for bankruptcy in one of two ways – Chapter 7 bankruptcy and Chapter 13 bankruptcy . A trusted attorney can advise on the best path forward for your personal situation. The pathway you take will affect your potential mortgage debt discharge. If you file for Chapter 7 bankruptcy, your discharge is typically granted after the creditor – in the case of your mortgage, your lender – has sufficient time to either object to the discharge or file a motion to dismiss it. This process can take several months. If you file for Chapter 13 bankruptcy, your discharge will be given following the completion of your payment plan. This process can take three to five years, if not more. If your mortgage debt is discharged under a Chapter 7 or Chapter 13 bankruptcy, you cannot be held personally liable for your mortgage debt. However, that does not mean you are permanently protected against foreclosure. The Mortgage Lien and Foreclosure Let’s say you file for bankruptcy and are discharged from your mortgage debt. You cannot be held personally liable for that debt, but the lender may still have a right to foreclose your property. It seems contradictory, so let’s take a closer look at the mortgage lien and how that impacts foreclosures following a successful bankruptcy proceeding. In most cases, when you take out a mortgage, you are committing to two legal obligations: A promissory note is a personal promise you make to your lender to pay back the borrowed funds. A mortgage, also known as a deed or trust, establishes what’s known as a lien on the property. A lien is your lender’s legal right to your property if you default on your payments. If you have a mortgage, you have a lien. You are relieved of your personal promise to repay the lender when you are discharged from a mortgage debt via a bankruptcy filing. The lien remains active. This enables your lender to foreclose on your property following the automatic stay, or if you have defaulted on your payments, after your bankruptcy proceedings are completed. Will Chapter 7 Bankruptcy Prevent Foreclosure? In a Chapter 7 bankruptcy, a bankruptcy trustee is nominated to liquidate your assets. The proceeds are used to pay off your debt. When all proceeds are exhausted, the leftover debt is discharged. In most cases, a Chapter 7 bankruptcy cannot prevent foreclosure altogether. But it can delay it temporarily. Here are several scenarios to consider: If you are up-to-date with your mortgage payments and have very little equity in your property, you can likely avoid foreclosure and keep your home. If your home holds significant equity, your creditors may have to sell your property to repay your debt, in which case filing for bankruptcy won’t prevent foreclosure, just delay it. You will likely be subject to foreclosure if you are behind on your payments – even if creditors do not sell your home. Will Chapter 13 Bankruptcy Prevent Foreclosure? If you file for Chapter 13 bankruptcy, you will be obligated to pay part or all your debt through a repayment plan (generally over three to five years, depending on the amount of debt owed and your income). If granted, these repayments can include money owed on your mortgage. So, if you are behind on your mortgage payments and want to keep your home, Chapter 13 bankruptcy may help you reach your goals. Always Seek Professional Legal Counsel Navigating bankruptcy, foreclosure, and the intersection between the two is no easy task, so don’t go it alone. To ensure you have the best chance of achieving your desired outcome, enlist the help of a professional bankruptcy attorney. At Alta Legal, we stand by our clients’ sides every step of the way, leveraging our deep experience, passion, and empathy to mitigate risk, minimize damage, and protect their interests. If you would like to discuss your personal circumstances, please don’t hesitate to reach out today. We are here to help. 

Foreclosure is when a homeowner can no longer make their mortgage payments, and the lender repossesses the house. Luckily, one late mortgage payment will not trigger foreclosure. You typically need to completely miss between two and four consecutive installments before the lender starts the process. Mortgages backed by federal Fannie Mae and Freddie Mac programs have 60 days of guaranteed protection against foreclosure. This means that if you are struggling to make payments on your mortgage, you have time to weigh your options, seek legal advice, and find the best solution to the issue. In some instances, going through with foreclosure may be the only option. However, most of the time, alternatives for a loan default will allow you to keep your home or sell it without harming your credit report. Here are five of the most common options that you have when facing foreclosure. 1. Bankruptcy Filing for bankruptcy can actually be a way to keep your home when faced with foreclosure. Most people have two options: Chapter 7 and Chapter 13 bankruptcy. Chapter 13 bankruptcy requires you to make a repayment plan for your debts. If you are earning income but not enough to cover your current mortgage payments, this option may allow you to catch up on missed payments using a renegotiated payment plan. During Chapter 7 bankruptcy proceedings, a trustee sells your assets and uses the proceeds to pay lenders. You may be able to keep your home if you can get current on mortgage payments or if your state has laws that protect against foreclosure of a primary residence during bankruptcy. For some people, having other debts discharged through Chapter 7 bankruptcy can help free up money to make timely home loan payments going forward. The main drawback of this option is that bankruptcy is a black mark on your credit history. It will remain on your report for seven to 10 years, and it won't be easy to get any loans or credit during that period. 2. A Forbearance Plan Lenders prefer to avoid foreclosure because of the expense and the risk of not getting a full return on their investment. They will often work with homeowners in danger of foreclosure to get payments back on track. One of the options a bank might offer is a forbearance plan. In a forbearance plan, a mortgage company will agree to reduce the amount of the monthly payments for a set period. In some cases, they may suspend payments altogether. Forbearance plans are meant to help homeowners with a temporary setback, such as unforeseen expenses, an illness, a divorce, or a job loss. This option works for people experiencing a temporary setback who expect to return to a state of financial stability. After the forbearance period, you typically repay the lowered or suspended amount over time. 3. A Loan Modification Another option is to contact the lender and try to amend the terms of your loan so that monthly payments are easier. You may be able to change specific factors, such as the interest rate or the length of the loan term, which could make the payments more manageable. In most cases, the process involves submitting an application for loan modification. The bank may ask for supporting documents that prove you will be able to make the adjusted payments each month. More importantly, once you apply for loan modification, the bank cannot continue foreclosure proceedings until they give you an answer on your application. If you are underwater financially, you likely will not get a positive response from the bank. Therefore, this option is only a good choice for those who can still make reasonable monthly payments. 4. A Short Sale A short sale is when the homeowner avoids foreclosure by selling the home for less than they currently owe on the mortgage. The profits from the sale go to the lender instead of the homeowner. This option typically requires legal advice because laws vary by state. In some places, the lender must forgive the remaining balance on the mortgage after a short sale. In others, they can sue you to recover the amount. A short sale is an alternative if you do not want to go through foreclosure. It will negatively affect your credit score, but you can still qualify for some mortgages after a short sale. Furthermore, you are responsible for selling the home, but the bank must approve the offer before the sale goes through. This could be a lengthy process, and it typically requires a real estate agent who is experienced with this type of transaction. One positive, however, is that you can remain in the home while seeking a buyer. 5. Deed in Lieu of Foreclosure and Deed for Lease With these options, you avoid foreclosure by handing over the deed of the property to the lender. If you opt for a deed in lieu of foreclosure agreement, you simply sign the property over to the lender, and they forgive your debt. This option is an alternative to foreclosure if your financial struggles are not temporary, and you cannot hope to make monthly payments. This agreement is sometimes known as a mortgage release. A deed for lease also requires you to sign your property over to the lender. However, they agree to let you stay in your home as a tenant as part of the agreement. You will have to begin paying rent immediately after giving up the house. However, the monthly payments will likely be cheaper because you are no longer responsible for insurance, property taxes, and general upkeep. Most lenders charge the market rate for a similar rental in the area. These options will help you avoid foreclosure, but they may negatively impact your credit score. Seek Legal Help When Facing Foreclosure The best option when facing foreclosure will depend on your specific situation. An experienced attorney can help you weigh the choices and decide which steps will give you the best result. Though facing foreclosure is stressful, you can still get a positive outcome if you make the correct decisions and get sound advice along the way.