Chapter 7 or Chapter 13 Bankruptcy for Avoiding Foreclosure
Both Chapter 7 and Chapter 13 bankruptcy can help people in avoiding foreclosure to a great extent. Both of them can be used for eliminating and paying off outstanding dues on account of mortgage loans, student loans, credit card loans and many more. In case of Chapter 7, the debtors would need to liquidate all their assets to pay off the pending debts. In case of Chapter 13, they are required to pay off the debts in a period of 3 – 5 years. During this time, their outstanding loans are paid off and they can become current on their loans. Plus, in the case of Chapter 13 bankruptcy, they can also retain their home without any problem.
Before filing for either of the, an evaluation of your current earning and current expenses would be done. If for the past 6 months, the debtor is unable to pay off their expenses since they have insufficient income, then they would qualify for Chapter 7 bankruptcy. If the debtor ha sufficient funds to pay off their expenses and part of the debts, then they will qualify for the Chapter 13 bankruptcy.