Kentucky residents who have been facing unexpected life changes may suddenly find themselves surrounded by unpaid bills and no money to pay them. You may have tried to at least make the major payments, but foreclosure seems to be looming. When you see no other way out, bankruptcy may be the solution.
Usually the foreclosure process begins after you have missed a few mortgage payments in a row. This gives you some time to work out other options. When that letter comes to your house, however, you need to act fast. Both chapter 7 and chapter 13 bankruptcy can give you some more time.
Once you have filed for bankruptcy, it initiates an Order or Relief. Under this order, you are given an automatic stay, and all creditors must immediate cease collection attempts. This order is typically not lifted for about three to four months, or however long it takes to finalize the bankruptcy. But sometimes this process can be expedited by creditors.
The most common type of petition a creditor can file is a motion to lift the stay. If this is successful, the foreclosure process immediately begins again. Instead of months, you could suddenly have weeks to remedy your situation.
If the bankruptcy goes through, a couple things may happen. Under chapter 7 bankruptcy, your assets, possibly including your home, will be liquidated to cover the debts. But, you will walk away debt-free after that. Chapter 13 bankruptcy allows you to “rearrange” your debts to pay them off under a new timeframe.
These two types of personal bankruptcy can become very nuanced and confusing. If you are considering filing for bankruptcy, having an attorney by your side to explain your options and the process may be helpful.