Which Type of Bankruptcy Stops Foreclosure in Pennsylvania?

Some bankruptcy chapters are more effective than others when tackling certain kinds of debt. If you have defaulted on your mortgage and are facing foreclosure, is there a specific kind of bankruptcy that would best suit your situation?

The best type of bankruptcy to stop foreclosure for consumers in Pennsylvania is Chapter 13. This will give you the ability to follow a court-approved repayment plan over three to five years, during which period your lender cannot foreclose. Chapter 7 is generally not nearly as effective in stopping foreclosure, as you might have to liquidate your home to repay the bank what you owe. Even with Chapter 13, indefinitely stopping foreclosure is not guaranteed. Our attorneys will ensure we promptly file disclose all debts, and comply with all the rules associated with a bankruptcy case so you are able to prevent foreclosure and keep your home.

For a free and confidential case assessment from our Pennsylvania bankruptcy lawyers, call Young, Marr, Mallis & Associates now at (215) 701-6519.

Do All Types of Bankruptcy Stop Foreclosure in Pennsylvania?

Different bankruptcy chapters address your debt differently, meaning not all suit debtors facing foreclosure. In fact, filing Chapter 7 might keep your home in jeopardy, forcing you to give it up through liquidation so that you can repay your lender in Pennsylvania. We can ensure you file the appropriate chapter for your situation so that bankruptcy solves your problem and does not exacerbate it.

Chapter 13

Chapter 13 bankruptcy is relatively effective in helping homeowners keep their houses while repairing their relationships with their lenders and repaying them. Generally speaking, only debtors who pass the means test qualify for Chapter 13, meaning their income is about the average or higher for a household of similar size in Pennsylvania. Once we confirm you qualify for Chapter 13, we can submit your bankruptcy petition to the court closely followed by our proposed repayment plan. This plan may span three to five years and will be based on your total outstanding mortgage payments, income, current mortgage payments, dependents, and all other expenses. Chapter 13 is effective because it enables debtors to keep their assets, including homes at risk of foreclosure.

Chapter 7

On the other hand, Chapter 7 is for debtors whose incomes aren’t high enough to repay creditors, even with the help of court-approved repayment plans, automatic stays, and being given several years to settle debts. Often, Chapter 7 is used for those with mostly unsecured debts, like credit card debt. The court erases dischargeable debts during Chapter 7 bankruptcy cases, but secured debts must be repaid. Because Chapter 7 filers don’t have the necessary income to repay secured debts, they identify assets for liquidation. Unfortunately, most debtors’ main assets are their homes, meaning Chapter 7 may not be the answer to your situation if you are facing foreclosure in Pennsylvania.

How to Use the Right Type of Bankruptcy to Stop Foreclosure in Pennsylvania

If used effectively, Chapter 13 bankruptcy can stop foreclosure. However, if you wait too long to file your case, fail to list all creditors and debts, or don’t follow the rules of the repayment plan, the case might be unsuccessful, leaving you once again at risk of foreclosure in Pennsylvania.

File Promptly

In stopping foreclosure, one of our goals, in addition to keeping your home, is ending the harassment associated with debt collectors and banks seeking repayment. The sooner you file for bankruptcy after identifying it as the solution to stopping foreclosure, the more time and resources you can reserve. While filing bankruptcy will stop foreclosure proceedings already in progress, our attorneys can prevent those proceedings from ever beginning by quickly filing your bankruptcy petition after you get a notice of intent to foreclose from your bank. Pennsylvania does not have a right of redemption following sheriff’s sales, so do not wait to file if one is imminent.

Disclose All Debts

Even if your primary concern is your mortgage debt, disclosing all debts when filing bankruptcy is important so that you get the appropriate discharges during your case. Omitting creditors from your bankruptcy case could lead to issues with it completing down the line. If you do not finish the repayment plan or the case is dismissed before repayment is finalized, your home could still be in jeopardy of foreclosure and a sheriff’s sale.

Follow the Repayment Plan

Stopping foreclosure indefinitely with bankruptcy is predicated on whether or not you satisfy the requirements of your Chapter 13 repayment plan. Because this is so important, our Philadelphia bankruptcy lawyers will spend the appropriate time writing the plan and arguing why its terms are fair based on the size of your debt, your income, and your expenses. If repayment plans are infeasible from the get-go, debtors might not have any hopes of adhering to them. Keep in mind that you will still have to stay on top of your current mortgage payments as well as past-due ones. Not doing either could give your lender reason to ask the court for foreclosure, even during your bankruptcy case. Suppose the case is dismissed because you do not follow the repayment plan. In that instance, foreclosure proceedings might resume again, and our attorneys can help avoid this by tailoring the repayment plan to your specific situation.

Comply with Bankruptcy Rules

Bankruptcy is a very complicated legal process that navigating alone could cause issues for debtors. The bankruptcy court might dismiss your case for not filing certain paperwork, not paying filing fees, not attending credit counseling courses, or even making clerical errors. We can ensure debtors comply with all rules of the bankruptcy process so that it ends up being a successful tool to help stop foreclosure in Pennsylvania.

Call Our Pennsylvania Bankruptcy Attorneys for Help Today

Get a free case review from our Springfield, PA bankruptcy lawyers when you call Young, Marr, Mallis & Associates at (215) 701-6519.