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Can filing for personal bankruptcy help prevent foreclosure?

Due to the recession, many people have fallen into debt trying to make ends meet. Many New Jersey residents are in fear of losing their homes and being headed for foreclosure. Though many do not realize it, filing for personal bankruptcy may be a way for homeowners to protect their house and still find a way to deal with their debt.

According to a study by the University of North Carolina Center for Community Capital, homeowners have a 70 percent chance of hanging onto their home when they file for bankruptcy. According to the research director, homeowners have had the ability to try to save their homes by filing for protection for a long time. He continued to say that people retaining their homes is important, which is why the law has a means for people to keep their house out of foreclosure.

Not every type of bankruptcy protection will allow someone to attempt to keep their home. If a person chooses Chapter 7, there is a large chance that he or she will lose the house. Filing for Chapter 13 greatly increases the odds of retaining the home. A Gordon Silver Professor of Law at the University of Nevada said that Chapter 13 allows people to get rid of some of their debt so that they are able to use that money to pay on the mortgage payments that are past due.

Many New Jersey residents feel ashamed of filing for bankruptcy and choose not to do it. Most people do not realize how much protection personal bankruptcy actually affords them. Although bankruptcy may not get rid of all debt, it can be used as a tool for someone to get back on his or her feet and help prevent foreclosure on the home.

Source: fool.com, "Bankruptcy Can Save Your Home From Foreclosure", Dan Rafter, Aug. 16, 2014

Source: fool.com, "Bankruptcy Can Save Your Home From Foreclosure", Dan Rafter, Aug. 16, 2014

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