When many people in Indiana think about a personal bankruptcy, they may be unaware that there are different types. The Chapter 7 bankruptcy that may leave a person without their family home seems to be the most well-known type of plan. However, there is another option and it may well be the right one for the homeowner who wants to save their home from foreclosure. That option is a Chapter 13 bankruptcy.
As explained by the United States Courts, Chapter 13 bankruptcies differ from Chapter 7 plans in that instead of having all debts discharged, consumers are essentially put on a repayment plan. The plan lasts anywhere from 36 months to 60 months depending on part on the amount of debt involved and the income of the consumer. The amount of the monthly payments should be considerably less than what the consumer would have otherwise paid. It is through this reduced amount that relief from the excessive debt is realized.
Home loans are not included in the repayment bankruptcy plan. However, by filing for a Chapter 13, foreclosure proceedings may be suspended due to an automatic stay. Then, during the course of the Chapter 13 plan, the consumer can get caught up on any past due amounts owed to a bank for missed or late mortgage payments.
According to The Mortgage Reports, some consumers might even be able to qualify for a new mortgage while still in the active portion of their Chapter 13 bankruptcy repayment plan. In fact, some lenders may look more favorably on Chapter 13 bankruptcies than on Chapter 7 plans because the applicant has demonstrated an attempt and willingness to repay some debt.