While any sort of financial trouble can be scary for a Tyler resident, it is particularly hard on a family when they fall behind on their house payment. After all, becoming delinquent on a home loan usually means that the family will wind up in foreclosure and have the real possibility of losing their family home.
While a straight Chapter 7 bankruptcy may offer some relief, these sorts of bankruptcies generally are not the most effective at staving off a foreclosure. The reason is that, although the lender cannot pursue its borrower personally, it can still move forward with foreclosing on and selling the house out from under the family.
With a Chapter 13, however, a person can stop foreclosure altogether under the right circumstances. Specifically, as part of the required Chapter 13 repayment plan, the debtor can agree to pay both the current loan payment as well as something in the way of a catch payment over a term of three to five years.
While the payment plan is still in force, the bank cannot proceed with the foreclosure. Moreover, a well-crafted payment plan can also shave off some of the family's other bills so they can focus on catching up with the mortgage.
The bankruptcy court will have to approve this payment plan. Moreover, the family will have to be sure to follow through on the plan once it gets approved. Assuming these things happen, though, the family will receive a discharge from other debts, wipe out the delinquency and, hopefully, be able to continue making house payments while remaining in their home.
One of the biggest advantages to a Chapter 13 is that it can help stop a foreclosure. A family interested in exploring this option should consider speaking with an experienced attorney.