Anyone experiencing the threat of foreclosure knows just how important it is to want to save their home. With the foreclosure rate still hovering around all time highs, many more people will face the risk of foreclosure in the years to come. Luckily, there are options that can help. ALouisville bankruptcy is one of them. In fact, a study found that filing for bankruptcy was more effective at saving homes from foreclosure than other methods of mortgage debt resolution.

Protecting Your Investment

In the study, conducted by University of North Carolina’s Center for Community Capital, it was found that among lower-income borrowers whose homes were in foreclosure, 70% of those were less likely to lose their home after filing for bankruptcy. The study also found that only 8% of people in foreclosure actually filed for bankruptcy. Why? One theory is the misconceptions and associated fear about the bankruptcy process. The second is lack of understanding how the bankruptcy process actually helps defend against a foreclosure.

Both Chapter 7 and Chapter 13 bankruptcy can put an immediate halt to foreclosure proceedings while further resolutions to debt are made. A Chapter 7 bankruptcy an rid unsecured debts like credit cards, and may be able to strip away second liens on the home. The study also found that Chapter 13 bankruptcies were about five times more effective at resolving mortgage debt, as it acts as a mechanism for repaying delinquent payments over a period of time that is more affordable to the borrower. While it is understandable that myths and misinformation about the bankruptcy process can lead to the perception of a stigma, the real consequences and stigma associated with losing a home to foreclosure can be far worse.

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