Behm Law Group, Bankruptcy Attorneys

It’s officially October! With Halloween just around the corner, scary haunted houses are popping up around the Mankato, Minnesota area. Usually, these houses have spider webs on the door or Jack-O-Lanterns on the front porch. They are presented in good fun, intended to spook ticket-buying folks in search of a scare.

For some people, however, a house doesn’t have to be haunted to be scary. A house in foreclosure can be equally as frightening as one frequented by a witch, simply because it’s full of so many uncertainties and unknowns. For example, what exactly is foreclosure? Is it better to file for bankruptcy before or after foreclosure? And, should you file for Chapter 7 or Chapter 13?

If you’re facing foreclosure and considering bankruptcy, the professionals at Behm Law Group, Ltd. may be able to answer a few of your questions:

1. What exactly is foreclosure?

Foreclosure occurs when a homeowner cannot make mortgage payments. As a result, the bank or lender has the ability to accelerate the mortgage debt and “foreclose” on the property, which means taking the property and evicting the current occupant.

2. Is it better to file for bankruptcy before or after foreclosure?

If you have the option, it’s best to file before. Although not all of your debts will be relieved as a result of bankruptcy, your mortgage will be discharged to you personally.  Of course, the house itself will remain liable on the mortgage debt. Also, because bankruptcy filings and foreclosures can take months to process, you may be able to remain in your home for quite some time.

3. Is Chapter 7 or Chapter 13 a better option if foreclosing on a house?

Both options are available. However, it’s important to determine if you want to retain the home and if you can repay the mortgage delinquency through a chapter 13 bankruptcy plan.  For instance, many people miss one or two mortgage payments and then the management of the entire mortgage spins out of control because late fees, escrow additions and other charges are piled on top of the past due regular mortgage payments.  Chapter 13 can be a “reset” of sorts because one can cure or pay back the mortgage delinquency over 36 to 60 months instead of having to come up with the whole amount in a much shorter period of time.  In a Chapter 7 bankruptcy, one is not able to do this.

Filing for bankruptcy before foreclosure in the Mankato, Minnesota area can be a daunting process. With the help of Behm Law Group, Ltd., however, it shouldn’t have you spooked. Whether you need assistance filing for bankruptcy or clearing cobwebs from your financial history, contact our professionals today.