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Filing for Chapter 7 or Chapter 13 bankruptcy may be the ideal option for many homeowners facing foreclosure. Advantages of bankruptcy include the ability to stop foreclosure without acceptance from the creditor and can also include debts owed to additional creditors. In most cases bankruptcy comes as a last resort. It is best to file your bankruptcy with an experienced professional.
In a Chapter 7 bankruptcy all nonexempt assets are turned over to the bankruptcy trustee and the debts are discharged. Exemptions may vary in the homeowners state. In most cases the debtors possess so few assets that they may keep everything and have all of their debts wiped out completely.
In a Chapter 13 bankruptcy a plan outlines how the debtor will pay creditors over a three to five year period.
Only a Chapter 13 bankruptcy can stop a creditor from foreclosing on a delinquent debtor over a period of years. Under a Chapter 13 the court will retain the right to scrutinize finances of the debtor for the life of the reorganization plan.
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