Bankruptcy
Bankruptcy is a lawsuit brought in a federal court. There are different kinds of bankruptcy, but the most common one used for people in foreclosure is Chapter 13 Bankruptcy, and is often referred to as a restructuring bankruptcy.
With reference to foreclosure, the general idea of this bankruptcy is that it allows a property owner to force a different repayment plan upon the creditor (Mortgage holder). After the bankruptcy is filed, the property owner once again makes the regular monthly payments, plus an additional payment to make up for the missed payments, attorney's fees, late fees, and other costs of foreclosure. Also, a property owner must pay all of their excess income into bankruptcy court. A detailed description of the bankruptcy process can be found
here.
Advantages of bankruptcy
A bankruptcy will stop a foreclosure sale right up to the day of the sale. It also provides time to work out a repayment plan.
Bankruptcy is
reported to be a more effective way of resolving debt than other methods (such as debt management or debt settlement plans).
Disadvantages of bankruptcy
Bankruptcy is a temporary measure. It does not forgive the debt on your home - only reschedules it.
Bankruptcy incurs additional costs, such as attorney's fees.
Bankruptcy has negative consequences for your creditworthiness
Most importantly, Chapter 13 bankruptcies have a very high failure rate (according to a study by the Federal Reserve, close to 50% of Chapter 13 cases fail; 20% of these cases do not even get a plan confirmed).
A homeowner often files for bankruptcy well into the foreclosure process. If this bankruptcy now fails or the case is dismissed, the foreclosure will pick up from where it left off. As a result, the homeowner is once again faced with a very short time until the foreclosure auction takes place.
How can Enchante help?
In a similar manner to foreclosure, Enchante can:
Buy the house with immediate settlement (so you don't have to make any more payments and are out of foreclosure)
Pay expenses to help you get settled in new affordable housing, including security deposits and first month's rent
Help restore your credit
Meet with you to help determine your best course of action
Charge no fees
When things are not going well, a mortgage can be a heavy burden on financial well-being. By providing you the ability to sell your home quickly and help you find and get moved into affordable housing, Enchante helps you to get started on the road to financial recovery.