How does a Chapter 13 Bankruptcy stop foreclosure?

Chapter 13 Bankruptcy law in Virginia enables people facing foreclosure to stop the foreclosure process and keep their homes, while also reorganizing their debt into a manageable plan. This type of filing provides an individual with an automatic stay, which prevents the creditor from continuing to attempt to collect on past debts or from initiating foreclosure proceedings. An individual filing for Chapter 13 must first propose a repayment plan that must be approved by the court. The repayment plan must be reasonable and include details regarding the amounts to be paid for each debt, over a period of time of up to five years. Once the repayment plan is approved, creditors are legally bound to repay their debt within the stipulated timeframe. Furthermore, creditors must also accept the payments determined by the court as full payment for the entire debt. This is known as debt stripping and it is one of the major benefits of Chapter 13 Bankruptcy. In addition, any interest or late fees incurred on the debt since filing for bankruptcy is also eliminated. With a Chapter 13 bankruptcy, the foreclosure process is halted and the individual is granted the opportunity to repay their debt over a reasonable timeframe. This repayment plan can help individuals keep their homes and avoid foreclosure.

Related FAQs

How does a Chapter 13 Bankruptcy stop foreclosure?

Related FAQs

Related Blog Posts