Sometimes people file Chapter 7 to eliminate credit card debts or medical bills, but they are up to date on their mortgage payments on their homes. In these cases, as long as the debtor stays current on their mortgage payments, they will continue to own their home and nothing will change.
Homeowners who want to use bankruptcy to save their homes from foreclosure will likely use Chapter 13 because it gives you options that you won’t find in Chapter 7. Many homeowners come to us after trying unsuccessfully to complete a loan modification or after frustrating experiences with their lenders.
Chapter 13 is ideal for people who want to save their home from foreclosure, lower car payments, consolidate debts or save other valuable assets when Chapter 7 won’t allow them to accomplish their financial goals.
Even if Chapter 7 is not available to you, there is still relief to be had in Chapter 13 depending on your income, expenses and debt burden. It’s possible that you could feasibly complete a Chapter 13 repayment plan and use the advantages of Chapter 13 to restructure your debts and your debt payments—thus taking back control of your financial life.