If you’re falling behind on your mortgage payments or already facing foreclosure, you’ve probably considered filing for bankruptcy. But, have you carefully considered which type of bankruptcy you should file? If the end goal is keeping your property, filing for Chapter 13 bankruptcy may be a better option than choosing traditional Chapter 7. Here are some of the reasons why.

What’s the Difference Between Chapter 7 & Chapter 13 Bankruptcy?

Under Chapter 7 bankruptcy, all of your non-exempt assets are sold in order to pay off as much of your total debt as possible. Once all of these assets are liquidated, any remaining debt that you have will be forgiven. When you file for Chapter 13 bankruptcy, on the other hand, the goal is not to get rid of all of your debt. Instead, the purpose is to reorganize your debts and create a manageable repayment plan — based on your income and expenses — that you’ll follow for a set period.

How Can Chapter 13 Bankruptcy Help Stop Foreclosure?

Because you are not required to give up your assets, filing for Chapter 13 bankruptcy allows you to keep your home while you pay your creditors’ back. When you file, you’re immediately granted an automatic stay, which requires creditors to stop all collection attempts. It will also stop and postpone any foreclosure proceedings — including the sale of your home — until the bankruptcy is finalized.

This will give you some time — typically three to four months — to make provisions and propose a repayment plan to your creditors. If you follow all the terms and conditions that are agreed upon when finalizing Chapter 13 bankruptcy, you’ll still have your home once your debt is paid off. Most Chapter 13 plans last three to five years.

If you’re facing foreclosure, contact the knowledgeable bankruptcy attorneys at Law Office of James B. Mallory III in Statesville, NC. For nearly 30 years, they’ve been helping clients manage their money problems and get out of debt, and they are experts when it comes to filing Chapter 7 and Chapter 13 bankruptcy. Visit them online to learn more about how they can help stop foreclosures, and call (704) 872-1911 to set up a consultation today.