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The family home, foreclosure and Chapter 13 bankruptcy

The home is probably the single most valuable asset that the average Pennsylvania family possesses. It is valuable both financially and emotionally. For many, it is where the family memories are treasured. The possibility of losing the family home to foreclosure can be devastating. However, in some cases, even though the family is facing numerous financial difficulties, the foreclosure process may be avoided by filing for Chapter 13 bankruptcy.

Once the family realizes that the cycle of debt is out of control and must be dealt with, discussing the situation with an experienced bankruptcy attorney may assist in determining the best way to address the problem. If mortgage payments are already delinquent, it is likely that foreclosure proceedings are on the horizon. However, by filing for bankruptcy, lenders' collection efforts are placed on hold while the bankruptcy is processed.

Chapter 13 bankruptcy allows the borrower to establish a repayment plan. Rather than relieving the borrower of the debt, a repayment plan is established that makes it easier for the borrower to make the required payments. The mortgage and other secured debts are the first to be paid. Many times, second mortgages are treated as unsecured debt and unless there is equity value in the home, these unsecured debts may be discharged.

Filing for bankruptcy and the possibility of foreclosure are often topics that the Pennsylvania family would rather avoid. However, in some cases, Chapter 13 bankruptcy can help the family keep from losing their home to foreclosure. For those facing this possibility, discussing the situation with experienced counsel can help provide guidance on which options are best given the current circumstances.

Source:, "Facing Foreclosure? How Bankruptcy Can Help", Accessed on Dec. 12, 2016

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