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Chapter 13 filing may help save your home from foreclosure

A number of debtors lose their houses in New Jersey by failing to pay off debt. Unscrupulous creditors may manipulate borrowers, get an order of foreclosure and dispossess the distressed debtors from their homes. It quickly becomes very necessary for debtors to avoid foreclosure in order to save their houses.

Foreclosure is an inevitable phenomenon of financial market. Rates of foreclosure may go up or down due to changing circumstances, but one thing is sure: it causes detriment to the helpless debtors.

According to some recent market data, the national foreclosure rate continued to improve and as of February is now down more than 21 percent from last year. Despite the increase in delinquencies, foreclosures were down 19.5 percent from January, at 40,400 in February, close to September 2018's 15-year low. Income and home-price growth continue to support strong loan performance and are the main contributors for the drop in foreclosures.

The total national foreclosure pre-sale inventory rate was 0.5 percent in February, representing a 0.35 percent decline month over month, and a 21.3 percent decline year over year. According to Black Knight prepayment speeds rose by 11 percent from January's 18-year low, which indicates an increase in refinance activity driven by the recent decline in 30-year interest rates.

Home foreclosure is normally exercised in the cases where debt is secured by a mortgage. If the debtor defaults on payments, the creditors usually prefer to obtain a foreclosure order through the courts. Foreclosure negates the rights of debtor over the property. This order makes the creditor eligible to sell the house.

Distressed debtors can avoid home foreclosure by resorting to Chapter 13 bankruptcy filing. Filing for bankruptcy under Chapter 13 saves the debtor from losing their house and other valuable assets. As soon as bankruptcy is filed in bankruptcy court, an automatic stay comes into play. It precludes creditors from taking any action against the debtor.

In Chapter 13 bankruptcy, the debtor comes out with a repayment plan by working with the bankruptcy court. The plan allows the debtor to pay off the loan in a definite period of time.

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