On top of worrying about how to deal with creditors and pay monthly bills, people in Tennessee who struggle with serious financial problems may also have to be concerned about having a place to live. Homeowners facing these types of issues may be at risk of losing their homes and may want to find solutions that allow them to keep their treasured houses. Filing for a Chapter 13 bankruptcy may help them do just this.
As explained by the United States Courts, a Chapter 13 bankruptcy is essentially a form of restructured debt repayment in which consumers do not have to give up their assets in order to repay debts. Instead, a person in a Chapter 13 plan makes payments every month to a trustee. These payments are then distributed to creditors according to the court-approved plan. This continues over the life of the bankruptcy which lasts anywhere from 36 months to 60 months.
Credit Karma adds that when a Chapter 13 bankruptcy is initially filed, an automatic stay goes into effect. A stay is basically a hold that temporarily halts all credit collection activity against the person filing for bankruptcy relief. This gives the consumer time to make necessary arrangements for the plan and may help to prevent a foreclosure. However, if foreclosure action has been taken, the stay does not rewind the clock and undo those actions.
Any delinquent mortgage payments may or may not be included in a Chapter 13, but the homeowner must continue to make all payments going forward. If any future payments are missed or late, the creditor may be legally able to continue collection or even foreclosure action.