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The commercials on TV about it are endless. Not only can you protect your home but you will also get you life back on the right track if you file bankruptcy. Is this true, however? The answer might come as an unforeseen surprise. We will start with Chapter 13 bankruptcies first. This is the sort of bankruptcy that can be filed by either a person or a business. It enables you to suggest a reimbursement plan to your creditors, instead of canceling out debts, as many advertisers proclaim. This reimbursement plan, if accepted, is often at a much lower overall rate than you would be paying if you had not filed bankruptcy. Try proposing new mortgage terms as well for this type of bankruptcy, because if your proposal is accepted, it just may protect your home from foreclosure. Filing a Chapter 7 bankruptcy is also a viable option in a few instances. Only individuals can file under Chapter 7 and it provides no repayment plan. You can cancel out existing debts with this option. This process might not be as easy as it appears, though. It is true that a few debts like those owed on credit cards can be eliminated, but many others cannot be. The lien included with your mortgage property is a prime example. You can't just erase something that's considered collateral for the mortgage loan you have borrowed by simply filing bankruptcy. In many states, there is a homestead exemption that may permit you to exempt all or some of the remaining mortgage on your property. Check with a lawyer to figure out the amount, if any, your state will permit you to exempt in this way. Neither bankruptcy alternative is without flaw, unfortunately. If you start missing new payments on your home, for instance, neither the Chapter 7 nor the Chapter 13 bankruptcy you filed will help you. Your circumstances might even get worse, because this will result in the loss of your house and a dramatic reduction of your credit score at the same time. Before filing any kind of bankruptcy in an attempt to save your property from foreclosure, it is important to think about your options carefully. You must consider speaking with a bankruptcy attorney, both about whether bankruptcy is an appropriate choice for you and about any other options that might be out there.
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