Across the country, many Americans are struggling with big financial decisions such as whether to file for foreclosure or bankruptcy.
However, Americans who are considering a bankruptcy filing due to mortgage payments could benefit from a Chapter 13 bankruptcy, as it allows for financial reorganization and may allow for a house to be protected.
Unlike a Chapter 7 bankruptcy, where a lender can reject a home loan modification plan, Chapter 13 allows for these negotiations to be monitored by courts, Bankrate.com reports. This plan, which can spread out existing debt payments over three to five years, may allow for a consumer to keep a property as long as they do not become delinquent to their creditors.
This black mark can stay on a credit report for up to seven years; however, due to state community property laws, some may be able to save the credit of their spouse, the news source says.
However, in many states a home is viewed as part of a co-ownership between a husband and wife, and consumers who are considering a filing could benefit by reviewing their state laws with a bankruptcy attorney.