If you're facing foreclosure, you may want to explore how Chapter 7 bankruptcy in South Carolina could help you in a number of ways. A Chapter 13 bankruptcy can help you save your house. But if you are likely to lose your home anyway a Chapter 7 bankruptcy can help. It may help you to regain your financial footing and start completely fresh. This will be essential in helping you to repair your credit, build your savings, and expedite your purchase of another home down the road.
Our Columbia Chapter 7 bankruptcy attorneys can help you determine whether this is a smart move given your current financial status and your long-term financial goals. In many cases, it makes sense to pursue both bankruptcy and foreclosure simultaneously.
What is a Chapter 7 Bankruptcy
Chapter 7 bankruptcy, as defined by the U.S. Courts, is a form of liquidation. It's primarily intended for people who cannot make regular, monthly payments toward their debt. It can provide relief to those regardless of whether a debtor is solvent or insolvent.
In each case, a trustee will be appointed by the court who will be responsible for converting your assets into cash for distribution among creditors.
At the conclusion of your Chapter 7 bankruptcy, you will receive a discharge of your debts, which will release you from personal liability for most debts. Some may not be dischargeable, but it depends on the circumstances of each case. For example, debt owed as a result of liability for a DUI accident can't be discharged, nor can child support payments or most taxes.
When debts are discharged, the debtor has no liability for them. However, Chapter 7 will not extinguish a lien on a property like a mortgage.
How a Bankruptcy May Help After Foreclosure
Most people who file Chapter 7 don't lose any significant property but it is possible you may have to forfeit some property. That tends to be luxury items and property with secured debt. So if you are behind on your mortgage payments, your lender might foreclose (or continue a foreclosure) after your bankruptcy is discharged. The same goes for condos or liens held by a homeowners' association.
You won't be responsible to for the mortgage deficiency balance after your foreclosure if you file for bankruptcy. This is where Chapter 7 can help struggling homeowners most.
However, let's say you are current on your mortgage. You need to discuss with your bankruptcy lawyer whether you'll be allowed to continue making payments while your Chapter 7 bankruptcy is moving through the process. Most courts will allow you to do this so that you can keep your home even though you've declared bankruptcy.
One should note however that if you're behind, we should discuss a Chapter 13 bankruptcy.
To learn more about how we may be able to help you through this process, contact our experienced Columbia bankruptcy lawyers.