When Colorado residents start to see their pile of unpaid bills growing larger by the day, it can be frightening to think of what might happen if they cannot afford to pay them. Once debt collectors start calling and sending letters, the level of fear can increase. Fortunately, Coloradoans have some recourse against these debt collectors by filing for bankruptcy.
Perhaps the best example of the power individuals have is in relation to their most valuable asset, their family home. By filing for personal bankruptcy, individuals can stop foreclosure on their home, even if the foreclosure process has already started. The foreclosure is stopped because the bankruptcy imposes what is known as an automatic stay of most proceedings. As with most things, there are some exceptions to this, but, in general, most bankruptcies will temporarily stop the sale of the home from anywhere from six-weeks to three-months.
Different types of bankruptcy have different rules, however, when it comes to saving the home from foreclosure. Chapter 13 bankruptcy generally leaves filers with a better chance of keeping their home, although the entire process takes significantly longer than Chapter 7 and places filers on a strict budget under which they must repay some of what they owe before discharging the remainder. Chapter 7 is quicker and will not require the same kind of repayment as Chapter 13, but the exemptions under Chapter 7 are such that filers are less likely to be able to keep their homes.
Colorado residents who find themselves in danger of losing their homes to foreclosure should consider their legal options carefully. A qualified bankruptcy attorney can explain how the process works and prepare the necessary paperwork that must be filed with the bankruptcy court. After this occurs, a hearing may be set, and the judge will be able to enter an order granting debt relief to the filer.
Source: FOX Business, "File bankruptcy to stall foreclosure?," Justin Harelik, Oct. 2, 2013