The last several years have been trying ones for many Colorado residents who are facing severe financial problems in the buildup and wake of the great recession. While the stock market and other economic indicators may have rebounded well, the same is not true for many individuals, who are still grappling to overcome the difficulties that have plagued them because of the recession.
For some, there is encouraging news that things could be improving. For instance, foreclosure filings reportedly hit their lowest mark since before the recession. The rate dropped significantly since 2012, according to the report, with one in every 96 homes reporting at least one foreclosure filing.
Yet, many have not seen the threat of foreclosure removed from atop their head, as 9.3 million properties were reported to be deeply underwater in December of last year. This means the borrowers in these homes owed at least 25 percent more than the home was worth, leaving the homeowners searching for a way to stop foreclosure proceedings that could be around the corner.
For these individuals, Chapter 13 bankruptcy may be able to provide a fresh financial start. After filing for Chapter 13, foreclosure proceedings must automatically come to a halt against the borrower, as an automatic stay is imposed. While the stay may not help individuals make their payments, in and of itself, it can give the borrower enough time to become current on the mortgage, or to negotiate with their lender.
At the end of this process, the person might have saved enough to stave off foreclosure. In addition to saving their home, individuals can also obtain debt relief through Chapter 13, which creates a repayment plan to allow the person to pay their debts in manageable payments over time. Accordingly, the benefits of Chapter 13 are multiple, and individuals should consult with an attorney to determine if Chapter 13 is right for them.
Source: CNN Money, "Foreclosures hit six-year low in 2013," Les Christie, Jan. 16, 2014