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Often times, consumers need to choose between filing financial insolvency or allowing their home loan lender to foreclose on their property. If monthly or bi-weekly house payments are not received, the financial institution will eventually file for a foreclosure on the home. Not a thing shy of paying the mortgage on schedule is guaranteed block the foreclosure. It is exactly the same for everybody who has not been able to pay his house loan, the mortgage holder will foreclose on the house. House loans are just like automobile loans, if you do not pay your monthly payments you will lose it.

Insolvency proceedings are a legal action filed by somebody who cannot pay their debts as agreed. Once filed, all current civil proceedings related to the mortgage will be put on hold. Legally, a home loan creditor must terminate every collection action, including foreclosure. A lender can ask for relief from the required stay, and if it is allowed, can go on with the foreclosure action. Filing for Bankruptcy will not halt foreclosure and you have to pay back your mortgage. Going into bankruptcy just makes the process continue slowly; it can not resolve the problem.

While insolvency is not going to end a foreclosure for good, it could give a person more time to pay back the overdue amount or at least makes it little more accessible to pay back the mortgage lender. Bankruptcy laws requires that a mortgage lender to put a hold on a foreclosure action, a debtor will have a bit of time to raise the money necessary to pay the lender. The final fall back for any debtor to declare bankruptcy when the consumer is totally incapable of to meeting their creditor’s minimum commitments. With insolvency, some non-secured debt will in all likelihood be discharged but the real estate loan will remain. The home loan borrower must be willing and able to repay the home loan within the required time frame as the debt is guaranteed by real assets. In addition, Chapter 13 insolvency has a schedule of fees that will be court-ordered, that permits the home owner make payments on her home loan to get caught up to date on their balance.

Not everyone meets the standards for insolvency and unfortunately if the borrower does meet the standards, there will be legal fees. Possibly, it may cost more in legal fees than it does to simply pull the belt tighter and continue with making mortgage payments. If you are of the mind that filing for insolvency may be a solution to the problem, an attorney will probably be able to answer any questions. Because insolvency is very complicated, the home owner should not seek to do it by themselves.

This is not legal advice. Contact a bankruptcy lawyer in your state for legal advisement.