One of the scariest things for a Harrisburg family who has run into financial trouble is the prospect of losing the family home.
Without a steady income or in the face of other hard circumstances, the family may find itself unable to make payments on their mortgage or mortgages.
Banks that loan money in Pennsylvania may or may not be willing to work with the family, so bankruptcy may be the only option a family has to protect the home.
Chapter 7 bankruptcy offers limited options for foreclosure relief
A Chapter 7 bankruptcy, which is the more common form of consumer bankruptcy, can offer some relief from a pending foreclosure.
In most cases, a family who files this type of bankruptcy will get the benefit of an automatic stay, which means that the bank will legally have to delay foreclosure until the bankruptcy ends or it gets permission from the bankruptcy court to proceed.
Also, a Chapter 7 may give a family debt relief in other respects which will allow them to re-arrange their finances and get into a position to catch up on payments or negotiate with the bank.
On the other hand, it is important to remember that a Chapter 7 bankruptcy offers only personal protection from a delinquent mortgage, meaning a bank cannot pursue the family after it sells the home. The bank still, however, can foreclose its mortgage when all is said and done.
Chapter 13 bankruptcy may allow a family to save its home
If a family is in a financial position to do so, then they may wish to consider a Chapter 13 bankruptcy.
In a Chapter 13, the family can agree as part of its repayment plan to make catch payments on a delinquent mortgage. If they do so, then they can prevent foreclosure altogether. Chapter 13 may offer additional options for second mortgages.