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Bankruptcy can halt Ohio foreclosures

High unemployment and the foreclosure crisis have gripped the nation's economy. Many people in Ohio have sought relief under the bankruptcy code to put a halt to home foreclosures and seizures. In some cases, filing for chapter 7 bankruptcy is sufficient for those who qualify under the "means test" to not only stop the foreclosure process, but place a distressed homeowner in a financial position to be able to remain current on the mortgage and keep the home.

The discharge of unsecured debt, such as credit cards and medical bills, may allow a person to have enough monthly funds to service their mortgage. The difficulty is many homeowners wait an extended period of time after becoming distressed, and are too far behind to catch up under chapter 7 due to the limitations on exempt assets allowed.

Many individuals choose to stop foreclosure through chapter 13 bankruptcy. An Ohio bankruptcy attorney can assess an individual's asset and debt structure to create a three-to-five-year payment plan to allow the working individual to become current on the home mortgage payment over time.

Certain debts, like student loans, mortgages and back taxes are given priority in a chapter 13 bankruptcy. Unsecured debts, such as credit card debt and medical bills, are given less priority in a chapter 13 payment plan, and a portion of the remaining debt can be discharged at the conclusion of the payment plan.

Timing is important for individuals. Many distressed homeowners wait until the foreclosure is imminent. Filing for bankruptcy will halt the foreclosure, but early action may help to preserve more assets.

Many experts believe that speaking to a qualified counselor or bankruptcy attorney in the early stages of distress to determine the best route. Bankruptcy is not for everyone; loan modifications and other types of debt negotiation at the early stages may be better options for some distressed consumers. It is important to obtain the sound information from a professional in achieving the best outcome.

Source: The Atlanta Journal Constitution, "Bankruptcy as a means of halting foreclosure, for a moment," Katie Leslie 18 Jan 2011

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