According to a story published in the Chicago Tribune on November 13, 2013, Chicago-area foreclosure filings rose nearly 30% in October 2013. This number, while lower than this past summer and the past few years of extreme foreclosure rates, signals that the economic recovery is far from complete. A spike in foreclosure filings as winter comes indicates that for some, household income has gone down or been eliminated all together.
With foreclosure, it is important to remember that the filing of a foreclosure case does not automatically signal the incurring of massive debt or the loss of a home. Homeowners facing foreclosure still have two options available to them under the Bankruptcy Code to help cope and deal with the situation. One, a Chapter 7 bankruptcy, will afford them the opportunity to discharge their obligation on the home and thus the liability on the mortgages. The foreclosure process will still take some time, meaning the debtors can stay in the home until the foreclosure sale, but the personal liability owed by the debtors prior to filing the Chapter 7 is eliminated.
To save the home, debtors can always file a Chapter 13 bankruptcy. A Chapter 13 is a consumer reorganization and similar to the Chapter 11 reorganization bankruptcy that is filed by corporations and other businesses. With the Chapter 13, the debtor proposes a plan to the bankruptcy court for approval to pay back the arrears (back payments on the mortgage) along with other debts over the course of 3 to 5 years. During this time frame they are protected from the foreclosure process due to the automatic stay and as long as they make their regular mortgage payment and their trustee payment, by the time they finish the case they'll be current on the mortgage and can thus keep the home.
So, although foreclosure filings are on the rise in Chicago, homeowners who potentially feel there is no way out do have a remedy. They can contact an experienced bankruptcy attorney to discuss options in keeping the home. If they have determined for themselves that keeping the home is a lost investment and wish to rid themselves of the obligation, then perhaps a Chapter 7 is available. If they want to try and save the home, then they can attempt a Chapter 13. Regardless, a free bankruptcy consultation is the first step towards a solution.
