A bankruptcy foreclosure is basically a legal process that is started by the lender when the borrower defaults on the loan. When a borrower does so on a loan which was secured against a property, the lender can accelerate the loan repayment process. In other words, the lender would simply ask the borrower to pay off the whole loan immediately otherwise the lender would start the foreclosure proceedings. Chapter 7 will not prevent foreclosure; however, what it will do is that it will put an automatic stay on the foreclosure proceedings and will give you enough time to either sell your home or redeem it. If you want to stop foreclosure proceedings, then Chapter 13 is your best option available.

The new bankruptcy law took effect on October 17, 2005. One of the most significant changes that this new law has brought about is that it has made the process of filing for bankruptcy a very laborious task. The role of the attorney and documentation required to file for bankruptcy has increased. The debtor is required by the new bankruptcy law to provide additional information related to his expenses and income. Lawyer’s role in a bankruptcy has also gone through a lot of changes. The new bankruptcy law requires that the debtor to go through credit counseling services within six months prior to filing the bankruptcy petition.

When someone files for bankruptcy under chapter 13 bankruptcy code, his aim is to have the opportunity to repay some or all the debts in his name, in better terms, i.e. lower or no interest. Filing Chapter 13 Bankruptcy is thus applicable for a debtor who has a regular income, and thus can afford to request for such adjustments or reductions. The one advantage of chapter 13 over chapter 7 Bankruptcy is the full discharge option which is not applicable under Chapter 7 filing.