Maryland foreclosure rates have spiked by 26.5 percent since the end of 2011, according to a recent report from foreclosure listing firm RealtyTrac. The news is not all bad, however: Despite the increase in recent months, Maryland foreclosures are still down 8.3 percent from this time last year. Along with Maryland, 29 other states have also experienced a decline in foreclosure rates over the past year.
Currently, one in every 291 Maryland homes is in some stage of foreclosure. In some cases, Maryland homeowners who are facing the threat of foreclosure due to unmanageable debt burdens can keep their homes and pay off their debts by filing for Chapter 13 bankruptcy.
Stopping Foreclosure With Chapter 13 Bankruptcy
Unlike Chapter 7 bankruptcy, which is often referred to as liquidation, Chapter 13 bankruptcy does not require filers to surrender their assets in order to obtain debt relief. Instead, during Chapter 13 bankruptcy, a filer's debts are reorganized and paid off in order of priority. The highest priority debts are paid off over three or five years according to a customized payment plan that is approved by a judge. At the end of the repayment period, certain remaining debts may be discharged.
High priority debts that are typically included in the payment plan include:
- Back taxes
- Delinquent child support payments
- Secured debts such as a home mortgage or car loan
Unsecured debts like credit card balances and medical bills are generally not included in the payment plan, but borrowers are required to make a good faith effort to pay off their unsecured debts with whatever disposable income they have remaining after making payments toward the payment plan.
As soon as a borrower files for bankruptcy, a legal order called an automatic stay goes into effect. The automatic stay stops creditors from taking collections actions like foreclosure or wage garnishment against the debtor while his or her bankruptcy case is pending. When combined with the automatic stay, a Chapter 13 payment plan can be a powerful tool to help homeowners catch up on their overdue mortgage payments and avoid foreclosure.
Seek Legal Advice
To learn more about how Chapter 13 bankruptcy can help distressed homeowners stop foreclosure and get out of debt, contact an experienced bankruptcy attorney in your area.