Massachusetts foreclosure rate jumps during 2015

According to the latest data, more Massachusetts homeowners are having problems keeping up with their mortgages. According to the Boston Globe, the number of foreclosures in the state rose 61 percent in September over the same month last year. Specifically, lenders filed a total of 1,179 foreclosure petitions during September, a significant jump from the 734 petitions filed during September 2014.

Unfortunately, the increase in foreclosure activity is not limited to the month of September. According to the Warren Group, the total number of foreclosure filings for the first 9 months of 2015 rose 57 percent over the same period a year earlier.

If you are one of the many homeowners that are having trouble keeping up with their mortgages, you may have heard that bankruptcy can help you with your situation, but are confused about which type to file. Although both types of bankruptcy may potentially help, in most cases Chapter 13 offers a more effective solution.

Chapter 7 and foreclosure

Chapter 7 offers filers an immediate pause of foreclosure proceedings as soon as it is filed. However, this pause is temporary. If you are unable to bring your mortgage current fairly quick, your lender may ask the court to allow the pending foreclosure proceedings against you to continue.

Because of this limitation, Chapter 7 is better if you are unable to pay your mortgage because of other debts. Since it offers a quick discharge of most other debts, Chapter 7 can free up income for you to use to catch up on your mortgage. Additionally, Chapter 7 is ideal if you cannot afford your home and would like to surrender it back to the lender. In such cases, Chapter 7 protects you against the possibility of a deficiency judgment. In other words, if your lender sells your home for less than the amount of your outstanding mortgage, Chapter 7 prevents you from later being sued for the difference.

Chapter 13 is likely better

If you have a regular income, Chapter 13 is probably a better fit for you, if you would like to keep your home. This is because, under Chapter 13, you have 3-5 years to catch up with your mortgage under the payment plan.

Under the plan, you make a monthly payment towards the delinquent amount of the mortgage for 3-5 years. As long as you make the agreed payment each month, your lender cannot restart foreclosure proceedings against you. Once you have completed Chapter 13, your mortgage has been brought current. At this point, you resume making the normal monthly mortgage payments that you paid before you filed bankruptcy. However, this time, you are in a stronger financial position, as you are free of most other pre-bankruptcy debts.

Get help, if facing foreclosure

If you are facing the prospect of the loss of your home, it is normal to feel scared. However, you have several options to avoid the process completely, provided that you act early when your options are greatest in number. An experienced bankruptcy attorney can outline the courses of action available to you and recommend one that would best accomplish your long-term goals.