In Kentucky for 2005, home foreclosures ran at 5%.  Sometimes the only way to stop a home foreclosure is by filing a Chapter 13 bankruptcy.  You are allowed to take up to 2 years to repay arrearages in a Chapter 13 bankruptcy.  In Kentucky, a Chapter 7 Bankruptcy will only temporarily stop home foreclosures.  But you may want to file an answer and a Chapter 7 which may allow you to stay in the house for a year or more before the foreclosure is final and you have to move.   Just by eliminating unsecured debt in a Chapter 7 bankruptcy you may afford your home and avoid foreclosure.   Sometimes you may want to include other home foreclosure options with your bankruptcy.

LOAN MODIFICATION - Some mortgage lenders will negotiate payments and home foreclosure fees being added to the back of the loan. Home foreclosures are prevented and in some cases interest rates can be reduced.  Drawback: your loan may still be a bad loan or a home may still be undesirable. 

FORBEARANCE PROGRAMS - Some home lenders offer home foreclosure workout programs.  You immediately pay an amount normally including foreclosure fees, the balance is added over a period of 6 to 24 or 48 months.  Drawback: How to afford it. 

SHORT SALES This is an example of a paying to a lender less than what is owed for a property.   Often a relative or friend buys the property as a straw man and sells it to you.  As an example      Loan $250,000 -- Lender estimate of home value $185,000--  Expected proceeds of foreclosure sale 150,000 --  Expected expenses of foreclosure 10,000  Offer $145,000 house sold back to Debtor! Drawback:  Beware of others that make this offer to "help" you after a bankruptcy or foreclosure is filed.  It may be an attempt to steal your home.  Also there may be tax consequences for forgiveness of debt if you do not file a bankruptcy and do the short sale.  Mortgage companies will 1099 you for the loss as income and then you owe a massive tax debt. 

Chapter 13 Bankruptcy - Only a Chapter 13 will permanently stop a foreclosure.  You can take up to 2 years to cure your arrearage.   Filing an answer to a foreclosure will delay it 6 months to a year and a Chapter 7 will delay it for 6 months to a year.  Tax consequences if filed at the right time = none. 

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