Can Chapter 13 Bankruptcy Stop Foreclosure?
Need to stop foreclosure on your home but unable to refinance your mortgage? If you have fallen behind on your mortgage payments and need to stop foreclosure, a Chapter 13 bankruptcy may help you save your home.
Chapter 13 and Foreclosure: What You Should Know!
As mortgage companies continue to foreclose on American homes at a frightening rate, more and more people are wondering why this is happening and how they can stop foreclosure.
When the real estate market boomed in the late 1990's and early 2000's, property values increased and many homeowners cashed in on their new found home equity. However, interest rates have climbed, the real estate market has slowed and homeowners realize it's a buyer's market. Some homes will sit on the market month after month. Homeowners feel powerless as they fear losing their homes and wonder how they can stop foreclosure.
With that in mind, many consumers do not understand that the bankruptcy code may be able to help them stop foreclosure and save their homes. That's right. Chapter 13 and foreclosure are more related than you might have originally thought or even known about. Here's how!
So How Can Chapter 13 Bankruptcy Stop Foreclosure?
Chapter 13 bankruptcy is designed to stop foreclosure and protect other secured property. In fact, the main reason many people file Chapter 13 bankruptcy is to stop foreclosure. But how does Chapter 13 bankruptcy specifically work to stop foreclosure?
As soon as you file Chapter 13 bankruptcy, an "automatic stay" goes into effect. As its name may imply, this "stay" will basically stop foreclosure proceedings on your home by your mortgage company.
While in Chapter 13 bankruptcy to stop foreclosure, your mortgage company cannot contact you in regard to your pre-filing mortgage arrears (the amount you are behind on the mortgage). In most foreclosure cases, you can have up to five years under Chapter 13 bankruptcy to cure the delinquency in your mortgage payments. Be aware, however, that the mortgage company can attempt to set aside the automatic stay and pursue foreclosure if you are not in compliance with the terms of your Chapter 13 bankruptcy repayment plan. If you're in Chapter 13 bankruptcy to stop foreclosure, it's critical to make scheduled payments and keep your current mortgage payments up to date.
Chapter 13 Bankruptcy and Foreclosure: What Happens When You File Chapter 13 bankruptcy?
Once you prepare a Chapter 13 bankruptcy plan with your attorney, you will file a Chapter 13 to stop foreclosure proceedings. Your creditors will have an opportunity to make objections, and the trustee may require modifications to your Chapter 13 bankruptcy plan. Once the court approves your Chapter 13 bankruptcy repayment plan, and you will be able to get current on your mortgage over a three to five year period.
After you file Chapter 13 bankruptcy to stop foreclosure, you must make all current mortgage payments that come due. If you miss a mortgage payment after you file Chapter 13 bankruptcy to stop foreclosure, the mortgage company can ask the bankruptcy court to lift the protection of the bankruptcy code.
What does this exactly mean in terms of Chapter 13 and foreclosure? If the judge agrees with the mortgage company, it may ignore the "stop foreclosure" and resume the foreclosure proceeding.
When Should I File Chapter 13 Bankruptcy to Stop Foreclosure?
Generally, you need to file Chapter 13 bankruptcy to stop foreclosure prior to the mortgage company selling your home. However, if you find yourself behind on your mortgage payments, you ought to call an experienced attorney to explore debt workout plans, bankruptcy, and all of your other options to stop foreclosure before the situation spins out of control. The Chapter 13 bankruptcy filing gives homeowners the time they need to stop foreclosure and cure delinquent mortgage payments.
Chapter 13 Bankruptcy and Foreclosure: Who is Eligible to File Chapter 13 Bankruptcy?
You can file a Chapter 13 bankruptcy to stop foreclosure if you are employed or have a steady source of income. For the court to approve your Chapter 13 bankruptcy and help you stop foreclosure, you must have enough income to make your Chapter 13 bankruptcy plan payments, as well as all current mortgage payments that come due after you file for Chapter 13 bankruptcy.
Chapter 13 plan payments are fixed so that you can meet all your living expenses first and then pay any additional income to creditors. An experienced consumer bankruptcy attorney can help you create a repayment plan that works for you and your mortgage company.
Is Chapter 13 Bankruptcy an Affordable Means to Stop Foreclosure?
Chapter 13 bankruptcy is an affordable solution to stop foreclosure for many people, especially when compared to the possible loss of your home. The cost of Chapter 13 bankruptcy may even be less than the costs to refinance or take out a second mortgage, which usually involves significant points, fees and closing costs, as well as a higher interest rate on the new loan.
Need More Reasons to Consider Chapter 13 Bankruptcy to Stop Foreclosure?
As if you needed other reasons to understand the powerful way in which Chapter 13 bankruptcy can stop foreclosure, but here are some more interesting points. A foreclosure appearing on your credit report may undermine your ability to purchase a house more than a Chapter 13 bankruptcy filing. If your circumstances change, the possibility of refinancing your mortgage after you have gotten back on track with your Chapter 13 bankruptcy plan is a real possibility for many homeowners.