Can Bankruptcy Protect my Home from Foreclosure?

  • David M. Offen,
  •   Foreclosure Defense
  •   Comments Off on Can Bankruptcy Protect my Home from Foreclosure?

Are you facing the prospect of foreclosure? If the idea of losing your home is enough to keep you up at night (and it probably is), it is safe to assume that you are willing to consider all options. Bankruptcy may be able to help. It can either stop things for a period of time or permanently stop the foreclosure.

The Automatic Stay

No matter if you file Chapter 7 or Chapter 13, the court will issue an automatic stay. With this, creditors are required to cease all collection activities, regardless of whether or not they believe this is fair. If your home is in the process of being foreclosed upon, the sale will be postponed while your bankruptcy case moves forward. Generally speaking this will buy you three to five months worth of time if you file a Chapter 7 case.

In the event you file a Chapter 13 case, you are given up to 60 months – 5 years in which to pay back the amount you are delinquent on your mortgage. There are occasions when your lender can ask the Court for permission to move forward with foreclosure, even if you have filed for bankruptcy.  This typically happens if you do not resume making your mortgage payments and/or trustee payments after you have filed for bankruptcy protection.

The General Benefits of a Chapter 13 Bankruptcy in regards to home mortgage

If you are willing to do whatever it takes to save your home from foreclosure, Chapter 13 bankruptcy may be a very good idea for you consider at some point in time. In the event that you are behind on your mortgage payments, this is a great way to get current, allowing you to keep your home and make things right with your lender. Chapter 13 puts you in position to make late unpaid payments over the course of your repayment plan, which typically lasts five years. However, you must have enough income to make this payment along with all normal payments during this time. If you are able to do so, at the end of your repayment plan you will feel good about where you stand with your home.

In some cases it may be to your advantage to pay off the whole mortgage debt inside a Chapter 13 plan.  This is usually when the total mortgage debt is not very large and there is a judgment against you.  In many cases the interest rate can then be reduced.

Contact a Bankruptcy Attorney As soon as you receive a notice of foreclosure, it would be in your best interest to consult with a qualified bankruptcy attorney. If you have waited, it may not be too late, however, you don’t want to delay any longer. Your bankruptcy attorney can review your case, make suggestions, and help you understand if filing for bankruptcy is the best way to save your home.

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