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FORECLOSURE AND BANKRUPTCY
Chapter 13 Bankruptcy will stop a foreclosure any time prior to a Sheriff’s foreclosure sale, and allow you to repay your mortgage arrears. You will still be obligated to make all future payments directly to the mortgage company, but they may not proceed with the foreclosure.
What is Foreclosure?
A foreclosure usually happens when a homeowner fails to make their mortgage payments. The lender will force the sale of the home and apply the proceeds to the balance on the loan. Whether the lender can pursue collection of a deficiency in the balance depends on that state’s law.
A foreclosure doesn’t occur overnight. Your mortgage lender will probably begin contacting you as soon as you are late on one payment. You will have to receive notice before a bank can hold a foreclosure sale of your home. Notice requirements will vary by state.
The Automatic Stay
If you are facing a home foreclosure, bankruptcy provides a protection called the Automatic Stay that can help. Once your petition is filed with the court, the Automatic Stay protects not only against home foreclosure, but vehicle repossession and wage garnishment. The stay is effective until your case is discharged or dismissed. A Chapter 7 Bankruptcy is typically discharged in 3-5 months, but a Chapter 13 Bankruptcy is discharged after a 3-5 year payment plan. If you opt for Chapter 7 Bankruptcy, you will need to resolve the past-due balance on your mortgage before the case is completed. If you need more time than that, Chapter 13 may be a better option for you.
How a Chapter 13 Bankruptcy Can Help
A Chapter 13 Bankruptcy is a reorganization of your debt into a 3-5 year payment plan, depending on if you make more or less than your state’s median income level. Some balances, such as financed vehicles, must be paid in full during your bankruptcy. Your home mortgage, however, isn’t. Whatever your past-due balance is will be spread out over the course of your payment plan along with the rest of your debts.
If foreclosure is imminent, reach out to a bankruptcy attorney as soon as possible. Your bankruptcy attorney may be able to utilize a procedure called Emergency Bankruptcy/Skeleton Petition Filing to get your case filed- and stop a foreclosure- sooner.
Contact Us Today
If you are struggling to make payments and fear losing your home to foreclosure, bankruptcy may be the solution to your problems. Our office offers free phone consultations, affordable payment options, and can offer same-day filings in some circumstances. Don’t wait until it is too late- file bankruptcy and stop a foreclosure today. Call (480) 800-0033.