Save Your Home & Pay Your Mortgage.. Through Chapter 13 Bankruptcy
It is understandable that you will have tremendous fear when you fall behind on your mortgage and you start to receive threatening letters. You may not even know that bankruptcy is an option to save your home and stop a foreclosure case. You probably think like most people that bankruptcy will mean giving up the house and getting a fresh start. That would be true under chapter 7 of the United States Bankruptcy Code. Many homeowners during the peak of the foreclosure crisis decided that they simply could not afford their homes and elected to file a chapter 7 fresh start and walk away from their homes. There were many others however that wanted desperately to save their homes. After struggling with their lender and after not finding an in-house resolution, they sought out chapter 13 as a way to pay back mortgage arrearages over a 60 month period. They were also allowed to make the regular mortgage payment on time once again after their case was filed.
Deal With Your Home On Your Terms
While you’re in a chapter 13 bankruptcy, you have a plan set up whereby you are going to make your mortgage payment on time and cure your arrearage within a three to five-year period of time. However, this does not eliminate or shut off other methods or opportunities to deal with your house. For example, the entire time that you’re in a chapter 13 bankruptcy case, you have the ability to work out other loss mitigation efforts with your lender. You can continue to apply for a loan modification under the many government programs or under a program provided directly by the lender. You also have the ability to work out a refinance option with an alternative lender to replace your existing loans. You also have the ability to list your property for sale and possibly walk away with equity or in the event of a short sale walk away without owing any money. All of these options and more exist while you’re in a chapter 13 bankruptcy. The bankruptcy basically provides the protection to allow you to deal with your house on your terms. Provided you are making all of your payments through the chapter 13 trustee and directly to your lender post-petition, you have the ball in your hands with regard to how you’re going to deal with your home.
Stop The Foreclosure Now
What’s great about chapter 13 is that it stops the foreclosure procedure immediately. Provided the case has not already gone to a Sheriff sale, you will have effectively stopped the foreclosure proceeding dead in its tracks. This is true whether the case has been going for 30 days or 30 months provided there has not yet been a successful Sheriff sale on the property. In order to get the bankruptcy protection going, a case needs to be filed. In order to file a case, you need to meet with an experienced, chapter 13 bankruptcy attorney to find out if you qualify. Your bankruptcy attorney is going to want to know all about your income, your expenses, your assets and your liabilities. The bankruptcy attorney is going to analyze whether or not a repayment plan under chapter 13 is feasible. Most bankruptcy attorneys are paid as your case progresses through the system. If your financial numbers do not show the ability to repay, then the attorney is not likely going to file your case.
When Chapter 13 Bankruptcy Isn’t An Option
There are many cases where chapter 13 simply will not work. In the case of someone who has a decrease in pay or an increase in mortgage payments, there simply is not enough money available to satisfy the mortgage payment directly and satisfy the trustee on an ongoing basis. For homeowners who fall within this category, they still have the ability to file a chapter 13 and create the automatic stay to stop the foreclosure proceeding temporarily. However, keep in mind that the stay is not permanent. The mortgage company can bring a motion to modify the automatic stay or dismiss your case for failure to make timely payments. Your chapter 13
trustee can bring a motion to dismiss your case for your inability to propose a feasible plan or for your inability to make timely trustee payments.
Bottom Line: You Have Options
My best advice is this. Make an appointment with a chapter 13 bankruptcy attorney to learn your rights. You may just find that chapter 13 is a great option for you. You may have the ability to pay the trustee and your mortgage company. You may also find that chapter 13 is not going to be successful based on your financial package. You may at that point want to elect for a chapter 7 fresh start and possibly talk separately to a foreclosure defense attorney to handle your foreclosure case. Keep this bankruptcy option viable in your mind. Nobody sets out to file for bankruptcy. Nobody acquires a mortgage and purchases a house with the thought of bankruptcy in their mind at any point. However, when you get yourself into a foreclosure situation, you should keep all of your options available. Most chapter 13 bankruptcy attorneys will offer their advice to you free of charge initially. For that reason alone, get the education that you need on the subject so that you can save your home if at all possible.
