Foreclosure
I think it’s safe to say that the peak of the foreclosure crisis is behind us. Many people have already lost their homes, sold their homes, walked away from their homes or reorganized their debt through chapter 13 bankruptcy. Others have received modification offers from lenders, offers for deeds in lieu of foreclosure, relocation assistance and in some cases releases of liens. However, even though the worst is behind us, we still see many people who are struggling to either save their home or to stay in their home for as long as possible. Filing bankruptcy is a method by which some people can extend the time in their home for either a small duration or permanently. It really all depends upon the chapter being filed.
Chapter 7 Bankruptcy
Filing chapter 7 bankruptcy will gain a little extra time in the property under normal circumstances. The filing of a chapter 7 bankruptcy creates an automatic stay. Your lender or their counsel must bring a motion to modify the automatic stay if they wish to proceed with a foreclosure case while you’re in your bankruptcy. The lender can simply wait out the entire filing which is about 110 days, however, most lenders go ahead with the routine of modifying the stay so they can proceed with the foreclosure case without any further delays. The benefit to a chapter 7 is very limited in terms of time. Most debtors cannot catch up on their mortgage even when they file a chapter 7.
Chapter 13 Bankruptcy
Filing chapter 13 is a complete game changer when it comes to foreclosure. In a chapter 13 bankruptcy case, you as the debtor are able to make your regularly scheduled mortgage payment on time once again from the date of filing going forward. The arrearage, which is the part that you are behind on your mortgage can be repaid over a 60 month period. Provided you are able to make both your current mortgage payment and your trustee payment, the lender is prohibited from modifying the stay and prohibited from continuing with their foreclosure action. Thus, chapter 13 takes the wind out of the mortgage company sails with regard to foreclosure. The debtor has the ability to control whether or not that case is going to proceed, and if so, when. 
Change In Circumtances
The difficult part of chapter 13 is that you are asking somebody who has fallen behind on their mortgage, often significantly, to all of a sudden start making payments again in a timely fashion. For the best odds of success, it takes a significant change in circumstances. For example, maybe the person fell behind on the mortgage because they were out of work. Perhaps there was a divorce and a loss of income. Possibly, there was an injury or illness that prevented the person from having gainful employment. If any of these situations apply, and the problem has been rectified, then there is a decent chance that chapter 13 will provide a successful solution and save the home. If, on the other hand, there are no changes in circumstances and the debtor simply is grasping at straws to try and save the home, then the chapter 13 will likely only delay the inevitable. It’s all about money in these cases. It’s all about making your payments on time, without interruption, and in the proper amount. If you as a debtor are able to do that, you have a great chance of saving your home through chapter 13. If not, you will eventually see either a foreclosure summons or an eventual notice of Sheriff sale.
If you feel that you may be a person who can save his home through chapter 13, speak with an experienced, bankruptcy attorney in your local area to see what type of payment plan could be proposed. You may be surprised to find that the pathway to save your home can oftentimes be very possible.
