Chapter 13 Bankruptcy and Foreclosure

Bankruptcy and Foreclosure: This Chapter 13 Solution May Help

Everyday people receive notice of pending foreclosure on their home. Even if they’ve done everything they can to keep their payments in good standing, keeping up can be difficult.

If you own a home, you already know how difficult it can be to afford to pay your mortgage each month even when things are going well. If the unexpected occurs and money gets tight, your mortgage can suddenly become a significant burden.

Is there a way to stop a foreclosure on the horizon?

Thankfully, yes. There are ways to prevent the loss of your home and regain your standing with the mortgage company.

Bankruptcy might be one of your best options.

How Does Bankruptcy Work?

There are different types of bankruptcy, but the most common option used by homeowners is Chapter 13. In Chapter 13 bankruptcy, you reorganize your debt and make a single payment each month toward that debt. Filing helps you eliminate things like late fees and other penalties on your mortgage and other debts.

Filing for bankruptcy also creates something known as an automatic stay.

The automatic stay stops all debt collection efforts by creditors, including foreclosure, and gives you time to get things organized. Not only will it prevent you from losing your home, at least temporarily, it also means you won’t have to deal with calls and legal action while you sort through your situation.

How Does Bankruptcy Affect Foreclosure?

Foreclosure occurs when a mortgage lender decides to take legal action against you because you’ve fallen behind on payments. It is a process that is strictly governed by the law and lenders must follow it carefully to avoid problems.

If you lose your home to foreclosure, it will be sold at auction so the lender can recoup at least some of the money that was lent to you when you purchased your home. As part of the foreclosure process, you are evicted from your home and forbidden by law to be on the premises.

Before foreclosure efforts can begin, the lender must notify you of your status and let you know they are moving forward with the foreclosure process. You never need to worry about foreclosure happening “out of the blue” or without warning. You’ll receive notice and have time to take action to prevent foreclosure efforts, but you should still act quickly if you believe foreclosure could be in your future.

I’ve Opted to File for Bankruptcy to Stop Foreclosure. Now What?

Filing for bankruptcy is a process and the smartest way to begin is to work with an experienced attorney. It’s also important to keep in mind that a mistake when you file could put your home and other assets at risk, which means the right support and guidance is essential.

Chapter 13 bankruptcy can make it possible for you to continue living in your home even if your mortgage lender has threatened foreclosure. A Chapter 13 plan allows you to pay off the amount you owe in late payments within a three to five year period. This means you’ll be able to get caught up on payments, but you won’t need to do it immediately.

However, you will also need to pay the amount you owe each month, in addition to the back payments and other debts that are part of your Chapter 13 plan. Bankruptcy allows you to stretch out the back payments, but you’ll need to afford the regular mortgage payments.

To learn more about how a Chapter 13 repayment plan is designed and how it works, check out this information from nolo.com.

As a homeowner considering bankruptcy, there are numerous things you’ll need to consider. Mortgages can complicate a bankruptcy filing and affect your decisions throughout the process, which is why it’s so important to work with an experienced bankruptcy professional.

To learn more or to speak to someone about how Chapter 13 bankruptcy might help you if you’ve fallen behind on your mortgage, contact R. Flay Cabiness, II, P.C. at (912) 554-3774 (Brunswick, GA); (912) 375-5620 (Hazlehurst, GA) or; (912)-554-3756 (Jesup, GA).