If you are facing foreclosure, bankruptcy might be able to help. If you are trying to catch up on your mortgage a Chapter 13 bankruptcy allows you to catch up or “cure” your pre-bankruptcy mortgage arrears. In many cases, filing a Chapter 7 bankruptcy can provide valuable benefits to debtors as well.
Typically foreclosure begins after a homeowner falls behind on mortgage payments. The lender begins the legal process of foreclosure and ultimately looks to get a judgment allowing it to sell the home at auction in order to get payment for the loan. The process involves numerous steps, including multiple notifications to the homeowner.
If you’re behind on your mortgage payments or are already in foreclosure, bankruptcy may be able to help you save your home. Usually, Chapter 13 bankruptcy is the best way to save your house. It allows you to make up missed mortgage payments through your repayment plan and get back on track. Chapter 7 bankruptcy, while providing temporary relief from foreclosure, usually doesn’t prevent the eventual foreclosure of your home unless a mortgage modification or settlement is agreed to by the bank.
Many people file for Chapter 13 bankruptcy specifically to stop foreclosure. In most cases, an automatic stay is entered as soon as a Chapter 13 bankruptcy petition is filed. The automatic stay should temporarily stop foreclosure, along with all other collection action, regardless of the stage of the foreclosure proceedings.
With the automatic stay in place, the debtor and his attorney have the breathing room to work out a Chapter 13 repayment plan. In essence, then, through a Chapter 13 debt reorganization plan you can cure the default and save your home. However, you must realize up front that not everyone qualifies to file for bankruptcy, nor is a bankruptcy recommended for all people who otherwise qualify. Only a qualified bankruptcy attorney can guide you properly on these very important issues.
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