What is a Foreclosure?
Foreclosure is the process in which your lender wants the entire amount owed for your mortgaged property, usually after several mortgage payments have been missed.
Filing for bankruptcy stops the foreclosure procedure through the process of the automatic stay. An automatic stay is an injunction that stops creditors from collecting debts until the bankruptcy proceedings have been completed.
Can Chapter 13 Bankruptcy Stop a Foreclosure?
If you have filed for Chapter 13 bankruptcy, there is still a chance to prevent foreclosure and keep your home. During the automatic stay, you have the option of working out new terms with your lender. Chapter 13 works well for families and individuals who have a steady income, but need the extra help to get back in control of their finances. Through Chapter 13 bankruptcy, new payment plans may be worked out through a 3 to 5 year repayment period. During this time, homeowners will be able to keep their homes and avoid foreclosure as long as they are able to make the payments, designated by the bankruptcy court, on time.
Another advantage of Ch 13 bankruptcy is that you may have the ability to strip second and third mortgages from your home and convert them to unsecured debt. This means there may be a chance you won’t be required to pay them off at all. This situation is common when your home has lost value and is no longer worth enough to secure the remaining mortgages.
If you are required to pay them off, the mortgages then become part of your Ch 13 repayment plan. If any remaining money is owed on the mortgages after the repayment period ends, it is then discharged and the liens are permanently removed from your property.
Making Payments During Ch 13 Bankruptcy
Chapter 13 bankruptcy will stop the foreclosure on your home, but only if you continue to make payments as promised. Continuing to make the monthly payments when in Ch 13 is critical if you wish to keep your home in your possession.
If you stay current on your mortgage payments, and make up the money that is owed through your Chapter 13 plan, the lender cannot foreclose on your home and it will remain in your possession.
If your home is in danger of being foreclosed on you should talk to a Los Angeles Bankruptcy lawyer as soon as possible. To learn which chapter of bankruptcy will keep you in your home the longest, or allow you to keep you house, please contact Ure Law Firm today, (800) 250-5175.