One major reason people file for a Chapter 13 Bankruptcy is to save their home from a foreclosure. When a person falls behind in their mortgage payments (or car note), eventually the bank sends a foreclosure notice to the home owner warning them that the foreclosure process will begin. Generally a lender or bank must give the homeowner 30 days notice before they sell the property (less time for a car).
Receiving a foreclosure notice that does not mean that the bank will immediately sell your house. However, it is extremely important that you review the notice carefully in order to find out how much time you have before your home is sold. A Chapter 13 Bankruptcy can protect your home from a foreclosure sale. But you MUST ACT before the house is sold.
Chapter 13 bankruptcy prohibits the lender from conducting the foreclosure sale. A powerful component of the Chapter 13 bankruptcy is the automatic stay. The automatic stay prohibits the mortgage lender and any other creditors, from continuing any collection actions without further court permission. It is very important to note that the Chapter 13 bankruptcy will save your house as long as it has not been already sold in a foreclosure sale. Once the sale takes place, it cannot be undone. This is why it is so important to review a foreclosure notice carefully and immediately contact a competent bankruptcy attorney to discuss how to save your home from a foreclosure sale. This problem will not go away by simply ignoring it. Open your mail so you’ll know if a notice has come! Time is important!
Once you file for bankruptcy, a payment plan based on your debt income will be prepared. In the chapter 13 plan you will cure the mortgage arrears and catch up on your payments. When the plan is complete you will be caught up and current on your mortgage (car will be paid off). A Chapter 13 repayment plan can last from three to five years and can provide you an affordable way to cure your default over a period of time. During the repayment period, you will make monthly payments to the trustee that will help cure the amounts owed to your mortgage lender (missed payments on your mortgage) while you continue to make your regular monthly mortgage payments. The plan payment will be made by payroll deduction , if you are employed. If you have a fixed income, you can send payment to the trustee yourself or have it withdrawn directly from you bank account. This process will give you time to pay back the missed payments and keep your house safe from foreclosure. Once you have completed the Chapter 13 repayment plan, you will start back making your regular mortgage payments to the mortgage lender.
If you would like to learn more about Bankruptcy contact my office at 662.338.4687.