When your debts are out of control, filing for bankruptcy may be the best option. If you file for bankruptcy, it can help you get a fresh start. This could be the move you need to make if you are behind on mortgage payments.
You must be prepared that you may not be able to work out a repayment plan with your lenders. This would mean that you may risk going into foreclosure proceedings on your home.
If you’re at risk for the foreclosure process, then filing for Chapter 13 bankruptcy may be an ideal solution. Filing for Chapter 13 bankruptcy can stop foreclosure because it grants you an automatic stay. You may be wondering how long Chapter 13 will help you avoid foreclosure on your home to prepare yourself. Working with an experienced foreclosure attorney will give you the legal guidance you need to make the best decision in your situation.
What Does It Mean to Be Facing Foreclosure?
Foreclosure is the legal process where your mortgage lender is authorized to reclaim your home and have a foreclosure sale. This happens when you have missed a certain amount of mortgage payments. While it is not likely to happen after one missed mortgage payment, the best way to stop foreclosure is to make sure you make your payments on time.
However, life happens, and you may be unable to make those mortgage payments. In this case, it could benefit you to reach out to your lender to delay foreclosure by making smaller mortgage payments or deferred payment plans instead of monthly mortgage payments. Most lenders and creditors will be willing to work with you if you are able to find some way to pay. A foreclosure lawyer can help you work through this situation and understand your legal rights.
What Does It Mean to File for Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is among the most common types of bankruptcy available. When you file for Chapter 13 bankruptcy, it is different from Chapter 7, which liquidates assets to discharge unsecured debts. These could be things like the medical bills that may have put you into debt or your credit card debt.
With Chapter 7, most people do not lose any assets, and it may be the best course of action if you only have unsecured debt. However, Chapter 13 will restructure your different forms of debt into one repayment plan. With Chapter 13 bankruptcy, the bankruptcy court assigns a bankruptcy trustee that observes your progress. It combines your unsecured and secured debt items like your mortgage payments into one plan.
Borrowers have collateral on secured debts, and if you miss mortgage payments, they can recover that collateral. This is why Chapter 13 bankruptcy may be your best choice when you are behind on your mortgage, especially if you have second and third mortgages on your home.
Can Chapter 13 Bankruptcy Stop Foreclosure on a Home?
If you can’t make your current mortgage payments, you may be wondering if Chapter 13 bankruptcy can stop the foreclosure on your home. Once you have a repayment plan, then you can prevent the foreclosure of your property if you keep making those payments. When you file for Chapter 13 bankruptcy, it creates an automatic stay on your house. This means lenders need to wait until the bankruptcy courts remove this automatic stay or they dismiss your case.
However, you should know that your lender can foreclose on your home even after you finish the bankruptcy process. Repayment plans should include the payments for your mortgage, though completing this plan doesn’t mean you have paid all that you owe on your home.
Under this type of bankruptcy, you can pursue foreclosure deferment, but it does require working out this payment plan with your lender. Discussing your situation with a bankruptcy attorney may be beneficial in these circumstances.
Understanding What Happens When You Default on Your Chapter 13 Payments
If your financial situation is floundering and you continue to have missed mortgage payments, you will run the risk of losing your home. Chapter 13 bankruptcy does not discharge mortgage payments from an individual’s debts. Anything that you do not pay back on your repayment plan will still be owed.
Failing to continue paying your repayment plan will most likely result in foreclosure. Your lender will have the courts declare a default judgment that makes this possible. In the event that you are struggling to repay, you must communicate this with your bankruptcy trustee from the courts. There are options you can pursue, though you may find things go more smoothly with the help of a bankruptcy attorney.
How to Protect Your Home When Filing for Chapter 13 Bankruptcy
To file bankruptcy is a complex process that starts with a bankruptcy petition. With a Long Island Chapter 13 bankruptcy attorney, you will have someone who can help you navigate the legal path to obtaining an automatic stay and keeping your home.
Once you start your bankruptcy case, the debt collectors will stop hounding you. However, with Chapter 13 bankruptcy, you will need to keep your loan current and avoid missed payments. Macco & Corey P.C. can help you with filing Chapter 13 and work to help you keep your home. Reach out today for a free consultation to discuss how to avoid foreclosure, stop collection efforts, and get back on track with your financial situation.