Your home is probably your most important asset. When you fall into debt, creditors can apply pressure by putting a lien on your home. There’s also the chance that you fall behind on mortgage payments and the bank is threatening foreclosure. At this point, you have a couple of options available to you that will save your home and stop foreclosure.
If you’re concerned about losing your home to mounting debt, a bankruptcy attorney can help. At the Law Office of Eric Kornblum, we have successfully helped hundreds of Massachusetts residents manage their debts, stop foreclosure, and save their homes. Call us today.
Understanding How Foreclosure Works
When a homeowner falls behind in their mortgage, the bank that lent them the money for the house can initiate a foreclosure. Generally speaking, the bank initiates foreclosure after the homeowner has missed three to four payments. There are a number of options at your disposal if you’re facing foreclosure. One of those options is bankruptcy.
Typically, those facing foreclosure use bankruptcy as a last resort when all other options have been exhausted. Bankruptcy will give you an automatic stay. In other words, it will stop the bank from foreclosing on your home, at least for the time being. What happens afterward will determine what happens to your home.
Delaying Foreclosure With Bankruptcy
As soon as you file for bankruptcy all creditor actions against you are paused. They cannot complete the foreclosure. They cannot put liens on your property. They cannot even contact you concerning outstanding debt.
If you file for Chapter 7, the bank can counter with a motion to lift the automatic stay. Essentially, they file a motion with the court asking permission to complete the foreclosure and sell the house. Even still, this buys you some time.
Reorganizing Your Debt With Chapter 13 Bankruptcy
For those who do not want to simply delay the foreclosure, but find a way to keep their home, there is another option: Chapter 13 bankruptcy. Chapter 7 cannot discharge home equity loans, but Chapter 13 reorganizes your debt into manageable payments.
In essence, Chapter 13 allows you to pay off any debt that is in arrears. In other words, the debt that you are delinquent on, you can reorganize and pay off based on a court-approved payment plan. Typically, this debt is paid off over the course of five years. If, however, you fall behind in these payments, the bankruptcy will be nullified and you once again face foreclosure.
In order for this to work, you will not only need enough money to pay your monthly mortgage, but you will also need enough money to make payments on your delinquent debts. The upside is, you get to stay in your house while you’re making those payments.
How to Stop Foreclosure With Chapter 13 Bankruptcy
When you file for Chapter 13 bankruptcy, you and your lawyer sit down, take a look at all of your debts and then submit a repayment plan to the court based on your current income. This will include any debt that you want to see discharged by the bankruptcy. You don’t have to list every debt that you have, but creditors who are not listed in a Chapter 13 bankruptcy can still come after your for their money.
In addition, both the court and your creditors must sign off on the repayment plan. This means submitting a plan that pays these debts as much as possible while simultaneously leaving you enough money to pay your bills, mortgage, car payments, and whatever else.
Contact a Bankruptcy Attorney Today
A bankruptcy attorney may be able to help you stop foreclosure and come up with a repayment plan that lets you keep your home. Contact the Law Office of Eric Kornblum and we will help you save your home from foreclosure.