An
experienced foreclosure attorney can help you pursue numerous options to try to
stop a foreclosure action against your property, including loan modification,
mediation, short sale, deed in lieu of foreclosure, among others. Many
homeowners come into our office wondering: is filing for Chapter 13 bankruptcy
a way to halt a foreclosure?
While you
cannot prevent foreclosure by discharging your mortgage loan, Chapter 13
bankruptcy is a useful tool to delay foreclosure and help you regain control of
your financial situation so that you may become current on your mortgage
payments and retain ownership of your home. The following are some ways in
which Chapter 13
bankruptcy1 may help you if you are facing foreclosure.
Stopping
the sale of your home
As soon as
you file for bankruptcy, an automatic stay2 goes into effect that immediately halts all collection efforts and
legal actions against you by financial lenders. This includes mortgage lenders
and, therefore, an impending foreclosure sale will not be allowed to proceed
without special permission from the bankruptcy court. This automatic stay will
remain in effect as long as you abide by your Chapter 13 repayment plan, which
often lasts up to five years and can provide plenty of time to become current
on your mortgage and ultimately prevent foreclosure.
Helping you
catch up on payments
Having to
continually pay your monthly mortgage while facing significant arrears can be
overwhelming and often seems impossible. Fortunately, Chapter 13 lets you
reorganize your existing debt payments at the time of your filing, including
any mortgage arrears. You will make one monthly payment to a bankruptcy
trustee,3 which will be
allocated to your mortgage lender and other creditors. This does not mean you
are in the clear, however, as you will still have to stay current on your
monthly mortgage during your repayment plan. If you again become delinquent or
default on your mortgage, your lender may obtain permission from the court to
lift the automatic stay and allow a sale to take place.
While
Chapter 13 is by no means a quick fix for everyone to avoid foreclosure, it has
helped many homeowners catch up on payments to avoid losing their homes in
foreclosure. However, Chapter 13 generally works better if you have a small to
moderate amount of mortgage arrears and if you file for bankruptcy relatively
early in the foreclosure process. If you have several years of high mortgage
arrears, mortgage modification is often a superior solution to filing for
Chapter 13. Modification can absorb a higher amount of arrears and help you
become current on your mortgage even if you have fallen far behind.
If you have
any questions regarding whether Chapter 13 or other foreclosure solutions may
be right for you, call a Long Island and New York foreclosure attorney at the Law Office of Ronald D. Weiss, P.C. at 631-296-0912 for assistance today.
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