Are you struggling to make your mortgage payments? You may be facing Debt – Foreclosure if you have missed many payments, but you may be able to keep your home if you file for bankruptcy.
Debt – Foreclosure Basics
After a homeowner misses three or four mortgage payments, the Debt – Foreclosure procedure generally begins. In the event of a Debt – Foreclosure, the lender may begin the process of auctioning off the home to pay off the balance of the debt. There are various steps in the foreclosure process, and the homeowner must be told that the process is ongoing.
If you find yourself in this scenario, filing for bankruptcy may be able to help you stop or avoid foreclosure.
The Automatic Stay
An automatic stay is imposed upon filing for Chapter 7 or Chapter 13 bankruptcy, requiring creditors to cease all collection attempts immediately. If a lender has scheduled debt – Foreclosure sale for your house, the automatic stay will legally halt the sale while your bankruptcy is being processed.
In Chapter 7 bankruptcy, however, there is an exception:
Motion For Relief From Stay
In Chapter 7 bankruptcy, the lender may file a motion to lift the automatic stay after you file for bankruptcy and the automatic stay is imposed. If this motion is approved, you won’t have to wait for the usual three to four months for the creditor to sell your home. However, even if you file for bankruptcy, you should have at least two months before your home is sold.
Thus, if your home is under foreclosure or you are behind on your mortgage payment and you want to maintain your home or any other real estate you own, you should file Chapter 13 bankruptcy rather than Chapter 7.
Keep Your Home With Chapter 13 Bankruptcy
If you have fallen behind on your mortgage payments and have exhausted all other alternatives for repaying what you owe, or if your house or property is already in foreclosure, Chapter 13 bankruptcy may be the best option for you to keep your home.
You pay back what you owe through a repayment plan in Chapter 13 bankruptcy. This plan allows you to pay off your obligations over a certain length of time, usually three to five years. You will be able to maintain your home while making payments on your arrears (and eventually paying them off). Keep in mind that you’ll need enough money to repay both your arrears and your current monthly mortgage payments throughout this time.
If the fair market value of your home or property is less than the principal sum due on your first mortgage, filing for Chapter 13 bankruptcy might convert your second and third mortgages into unsecured debt. If this is the case, second and third mortgages can be stripped, converting them to unsecured debts, the lowest-priority obligation that typically does not even require repayment in Chapter 13 bankruptcy.
Dealing with a potential Debt – Foreclosure can be extremely stressful. The experienced Oklahoma bankruptcy attorneys here at Hilbern Law are here to help you keep your home. Give us a call at (405) 213-1919 to schedule your free consultation today.