Many consumers do not understand that the bankruptcy code can help them save their homes from mortgage foreclosure. This page will explain the difference between Chapter 13 and Chapter 7 bankruptcy and how the appropriate legal action can rescue your home.
Bankruptcy is the legal proceeding in which a bank or mortgage company takes title to real estate due to the homeowner’s failure to make the agreed mortgage payments. The downward spiral into foreclosure begins when your loan payment becomes 16 days overdue. At that point, your mortgage lender may try to contact you to work out a repayment schedule to bring your loan current. If your payments fall 90 days behind, the mortgage company will likely refer your mortgage to an attorney that will start formal foreclosure proceedings. At Debt Advisors, we will review your situation and help you arrive at decisions that are best for your circumstances. Below are the two most used bankruptcy options for stopping a foreclosure:
1. Chapter 13 bankruptcy is designed to stop foreclosure. In fact, stopping mortgage foreclosures is the driving force behind many Chapter 13 bankruptcies. As soon as you file Chapter 13 bankruptcy an “automatic stay” goes into effect. This “stay” stops your mortgage company from continuing to foreclose on your home. Your mortgage company cannot contact you in regard to your pre-filing mortgage arrears (the amount you are behind on the mortgage) while you are in Chapter 13 bankruptcy. Filing this type of bankruptcy is typically the best option to save your home and become current with your mortgage payments.
2. If you are facing foreclosure on your home, the automatic stay created by a Chapter 7 filing serves as a temporary defense against foreclosure. It will allow you to discharge, or eliminate, any deficiency balance owed to your mortgage company if your home is sold for less than the outstanding balance owed to the mortgage company. Although Chapter 7 can temporarily delay the foreclosure proceeding, it cannot provide the long-term protection of Chapter 13 because no plan to repay the mortgage delinquency is proposed.
At Debt Advisors, we have helped thousands of clients find relief from mortgage debt and other types of debt. If you have missed house payments on a first or second mortgage, it is important to speak with an attorney as soon as possible to learn what you can do about avoiding foreclosure. Our Madison, WI office is well-equipped to provide you with the guidance and support you need in these challenging times. If your home is already in foreclosure proceedings, time is of the essence. Allow us to stop foreclosure on your property. While saving your home, we can work to discharge your remaining debts and create a fresh start for your financial future. We advise clients on their options and act in a timely manner to save our clients as much time, expense, and stress as possible.
To stop foreclosure, we invite you to speak with a mortgage lawyer at Debt Advisors. All you have to do is contact us for your free initial debt evaluation.
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