Chapter 7 bankruptcy is a liquidation bankruptcy. A Chapter 7 will typically eliminate:
In most cases consumers will keep all of their property. If you are facing foreclosure on your home, the automatic stay created by your Chapter 7 filing serves as a temporary defense against foreclosure. As opposed to Chapter 13 bankruptcy, Chapter 7 will give you a fresh start, but will not provide you with the opportunity to catch up with your mortgage payments.
However, Chapter 7 bankruptcy 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.
The biggest difference is that a Chapter 7 bankruptcy does not provide for the repayment of any debt. Chapter 7 cannot stop a mortgage company from foreclosing on property. Chapter 7 will temporarily delay the foreclosure proceeding, but it cannot provide the long-term protection of Chapter 13 because no plan to repay the mortgage delinquency is proposed.
Mortgage companies continue to foreclose on American homes at an alarming rate. The real estate market boomed in the late 1990’s and early 2000’s. Property values soared and homeowners cashed in on their new found home equity. However, interest rates have climbed, the real estate market has cooled and homeowners realize it’s a buyer’s market. Some homes will sit on the market for six, nine or twelve months. The asking price goes down and homeowners inch closer to the edge of foreclosure.
Many consumers do not understand that the bankruptcy code can help them save their homes from mortgage foreclosure. Chapter 13 bankruptcy is a very powerful tool that can save your home if you have fallen behind on your mortgage payments and you want to rescue your home from mortgage foreclosure.
What is a Mortgage Foreclosure:
Foreclosure 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.
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 the Chapter 13 bankruptcy.
Once you prepare a Chapter 13 plan with your attorney, you will file a Chapter 13 petition for relief and the foreclosure proceeding will stop. The bankruptcy trustee will then recommend your Chapter 13 plan for confirmation and the bankruptcy court will approve a repayment plan that allows you to get current on your mortgage over a three to five year period. You must make all current mortgage payments that come due after the Chapter 13 bankruptcy petition is filed.
Homeowners must make all mortgage payments that come due during the Chapter 13 plan. If you fail to make your post-filing mortgage payments the mortgage company can ask the bankruptcy court to lift the protection of the automatic stay and the mortgage company can resume the foreclosure proceeding if the judge agrees with the mortgage company. The possibility of refinancing your mortgage after you have gotten back on track with your Chapter 13 plan is a real possibility for many consumers
Generally, the Chapter 13 bankruptcy must be filed before the mortgage company sells your home. However, if you find yourself behind on your mortgage payments you ought to call an experienced attorney to explore all of your options before the situation spins out of control. The Chapter 13 bankruptcy filing gives homeowners the time they need to catch up on their mortgage payments.
You can file a chapter 13 bankruptcy to stop a mortgage foreclosure, provided you:
Chapter 13 plan payments are fixed so that you can meet all your living expenses first and then pay any surplus income to creditors. Mike and Chad can help you structure a repayment plan that works for you and your creditors.
A provision that allows the lender to call the entire balance of the mortgage loan when the borrower fails to make some installment payments.
A written statement usually given while under oath or in the presence of a notary.
The process by which a licensed person gives an estimate of property value.
The annual interest rate covering the interest and other costs. The Truth in Lending Act requires lenders to announce the APR.
The transfer of property to be held in trust or to be used for the benefit of the creditors (lenders).
Large installment payment required at the end of the term of the mortgage note to pay off the entire mortgage balance.
The amount for a foreclosed property for sale at auction.
A title that is not burdened with encumbrances or defects.
A signed document that shows ownership in property and allows the transfer ownership of property from one party to another.
A transfer of title by the borrower to the mortgage company upon foreclosure.
An instrument signed by a borrower, lender and trustee that conveys the legal title to real property as security for the repayment of a loan. The written instrument in place of mortgage in some states.
A mortgage is in default when the borrower fails to make the payments as agreed to in the original promissory note.
A judgment against the borrower for the balance remaining after the property is sold at auction or foreclosure sale.
Mortgage, lien, tax, or any restriction on the use of land.
The value of real estate less the outstanding mortgages and debts pledged against the property.
The price that property would sell for on the market.
Common term used to indicate complete legal ownership of a property.
Federal Housing Administration under U.S. Department of Housing and Urban Development (HUD).
Legal action taken by the lender when the borrower fails to pay monthly installments.
Period between the due and the overdue date during which no late payment penalty applies to the mortgage payment.
Insurance against the destruction of the property.
A foreclosure that is processed by a court action.
A formal description of real property so that one can locate it by reference to government surveys or approved recorded maps.
A claim, or mortgage, on real estate for payment of debt.
A written pledge that uses real estate to secure repayment of a loan.
A notice giving specific information about the loan in default and the proceedings about to take place. This notice must be recorded with the county where property is located and advertised as stated in the security document or as dictated by state law.
An order signed by the judge confirming the sale of foreclosed property.
To publish, announce or advertise by physically attaching a notice to an object.
Paying off one mortgage loan by obtaining a new mortgage loan.
A borrower’s right to reacquire property lost due to a foreclosure. This right allows the owner to recover property lost to a foreclosure judgment, or sold after a foreclosure sale, within a certain period of time. The redemption period varies among the states.
A recorded document requiring a trustee to send a copy of a Notice of Default or Notice of Sale concerning a specific deed of trust in foreclosure to the person who filed the document.
A deed showing ownership to real estate.
An auction of real property conducted by a trustee. Also referred to as a Sheriff’s Sale.
Call our offices at 1-888-222-5615 for immediate assistance or email.
Let’s have a brief no pressure call to see if our free consultation is right for you. Fill out the form below and we’ll get in touch with you right away
We offer our clients the convenience to meet and communicate with us via telephone, video conferencing, mail or email. Please contact our office for more details.
We take your privacy very seriously. We’ll never share your information with anyone.
I had nothing but an amazing experience. Very professional, intelligent, hard working, and caring. Attorney Michael S. Georg was nothing short of amazing! He made the process painless and easy. From the first meeting to the last he was nothing but professional and showed that he cared! His staff was excellent and is very helpful!
From the second I walked in and talked to the lawyer I felt a sense of relief and a huge weight off my shoulders. Debt Advisors was efficient, timely, and professional. They helped my husband and I to get a fresh start financially.We’re so happy we chose Debt Advisors!!
Not a good year, 2016. Chad L. Schomburg at Debt Advisors Law Office made it easier. Very professional and with the knowledge to answer all my questions. Extremely happy with the results and I highly recommend this Law Office.
Mike Georg was extremely helpful during the entirety of my process. He made sure I understood exactly what was going to happen and he was always there to answer any questions I may have had. I really like the fact that I didn’t have to pay all out of pocket at once. Their payment plan made it easy for me to pay what I had to without breaking the bank. I’m completely satisfied with the level of professionalism that everyone in the office has. Even to this day I’m able to get in touch with them which I’m really grateful for. I’d definitely recommend them to my family and friends. If your someone who’s looking to get out of debt but are skeptical, you’ll have no worries here with Debt Advisors. The process is quick and easy.
I still remember the day when I started my bankruptcy back in 2016. I selected Debt Advisors because a good friend of mine had recommended Atty Mike Georg to me. After we met I was glad that I did select Debt Advisors for many reasons. Mainly, it was the professionalism and care that Mike and his staff showed me throughout the entire process. It felt good knowing that my situation would be taken care of efficiently and in a timely manner. Even after my bankruptcy was discharged Attorney Mike Georg and Debt Advisors have been there for me in 2018 and this 2020. Both times I've needed professional help with things like providing me with documents and forms that I've needed from my case. I strongly encourage anyone looking for debt consultation to visit Debt Advisors for help. They're great at what they do!
Bankruptcy is never fun, but this Law Office made it so much easier. If I ever had any questions at all they were answered timely. They even helped me through a rough time when I ended up having to pay taxes and had a big medical exspense too! They were always kind and never made me feel bad for having to do the bankruptcy. They were sympathetic to why and just helped me through it! I recommend them to anyone I know going through this or having to start this process. I know of two of the people I referred who used htem and loved them too! Thank you Debt Advisors Law Offices! Jeremy and Angel thank you personally!
I can confidently say that Debt Advisors is NOT in the business of taking advantage of you in your current situation. Debt Advisors is in the business of helping you get in a better place than you are now. I was there, constantly worrying about this large amount of debt that I owed. Feeling sick to my stomach and unable to sleep at night. Then I talked to Mike. He is genuine and honest. Having him in my corner took this huge weight off my chest. If you are in this place, I highly recommend giving Debt Advisors a call, it is the first step in the right direction.
I had nothing but and amazing experience with Debt Adviosrs. They made this process for me easy and painless. Still today they are open and willing to help me. These are really great people, and they really care. Thank you Geroge and the rest of your team.
They took the worries out of a very scary life experience. Explained everything step by step. Nice to be reassured that there is a light at the end of the tunnel and that everything will be okay! Because of their help life did go on! Thank you all!
Had a great experience with Debt Advisors! They never made me feel judged and made sure everything was handled in an efficient manner. Years later they are still extremely helpful when an issue comes up. They are on top of everything. Highly recommended!