Receiving a notice of foreclosure is an alarming experience, but you should know that you do not necessarily have to lose your home. If it isn’t possible to resolve your past-due mortgage payments, consider talking to a bankruptcy lawyer about your options. Many homeowners may benefit from filing for Chapter 13 bankruptcy, which will temporarily halt foreclosure proceedings and may resolve the situation entirely.
As soon as a bankruptcy attorney files your petition, an automatic stay goes into effect. The automatic stay prohibits any creditors from taking any actions against you. This halts the foreclosure process. In other words, even if your house was scheduled to be sold at auction the next day, filing a bankruptcy petition halts the sale. The automatic stay also prohibits any creditors or collections agencies from contacting you about your debts or attempting any other collections proceedings. The automatic stay remains in effect for as long as you meet the terms of your Chapter 13 repayment plan. However, it is possible for a creditor to petition the court to lift the stay. This may occur if you fall behind on your payments again.
If your Chapter 13 repayment plan is approved by the court, you’ll make predetermined payments for a three-to five-year period. These payments resolve some of your debts, including the past-due balance on your mortgage. This gives homeowners a way to catch up on their payments and save their homes. Bear in mind that you must also make all current mortgage payments.
At the end of the repayment period, your remaining unsecured debt can be discharged – except for certain types of debt such as student loans. Although you must continue to make on-time payments to your mortgage lender to maintain ownership of your home, eliminating other debts can help you stay on top of those payments.
If you’ve received a notice of foreclosure, call Cutler & Associates, Ltd.