Bankruptcy can help if you face foreclosure. Foreclosure may be delayed for a few months by filing a bankruptcy application for Chapter 7. If you want to save your home, the answer may be to solve the bankruptcy problem in Chapter 13.
Many people want to stay at home and do their best to stay at home indefinitely. If this tells you and you’re back on your mortgage payments, and you can’t catch up until foreclosure, the only way to keep your home is by filing a bankruptcy petition in Chapter 13.
When you file a Bankruptcy request in Chapter 13 or Chapter 7, the court will automatically issue an order (called a repair order) containing something beautifully known as an automatic stay.
If your lender has forfeited your home and filed for Bankruptcy, sales will generally be postponed for three to four months until the Bankruptcy is due. However, the lender may request permission from the bankruptcy court to proceed with the sale by applying for self-resident status. If you succeed, you won’t get the full three or four months.
Chapter 13 Bankruptcy allows you to repay arrears (unpaid delay payments) for the duration of the Chapter 13 repayment schedule, usually five years. However, in addition to paying arrears, you will need sufficient income to meet your current mortgage payment. If you make all the required payments before the end of the payment schedule, avoid forfeiture, and keep your home.
Failure to comply with Chapter 13 may also help you eliminate your second or third mortgage payments. You may no longer have the security to cover future mortgages if your first mortgage is guaranteed to your home’s full value (this can be done if the house value has decreased). This allows the Tribunal to remove and classify the second and third mortgages as unsecured, which is the last priority after the failure of Chapter 13 and is often not repayable. This approach is used less frequently, as home equity increases.
Not exempt from the capital. The big recession hit hard, and a bankrupt applicant had a lot of domestic value. It was very unusual. Home values have continued to rise ever since. The applicant must now carefully examine whether it can fully protect the applicant. If the exemption is insufficient to maintain a house, the taxpayer will also pay the non-exempt property’s value within the payment schedule.
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