Chapter 13 Bankruptcy Can Stop Foreclosure

If you have gotten behind on your mortgage payments you may have already received a foreclosure notice, but you don’t know what you should do.  You have options and filing for Chapter 13 bankruptcy is one possibility you have to stop foreclosure, but only a bankruptcy attorney can determine if you are qualified.  

Although it takes some time for a lender to repossess or put your home up for auction, you should act quickly. If you have reviewed your options such as loan modification or short sale and found these options are not feasible, bankruptcy may be the next logical step.

Indebted individuals often chose Chapter 13 bankruptcy which is a structured debt reduction plan that requires you to make regular payments to your creditors under a plan drafted by your bankruptcy lawyer. To be eligible for this filing you must have a regular source of income and be able to make regular payments out of your disposable income in a timely fashion.

Once your bankruptcy attorney has decided this is the route you should take they will file for an automatic stay. An automatic stay tells your creditors to stop collection activities and stop a foreclosure sale or repossession barring you are not too far along in the foreclosure process. If you received a foreclosure notice, and waited too long to file for bankruptcy, the automatic stay can be denied.

If you acted in promptly, under Chapter 13 you must be able to make your current monthly mortgage payments along with making payments on the arrearage, the late unpaid balances. Generally, this debt protection plan will give you up to five years to satisfy your creditors. If you have made all or your payments on time your foreclosure can be stopped.

It should be noted that under Chapter 13, unlike other plans, your debts cannot be dismissed.