Falling behind on mortgage payments and facing foreclosure is one of the most stressful events families in America face. The potential of losing your family home might be something you never imagined happening to you. Once you face foreclosure, is there anything you can do to stop it and get your finances back on track?
The “automatic stay” in bankruptcy
Filing a Chapter 13 bankruptcy will immediately invoke the “automatic stay” provision. This puts an immediate halt on all collection efforts, including those from mortgage lenders. Notably, this automatic stay will not permanently put a stop to the foreclosure process. However, it can provide you with some necessary breathing room to get your Chapter 13 repayment plan set up and approved by the court.
Developing your repayment plan
Unlike Chapter 7 bankruptcy, Chapter 13 is not a liquidation bankruptcy. Rather, through Chapter 13, individuals with a stable, regular income are able to develop a repayment plan to reorganize their debts to pay to creditors over a three-to-five-year period. You will still be responsible for keeping up with your regular mortgage payments, while catching up on past due payments through your repayment plan. Most importantly, you will be able to stay in your home while you make these payments.
What if the foreclosure process has already started?
In this case, keeping your home may be dependent on how far along the process is. Simply filing for bankruptcy can put a halt to the foreclosure process. However, if the foreclosure sale has already been completed prior to the filing, the house can still proceed to a foreclosure auction.
Ultimately, if you are behind on mortgage payments and face foreclosure, discussing your situation as soon as possible with a bankruptcy attorney will be helpful. They can advise on your eligibility for Chapter 13 bankruptcy and whether this is the right option for you and your family.
Gudeman & Associates has a proven track record of helping Michigan families to keep their homes and assets during times of financial crisis. With over 75 years of combined tax and bankruptcy experience, your financial future is safe in our hands. Our attorneys work hard to ensure your interests are well protected. Contact us today to schedule a free 30-minute consultation.