Bankruptcy Chapter 13

Your Guide to Stopping Foreclosure with Chapter 13

1 out of every 200 homeowners finds themselves facing foreclosure.

Every 3 months, 250,000 families begin the process of foreclosure due to financial hardship or the inability to pay their mortgage.

But, did you know that there is a way to stop foreclosure?

Chapter 13 bankruptcy is one way to stop your home from going into foreclosure. To be eligible for Chapter 13, an individual must owe unsecured debts for less than $394,725 and secured debts for less than $1,184,200.

Filing Chapter 13 bankruptcy is similar to consolidating your debt. The court will decide on the required payment amount and schedule. Those payments will be made directly to a chapter 13 trustee or your lender. The agreed upon bankruptcy plan will be in effect for 3 to 5 years.

Our homes are more than just houses we purchase or the payments we make. Our homes represent safety, togetherness, and peace of mind. When we purchase a home, unforeseen financial circumstances are not on our minds.

We are filled with hope and possibility for the future. We intend on building our lives within those four walls. We don’t imagine that foreclosure may happen to us, but if it does, then Chapter 13 could be a way to keep your precious investment.

If you’re facing foreclosure or want to be prepared for an unforeseen financial hardship, then read on to learn how stopping foreclosure with Chapter 13 can help to keep your house a home.

How Stopping Foreclosure with Chapter 13 Can Work for You

Chapter 13 is one option for stopping foreclosure. Get prepared for Chapter 13 filing by reading this guide.

1. Gather Documentation

Prior to meeting with an attorney and filing Chapter 13, you must gather some necessary documentation.

Begin by ordering a copy of your credit report. Your credit report will have a list of your debts and credit score. You can order your credit report from AnnualCreditReport.com.

A free copy of this report is available to you once per year.

Next, collect all of your legal notices and bills. Your attorney will factor in your bills and legal notices to negotiate a proper repayment plan for bankruptcy.

2. Find Legal Aid

When facing a foreclosure, one of the first steps to take is to speak with an attorney. Attorneys who specialize in bankruptcy will be able to walk you through the process of filing Chapter 13 bankruptcy. Your attorney will file the paperwork for you, ensure that deadlines are met, and explain the legal process in detail so that you understand exactly what is expected of you under Chapter 13.

By filing this paperwork in line with the foreclosure proceedings timeline, you can stop the sale of your home and protect your assets from creditors.

It’s understandable that you may not be able to pay for an attorney at this time. Seek out free legal aid if possible. Find an attorney who is reputable, organized, and familiar with Chapter 13 bankruptcy.

A court also charges filing fees and other fees when seeking Chapter 13 bankruptcy. If the court agrees, you can pay these charges on an agreed upon repayment plan.

Once the Chapter 13 bankruptcy plan is settled, your foreclosure is stopped referred to as an “automatic stay.” An automatic stay forbids your lender from sending your debts to collections and attempting to collect repayment within the original mortgage terms. The automatic stay also prohibits your mortgage company from proceeding with foreclosure.

However, your debts must still be repaid based on the repayment plan in order to avoid foreclosure again.

A creditor is, however, granted certain rights to proceed with foreclosure by filing a “Morton of Relief from Stay.” The court must grant the creditor the permission to do this by law.

3. Credit Counseling

To be eligible for Chapter 13 bankruptcy, an individual must first attend a credit counseling class. The credit counseling class must be through an approved agency. Many of these approved agencies also offer classes in languages other than English and Spanish.

Approved agencies are selected by your state, but some programs are located outside of your state. Agencies located outside of your state may require that you attend the class online or by phone, not in person.

An individual filing for bankruptcy must pay for credit counseling, however, free and reduced rates are available to people who are unable to afford it. Ask your credit counseling agency about a fee waiver prior to beginning the credit counseling course. Agencies are also required to speak with you about repayment and reduced fees before counseling sessions begin.

Credit counseling can help you to avoid bankruptcy in the future and to better your credit score. While many circumstances are outside of your control, gaining knowledge about how bankruptcy will affect you and how to avoid it in the future could be beneficial.

4. Make Payments

Once Chapter 13 is filed and a repayment plan is settled, then you must make the payments required and on time. Missing a payment is not an option.

During Chapter 13 bankruptcy plan, overdue mortgage payments or “arrears” will be paid within 3 to 5 years. If you miss a payment, then this will grant your lender the right to once again foreclose on your home.

It is vital that you stay current on your mortgage payment and adhere to the guidelines outlined in the repayment plan. During this time, you will be paying your current mortgage and your overdue payments.

If you have a second or third mortgage or a home equity loan on your home, then courts may decide to eliminate these debts if they are no longer secured by your equity. These debts are then recategorized as unsecured debts to be paid off with your repayment plan.

Many people who are using Chapter 13, however, end up paying less than the amount they were initially required to pay based on original loan terms.

Stopping Foreclosure with Chapter 13

Stopping foreclosure with Chapter 13 is a viable option for remaining in possession of your home. Filing for Chapter 13 halts foreclosure and can help you get back on your feet within a set amount of time.

Another solution may be selling your home for cash. Check out our website to learn more about our services, selling your home, and preventing foreclosure. We are well-connected to banking institutions and will work on your behalf to bargain with your mortgage creditors.

We also offer legal consultation, relocation services, and credit counseling. Contact us at 1-866-350-6769 to speak with us today about selling your home and preventing foreclosure.

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