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Chapter 13 Bankruptcy Can Help Stop Foreclosure

June 5th, 2013 at 10:17 am

The FDIC provides some troubling statistics about foreclosures. One out of every 200 homes will be foreclosed upon. Every three months, 250,000 homeowners enter foreclosure. One child in every classroom in America is at risk of losing his/her home because their parents are unable to pay their mortgage.

chapter 13 bankruptcy        Kerry may 15There are ways, however, to avoid foreclosure and work towards saving your home, even for a homeowner who has fallen so far behind that the mortgage lender has scheduled an auction. Filing for Chapter 13 bankruptcy will stop that foreclosure sale. When you file for bankruptcy, there is an automatic stay put into place that prohibits most creditors from continuing collection activities. This stay includes foreclosure sales.

Chapter 13 also allows you to cure the mortgage default and catch up with your loan. Many times, when a homeowner gets behind on their mortgage payments, the lender either won’t do a loan modification with the homeowner, or offers a repayment plan that is too high for the homeowner to keep up with, resulting in the foreclosure sale.

A Chapter 13 bankruptcy allows you to repay your debts over a three to five year period. For example, let’s look at a homeowner who is paying $1500 per month for their mortgage and they owe an arrearage of $15,000. Chapter 13 will spread that $15,000 over sixty months (five years) at $250 per month, meaning the homeowner will now be sending the mortgage company $1750 per month ($1500 for current mortgage, $250 for arrearage). If the court approves that payment plan, the mortgage company has to accept it. They cannot decline and foreclose.

If you are facing foreclosure, contact a knowledgeable Texas bankruptcy attorney to help save your family’s home. Email us today in San Antonio for a consultation. We can answer any questions you may have about how a Chapter 13 bankruptcy can help save your home from foreclosure.

 

Image courtesy of photostock/Freedigitalphotos

 

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