Does filing Chapter 13 save my property?
Filing bankruptcy under Chapter 13 of the Bankruptcy Code is a method to stop the foreclosure process. Is filing Chapter 13 the answer to my prayers and a way of getting out of foreclosure? The answer is…… it could be, under the right scenario.
First we need to understand how Chapter 13 works and then if it works in your situation. Anytime a person (or entity) files bankruptcy, an “automatic stay” goes into effect. For the purposes of a foreclosure, that means that all collection activity or legal process is stayed (stopped). It doesn’t mean the foreclosure is thrown out, but that the Court in the foreclosure proceeding is stopped from continuing any actions, including the sale of the property. The creditor (i.e. the bank) has the right to go to the bankruptcy court and get the stay removed, but that discussion is not for now.
Now that the foreclosure is put on hold, you (the debtor) are required to disclose you finances and tell the court how you are going to catch-up with your mortgage. That’s where the rubber hits the road! If you, the homeowner/debtor is not too far behind in the mortgage, and you can show that you can make payments going forward, you (your attorney) can FORCE the bank to take you repayment plan. There are many rules and criteria for a successful Chapter 13, but any consumer bankruptcy attorney can explain the details and advise you as to your specific situation. Feel free to contact us if you need help finding the right professional.