Are you facing a foreclosure proceeding? Do you know you have an option to file bankruptcy and save your home?
Here is some information for homeowners to delay or stop the foreclosure, repay the debt on their mortgages and, in certain cases, eliminate junior liens (i.e. lien stripping) from your real estate. Chapter 13 bankruptcy will allow homeowners to get current on their mortgage payments and save their home!
Chapter 13 bankruptcy can be an option if you are facing foreclosure after falling behind on your mortgage payments. It will allow you to pay off the amount owed through a repayment plan, usually within 3-5 years, depending on your income and other circumstances. However, if saving your home is the only goal, you certainly need to familiarize yourself with alternatives to Chapter 13 bankruptcy (e.g. loan modification).
A Chapter 13 bankruptcy may help you to eliminate junior liens on your property. If your first mortgage is secured by the entire value of your property, there may not be enough equity to secure the junior mortgages. In this case, the bankruptcy court will allow you to “strip off” the later mortgages and categorize them as unsecured debt, as long as they are completely unsecured. This is called lien-stripping.
A Chapter 13 bankruptcy will stop all the foreclosure activity, this procedure is called the “automatic stay”. Assuming your plan is confirmed and includes the provisions on repaying your mortgage arrearage, the lender will not continue with the foreclosure sale. On the other hand, if your plan does not include the payoff provisions, the lender may resume the foreclosure activity on your account even after the court’s approval of the plan, with relief from stay proceedings. However, the automatic stay is limited if there has been two or more previous cases dismissed within the past year. This exception does not apply if it has been more than a year since any prior bankruptcy proceedings were dismissed, closed or counsel motions to continue the stay.
For more information or help on how to stop the foreclosure and save your home, please contact us at 206-838-8118.