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Mortgage Foreclosure & Chapter 13 Bankruptcy

If you’re worried that your home is going to be foreclosed on, you may not be alone! American homes have been foreclosed at an alarming rate during this decade of climbing interest rates, a cooling real estate market and a buyer’s market. It is not uncommon for a home to sit on the market for a long time, have its asking price decrease and potentially face foreclosure.

You may not be forced into mortgage foreclosure just yet if you talk with a bankruptcy attorney. Speaking with a sponsoring bankruptcy lawyer is a good way to rationally assess your current financial situation, determine if a Chapter 13 bankruptcy plan can help you avoid mortgage foreclosure, and get educated on your rights and options under bankruptcy.

When Does Mortgage Foreclosure Typically Begin?

A bank or mortgage company may foreclose, or take title to your real estate, when you fail to comply with the details in the mortgage agreement between the lender and yourself.

Once your mortgage payment is 16 days late, your lender will likely call to develop a repayment schedule and bring your payment up to date. Collection attempts will often begin in full force when your loan payment is 30 days late and your next month’s payment is suspect. Your mortgage company will likely bring your mortgage to an attorney once your payment falls 90 days behind. At this point, the attorney will start formal foreclosure proceedings.

Can Chapter 13 Bankruptcy Help Stop my Mortgage Foreclosure?

If you qualify and file for a Chapter 13 bankruptcy plan, an “automatic stay” will go into effect and stop your mortgage company from continuing foreclosure. While in Chapter 13 bankruptcy, you do not have to worry about the mortgage company calling about the late balances on your mortgage.

You may apply for Chapter 13 bankruptcy if you have a regular source of income and the ability to meet payments on both your mortgage and repayment plan. Chapter 13 bankruptcy plans are fixed to make sure you make all of your regular payments first and then use any extra money to pay creditors.

How Does the Chapter 13 Bankruptcy Filing Process Work?

After you prepare a realistic payment plan with your attorney, you will need to file a Chapter 13 bankruptcy petition prior to your home being sold. A bankruptcy trustee will then recommend confirmation of your Chapter 13 bankruptcy plan, which will have to be approved by the bankruptcy court.

Once your Chapter 13 bankruptcy petition is filed, you will need to stay current on all of your mortgage payments throughout your three to five year plan. If you fail to make any of these payments after filing, the mortgage company will likely ask the bankruptcy court to lift the automatic stay, and then proceed with foreclosure proceedings. With that said, you may eventually be able to refinance your mortgage after getting your payments on track during your Chapter 13 bankruptcy plan.

Speak with a Local Bankruptcy Lawyer to Learn More about Mortgage Foreclosure and Chapter 13 Bankruptcy

The bankruptcy attorneys who help sponsor Total Lawyers understand that mortgage foreclosure can be an intimidating possibility. That’s why they provide free, no obligation consultations to help you understand Chapter 13 bankruptcy law and see if and how it applies to your situation.

Simply fill out our free, online case evaluation form or call us toll-free at 877-421-3761, and we’ll help you schedule a free, no obligation consultation with a bankruptcy attorney who may help bring some clarity to your current situation.