How Chapter 13 Can Save Your Home from Mortgage Foreclosure

Foreclosure of your family home can be devastating. If you’re struggling to keep up with mortgage payments or the lender sent you a foreclosure notice, you may be able to save your home by filing a petition for Chapter 13 bankruptcy.

Critically, once a Chapter 13 petition has been filed, an automatic stay goes into effect, providing a crucial safeguard for the debtor. Not only does it prevent creditors — including mortgage holders — from attempting to collect any debts from you, but it also halts any foreclosure proceedings initiated by a mortgage lender. As long as your house hasn’t already been sold at a foreclosure sale, Chapter 13 can provide you with the opportunity to cure the default on your mortgage.

While a Chapter 7 bankruptcy can provide temporary relief from foreclosure by allowing you to remain in the home throughout the duration of the bankruptcy case, this remedy may not be your best option. The only way you’ll be able to keep the property indefinitely is to become current on all mortgage payments. In most cases, this is not feasible, unless you are approved for a loan modification.

A Chapter 13 bankruptcy, on the other hand, offers a long-term solution by allowing you to enter into a repayment plan to satisfy your mortgage arrears. Chapter 13 bankruptcy can be beneficial for those who earn a steady income but are overwhelmed with burdensome debt. Unlike Chapter 7 — which discharges many types of debt entirely — Chapter 13 allows debtors to restructure their debt by entering into a repayment plan that lasts three to five years.

In the Chapter 13 repayment plan, the debtor must outline how they will make payment for the mortgage arrears. However, it’s important to understand that during the time you’re repaying the past due mortgage amounts, you will also need to make current payments to be able to remain in the home after your bankruptcy case has concluded. Failure to keep up with your mortgage schedule could result in foreclosure — even if you’re repaying the past-due mortgage amounts under the repayment plan.

With offices conveniently located in Athens, Douglasville, Gainesville, Lawrenceville, Marietta, and Scottdale, Jeff Field & Associates represents debtors in Chapter 13 bankruptcy proceedings throughout Atlanta and the surrounding area. To schedule a consultation, call 404-381-1278 or contact us online.

More on this topic:

How Chapter 13 Can Save Your Home from Mortgage Foreclosure

Using Chapter 13 Bankruptcy as a Remedy for Mortgage Foreclosure

I Just Went Through a Foreclosure! Do I Still Owe the Mortgage Company and Property Taxes?

Using Chapter 13 Lien Stripping to Reduce Secured Debt