For those who are behind on making their mortgage payments, and who have no solution in sight, do not despair. Filing a Chapter 13 bankruptcy case may be an effective, viable remedy for saving a home. Even if the foreclosure sale of a home is set for tomorrow, filing a Chapter 13 bankruptcy case today will stop a foreclosure sale from taking place. As long as a debtor is in bankruptcy and the automatic stay is in effect against the mortgage lender which holds a secured interest, any foreclosure sale will not occur in the near future as well.
Anyone who is behind on a mortgage may become current and makeup on any missed payments by filing a Chapter 13 bankruptcy case. Having a delinquent mortgage is one of the primary reasons many people file under this chapter of the Bankruptcy Code (Title 11). Unlike Chapter 7 bankruptcy cases, Chapter 13 cases allow debtors to catch up on missed mortgage payments and cure their mortgage arrearages through a Chapter 13 repayment plan.
At the very instant that anyone files a bankruptcy case under any chapter, whether 7, 11, or 13, an order or injunction known as the automatic stay goes into effect and prohibits any creditors, including a mortgage lender or servicer from engaging in any collection efforts for the mortgage debt, including the sale of the collateral (house).
The stay remains in effect while the Chapter 13 case is active. A Chapter 13 repayment plan must be confirmed or approved by the bankruptcy court. Also, a Chapter 13 debtor must make timely plan payments to the Chapter 13 trustee and resume paying his or her mortgage as such payments come due.
Although a mortgage lender or servicer may not foreclose during the pending bankruptcy case, any debtor who fails to stay current on the mortgage during the Chapter 13 case is subject to having the bankruptcy court lift the automatic stay, thus allowing the resumption of foreclosure proceedings.
In sum, if a home is in foreclosure when a Chapter 13, bankruptcy case is filed, the automatic stay will stop the foreclosure sale. If a debtor stays current on mortgage payments and repays the arrearages through a Chapter 13 plan, the lender may not foreclose, and the Chapter 13 debtor will be able to keep the home.
One of the Morrison Law Group’s qualified and knowledgeable bankruptcy attorneys may answer any questions about filing a Chapter 13 bankruptcy case. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.
