In a Chapter 13 personal bankruptcy, you can either stop mortgage foreclosure or at least briefly prevent it. Chapter 13 works great when somebody has a sale date scheduled soon and wants to either buy themselves more time, stop the repossession or keep their house. In this article, you will discover some of the within tricks to banruptcy and home mortgage repossession.
There are 2 types of personal bankruptcy, a Chapter 13 and a Chapter 7. A Chapter 7 is a total debt liquidation and can release you from the majority of customer financial obligation. While a Chapter 13 insolvency, it is a personal bankruptcy court authorized payment plan where the debtor pays pays back a portion of their debts to a bankruptcy trustee for 5 years allowing the the trustee to pay the debtor’s lenders.
There are several aspects of a Chapter 13 bankruptcy that work to assist individuals facing mortgage foreclosure. The first element is really relevant to all bankruptcies. It is called the “automated.
By law, whenever anybody submits bankruptcy, no matter the kind of bankruptcy, there is an immediate “automated stay” (automated momentary stopping) of a lot of civil procedures against the person filing personal bankruptcy. What this indicates is that if someone is dealing with home loan repossession and the person submits insolvency, the mortgage lender has to immediately stop its’ foreclosure action till it gets consent for the personal bankruptcy court to continue.
In a Chapter 13, the bankruptcy court will not lift the “automatic stay” and give the home loan lender permission to proceed with a repossession up until the debtor (the person filing bankruptcy) fails to make his payments to the insolvency trustee. As long as the debtor pays the regular monthly payments to the trustee and pays his routine mortgage payments, the “automated stay” will stay in force and the home loan lender can not do anything.
The second aspect of a Chapter 13 that works in favor of people dealing with foreclosure is that it allows a debtor to pay home mortgage arrearage over time, normally 3 to 5 years. In many foreclosure cases, a person has not paid his regular monthly mortgage payment for several months and the home mortgage lender needs complete payment of the delinquent monthly payments (arrearage) in lump sum before the loan provider will consider stopping foreclosure. Most people can not pay the lump sum.
In a Chapter 13 personal bankruptcy, a debtor can pay the arrearage with time. He does not need to pay everything at one time. Spreading the lump sum in time suggests paying smaller month-to-month payments up until the overall arrearage is paid. A lender can challenge the total up to be paid each month to the arrearage, but once the personal bankruptcy court approves the payment plan, the creditor can refrain from doing anything except take the payments.
A third aspect of a Chapter 13 personal bankruptcy that helps individuals dealing with mortgage foreclosure is that unsecured lenders may be paid a portion or all of what is owed to them. What this is truly doing is reducing the quantity of financial obligation that a person has to pay back every month. By paying unsecured lenders less monthly, there is more cash available with which to pay a secured creditor such as a home mortgage lender. For that reason, it ought to be easier for a debtor to pay his regular monthly mortgage payment.
This is general info. If you require particular info or have any concerns of any nature whatsoever, talk with an attorney certified in your state.