The bills are mounting up and creditors are calling. You skip a mortgage payment to try and catch up. Before you know it, you have missed three mortgage payments and you receive a “Notice of Default” and your home may be entering the foreclosure process.
Both carry the ominous news that your lender has begun the foreclosure process. You may be in danger of losing your house. You wonder if filing for bankruptcy will be the answer.
Filing a bankruptcy petition will trigger an automatic stay of collection action. In order to proceed with the foreclosure during the bankruptcy, the lender will have to obtain an order from the bankruptcy court. Whether you can ultimately save your house depends on your financial circumstances and whether you file under Chapter 7 or Chapter 13.
Chapter 7 Bankruptcy and Foreclosure
Although filing under Chapter 7 will temporarily halt the foreclosure process, it will not prevent it from happening permanently. The debt is a secured debt and not discharged. When the discharge is complete, the lender can continue the foreclosure process.
Chapter 13 Bankruptcy and Foreclosure
Chapter 13 is a reorganization plan. It may be possible to include the amount in arrears to the amount of debt you hope to include in a plan to pay it back over the next three to five years. Qualifications exist, such as you must have a certain amount of income, but if the court approves your reorganization plan, and you comply with its terms, you will be able to save your home from foreclosure.
There are many possible variations to bankruptcy law and its application to the foreclosure process. Experienced bankruptcy lawyers can help you decide if any provision of bankruptcy law can help you. Give the Sader Law Firm a call to talk to a knowledgeable Kansas City bankruptcy lawyer.