What are your Options When your Home is Facing Foreclosure?

With the tough economic times, many individuals find themselves falling behind on their mortgage payments and facing foreclosure.  Something that may come as a surprise to some individuals is that filing for bankruptcy can be an option to help save your home.

If you have fallen behind on your mortgage payments, Chapter 13 bankruptcy is an option you should consider to assist you in keeping your home.  In fact, one of the most common reasons a Chapter 13 bankruptcy is filed is to stop foreclosures and assist individuals with catching up on their mortgage payments.  Not only does filing a Chapter 13 bankruptcy assist with saving your home, it can also help reduce monthly mortgage payments.  Many times debtors feel that they cannot keep up with nearly any of their monthly bills, let alone their mortgage payments, and steep arrears and late fees.  By filing for Chapter 13 bankruptcy, however, debtors can find relief.

Chapter 13 bankruptcy is different from a Chapter 7 bankruptcy, in that it involves a repayment plan.  Based on various things like your income, what types of debt you have, and what types of property you have, a St. Louis Bankruptcy Attorney can assist with creating a repayment plan that will have to be approved by the court.  This plan will involve you paying the Trustee a set amount of money each month, over a period of three to five years.  With this monthly amount, the Trustee will then pay your creditors a certain amount of money each month.  This, essentially, offers the opportunity for individuals to reorganize outstanding debt, including missed mortgage payments.  While you will still, most likely, need to pay your regular mortgage payments, you will at least receive assistance with any arrearage amounts and other outstanding debts by filing for Chapter 13 bankruptcy.

When a Chapter 13 bankruptcy is filed, an automatic stay goes into effect immediately.  This means that any and all creditors are not allowed to take any actions against you or your property.  In regard to your home, this means that the automatic stay will stop your mortgage company from selling or foreclosing on your home.  This automatic stay will usually remain in effect for the duration of your Chapter 13 plan (this depends on the amount of bankruptcies the debtor has had pending in the last year).   As long as your remain current with your Chapter 13 plan payments, the automatic stay will remain in effect.  You will be able to keep your home, and will receive assistance with catching up on any missed payments.  It is important to note that if you fall behind on your plan payments, your case can be dismissed; this would mean that almost immediately actions to foreclose can take place.  However, as stated before, if you stay current on plan payments, filing for Chapter 13 bankruptcy will allow you to keep your home and stop any foreclosure proceedings.

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