Mortgage Foreclosures Increasing Across the Country
In this section of ABC Bankruptcy, you will learn about:
- mortgage foreclosure in the United States;
- Chapter 13 bankruptcy and mortgage foreclosure;
- Chapter 7 bankruptcy and mortgage foreclosure; and
- other solutions to stop foreclosure.
Mortgage Foreclosure in the United States
$330 billion in adjustable rate mortgages (ARMs) have adjusted upward since 2007, leaving more than three million American homeowners facing increased mortgage payments. Americans are facing the worst foreclosure crisis in years as banks continue to call in their mortgage notes. If you are living in fear that you might lose your home, you are not alone.
Many consumers do not know how beneficial bankruptcy can be. Chapter 13 bankruptcy can put a stop to foreclosure if you have fallen behind on your mortgage payments.
Mortgage Foreclosure and Chapter 13 Bankruptcy
Chapter 13 bankruptcy can stop foreclosure. Stopping foreclosure is often the driving force behind most people's decision to file for Chapter 13 bankruptcy, because it can put an immediate halt on the proceedings. You must file for Chapter 13 bankruptcy before your mortgage company sells your home. By filing, you are giving yourself time to pay your delinquent mortgage payments in a reasonable amount of time, while also being able to keep up to date with your current payments.
Repayment plans that you design in Chapter 13 bankruptcy allow you to pay any mortgage arrears, along with other secured debts from furture income, rather than from the current sale of your assets, such as your home. The payments are fixed, allowing you to meet your day to day expenses, including your necessary living expenses and giving any surplus income to your creditors. An experienced bankruptcy lawyer can help you devise a repayment plan that works best for you and your creditors.
If you own a home, you must make all mortgage payments due during the Chapter 13 repayment plan. Failure to do so may gives the bankruptcy court the right to lift the automatic stay, which allows the mortgage company to resume foreclosure proceedings. If all plan payments are made in a timely manner, homeowners are given the chance to catch up the past due mortgage payments over a period of 3-5 years. They may also qualify for refinancing after a period of repayment.
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Mortgage Foreclosure and Chapter 7 Bankruptcy
If you have filed for Chapter 7 bankruptcy protection, it is considered a liquidation bankruptcy. If you are facing a foreclosure, the automatic stay only serves as a temporary defense; unlike Chapter 13 bankruptcy, Chapter 7 does not give you the opportunity to repay your mortgage arrears over time. It is a good option if you know that you will not be able to keep up with your mortgage payments, and you need breathing room to make other plans while not having to worry about any deficiency judgments against you. If you have suffered a job loss or other life crisis that is preventing you from keeping up with your mortgage payments, and you think the surrender of your home mighlt help to resolve your debt, Chapter 7 bankruptcy just might be the option you are looking for.
Let ABC Bankruptcy connect you with an attorney in your area who can help you decide if Chapter 7 or Chapter 13 bankruptcy is right for you.
Looking for a Solution Besides Bankruptcy?
It is important to remember that filing for bankruptcy is not the only way to stop foreclosure. In many instances, it can help get you back on your financial feet and eliminate the worry of having to surrender your home, however, those who have significant equity in their homes, who are not more than 90 days past due on their mortgage payments may have other options.