Often, when people talk about foreclosure defense, they talk about Chapter 7 bankruptcy. Chapter 7 bankruptcy has an automatic stay and immediately pauses foreclosure actions. It helps people get out of unsecured debt and may allow them to catch up on missed payments so that they can keep their homes.
With Chapter 13 bankruptcy, you have to continue making your mortgage payments every month. They have to be made on time, too. Fortunately, it is also possible to stop foreclosure if you file for Chapter 13.
Chapter 13 puts you on a plan to get back on track
With Chapter 13 bankruptcy, you’ll start on a repayment plan. However, before you can do that, you will need to negotiate with creditors and come up with a reasonable plan for repaying each of them.
The nice thing about the repayment plan is that it can reincorporate your missed mortgage payments, fees, fines and other expenses that you may have had trouble catching up on. Additionally, if you stick to the plan and don’t miss any payments, you could emerge from bankruptcy back on track and with less debt holding you back.
Like Chapter 7 bankruptcy, Chapter 13 bankruptcy has the automatic stay that will put foreclosure on hold as you work with your attorney, court, lenders and others to come up with a reasonably monthly payment for the next three to five years. That stay gives you some breathing room, since the home cannot be sold while you’re waiting for the bankruptcy to go through without express permission from the court. There are exceptions, though, which is why it’s crucial to have experienced legal guidance.