Can Chapter 13 Stop Foreclosure?
Foreclosure generally relates to homeowners who have fallen seriously behind with their mortgage payments, which can mean being many months behind. Facing a foreclosure is not only financially devastating but also tends to pack an emotional wallop that can be difficult to overcome. The fact is, however, that - under some circumstances - Chapter 13 bankruptcy can save your home from foreclosure. Reach out for the skilled legal guidance of an experienced South Carolina bankruptcy attorney today.
Filing for Chapter 13 Bankruptcy
When you file for Chapter 13 bankruptcy, an automatic stay is entered that stops the foreclosure process on your home. Once the gavel hits on the sale of a foreclosed property, however, the chance to remedy the financial arrearage with bankruptcy or by any other means has passed. A Chapter 13 bankruptcy can buy you the time you need to get your home off the auction block and back on the right track.
Catching Up on Missed Mortgage Payments
When you file for Chapter 13 bankruptcy, you’ll be afforded the opportunity to cure the mortgage arrearage – or the amount owed in back mortgage payments. This translates to creating a payment plan that allows you to make up for the mortgage payments you’re behind on with smaller regular payments over the course of the plan. If you have other debts, such as car payments, they can be rolled into your Chapter 13 bankruptcy. While mortgage lenders and car loan companies rarely offer this kind of financial flexibility, Chapter 13 bankruptcy can.
What You Need to Know about Chapter 13 Bankruptcy
While Chapter 7 bankruptcy can discharge debt, Chapter 13 bankruptcy is a repayment plan – for all or part of the debt involved. As such, you’ll need to resume paying your mortgage once your Chapter 13 plan is established, and this includes paying the additional amount each month in order to clear those past-due payments. Some important points to keep in mind include the following:
- If you don’t have the financial means to keep up with your regular mortgage payments plus the arrearage amount, a Chapter 13 bankruptcy won’t be feasible and won’t gain the court’s approval.
- Chapter 13 bankruptcy can’t lower the interest rate on your mortgage.
- Chapter 13 bankruptcy can’t decrease your monthly mortgage payment.
If you’ve experienced a financial downturn, such as a temporary decrease in earnings, that left you behind with your mortgage payments, Chapter 13 bankruptcy can offer a financial lifeline. The most important thing to keep in mind is that taking action sooner – rather than later – is always to your advantage. The closer the bank gets to foreclosure, the fewer options you’ll have.
An Experienced South Carolina Bankruptcy Attorney Can Help
If you’re facing foreclosure on your home, Chapter 13 bankruptcy may be a viable option. The accomplished South Carolina bankruptcy attorneys at Reed Law Firm appreciate the significance of your predicament and are well-prepared to harness the full force of their experience and legal insight in pursuit of a favorable resolution that upholds your rights and allows you to keep your home – if at all possible. Learn more about what we can do to help you by contacting us online or calling us at (803) 726-4888 in Columbia, South Carolina, and at (843) 679-0077 in Florence, South Carolina, today.
