When you have taken the step to file for bankruptcy and are struggling to make ends meet, you may have wondered if your home will soon go into foreclosure. If you’re filing for bankruptcy, it’s likely that you’ve been struggling with finances for several months – even years – and may already have come close to losing your home.
The good news is, you can actually end up saving your home from foreclosure when you file Chapter 13 bankruptcy.
Filing for Chapter 13 bankruptcy is basically a “debt reorganization” bankruptcy. It’s designed to help you reorganize your debts and repay your debt over a realistic timeframe. Chapter 13 bankruptcy does not require you to liquidate your assets, including your home, like Chapter 7 bankruptcy which is a liquidation bankruptcy.
You will get to keep your home and will need to work hard to stick with the repayment plan for the next three to five years. After you have completed your repayment plan, you will have a “fresh start” and can even consider refinancing at this time.
Automatic Stay When Filing for Bankruptcy
In most cases, the bankruptcy court will grant you an automatic stay as soon as your Chapter 13 bankruptcy petition is filed. This temporarily stops your home from going into foreclosure, regardless of whether the foreclosure proceedings have already begun. This process gives you some room to work out a realistic repayment plan for your debts listed on your Chapter 13 filing.
An Automatic Stay does the following: halts foreclosure: stops any type of repossession of vehicles or assets; prevents creditors from contacting you about outstanding debts; and also stops any lawsuits or wage garnishments. Talking to a bankruptcy lawyer about your Chapter 13 filing and the automatic stay benefits can help you see how your home will be saved from foreclosure.
Keeping Your Home When Filing for Bankruptcy
During the bankruptcy filing process, it is critical that you continue to make all of your mortgage payments on time. Missing even one or a few payments may mean that your automatic stay is lifted and the mortgage company will be able to come after you. You need to continue making your mortgage payments on time!
Once the bankruptcy has been filed and you start making payments on the three to five-year repayment plan. You can then consider making a few extra payments on your mortgage to catch up, or even refinance your mortgage to get a lower interest rate and save on your monthly payment.
