As long as you file before the sale, you can offer up a chapter 13 plan that gets you back on track with the mortgage lender over the next 3 to 5 years. You would have to make your regular monthly payment as well as enough extra to cover the arrears and trustee fees.
If you have a regular source of income which allows you to make your current monthly mortgage payment along with your regular household expenses and catch up on your arrears on the mortgage over the life of a Chapter 13 plan then that would be a good idea for you.
With equity in your home it is mist important that you seek the assistance of a bankruptcy attorney to guide you. Even if you can make your payments if your equity is not protected depending on the amount you could still lose your home by the bankruptcy trustee selling it.
Remember that on this forum attorneys try to answer your questions with limited facts available to them. My answer should in no way be considered legal advice. No attorney client relationship has been formed by any answer given here.
As attorney Alan Walton said, filing a Chapter 13 Bankruptcy would stop the foreclosure sale of your home. The question then becomes, for how long would it remain stopped. The answer depends on many elements, more than can be covered in an answer here. But basically you have to be able to show the court that you can afford to remain current on your future mortgage payments, pay your normal living expenses, and pay off the back mortgage payments (as well as any other "priority debt" like back taxes) monthly over the life of the Chapter 13 payment plan (3 to five years).. Then you have to actually do that for the three to five years and then you're in the clear. The Chapter 13 acts as a "creditor consent not required" payment plan for your back mortgage payments. Do yourself a favor and consult with a qualified bankruptcy attorney in your area to discuss your entire financial situation.
This reply does not constitute legal advice or establish an attorney-client relationship.
Yes, a Chapter 13 will stop the foreclosure sale and will allow you to repay the mortgage arrears over a 3 to 5 year plan. You will need sufficient income to be able to resume making your monthly mortgage payment (which may be included in your plan, it would be here where I practice) plus make a plan payment which will consist of a cure payment, attorney's fees, trustee's commission and any amount that has to be paid to unsecured creditors, if any. The Ch13 would have to be filed prior to the title to your home transferring to the purchaser at the foreclosure sale. When the title actually transfers can differ by state laws, so you need to check when that actually happens in your area, but assume for the time being that it would happen at the time of the sale. You should consult with a few attorneys in your area to find the one you are most comfortable with then follow their advice. Good luck!
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As already mentioned the filing of the Chapter 13 bankruptcy will stop the foreclosure. What comes next? If you do not file a complete petition and Chapter 13 Plan your case could be dismissed in as few as about 14 days. The court will send you an order letting you know the deadlines.
What is a bigger question is how much equity do you have in your home and have you tried to obtain a loan modification yet? If you have not sent in an application for a loan modification contact the NACA (www.naca.com). They are a not-for-profit HUD approved provider of loan modification assistance.
You can file for Chapter 13 bankruptcy and pay the lender 31% of your gross income while the loan modification application is pending. After assuming many things it is possible to obtain a modification of your loan in the Chapter 13 bankruptcy and hold off the foreclosure of your home.
My partner Kitty J Lin, and regularly meet with clients in our Oakland and Fremont offices in the East Bay. All of our consultations are free. Gives us a call 1-877-963-9543 and maybe we can help.
Ryan C. Wood is a Bay Area bankruptcy lawyer and has been practicing exclusively bankruptcy law in California since 2007. Mr. Wood formerly worked for David Burchard, Chapter 13 Trustee for the Santa Rosa and San Francisco Divisions of the United States Bankruptcy Court for the Northern District of California. West Coast Bankruptcy Attorneys has filed hundreds of bankruptcy cases and has an “A” rating by the Better Business Bureau.
Legal Disclaimer: Ryan C. Wood practices law in California only. Any answers to questions re not intended to be legal advice or create an attorney-client relationship. Always consult an attorney in your jurisdiction about your particular circumstances.