It is easy to get behind on your mortgage payment. It is not easy to catch up past due mortgage payments. Many homeowners fall behind on their mortgage payments when they lose their job, become injured or ill, or experience another financial hardship. They skip a payment with the intention of catching it up next month.
However, next month’s finances are even worse. Before long, they are several months behind on their mortgage payments with no hope of catching them up in a lump sum. The mortgage company begins foreclosure proceedings, and the homeowner loses hope of stopping the foreclosure.
There is hope. Our Gilbert foreclosure attorney can review the foreclosure to determine if there are any foreclosure defenses you can utilize. If not, we can review your options for saving your home by filing a Chapter 13 bankruptcy case.
How Quickly Can My Lender Foreclose On My Home?
Your lender could legally begin foreclosure proceedings as soon as you miss one payment. In reality, most mortgage companies do not begin foreclosure proceedings for several months. The company wants your money, not your house. Therefore, the lender may try to work with you to catch up on the payments.
However, never assume that you have any length of time. Each mortgage company is different, and each situation is different. Your lender may file a foreclosure complaint quicker than another lender.
When you receive a copy of the foreclosure complaint, you have a short deadline to file a response. If you do not file a response, the court schedules the case for a hearing. The judge grants a default judgment and schedules your home to be sold at the next available foreclosure auction.
Filing Chapter 13 to Stop Foreclosure
If you file a Chapter 13 petition before your home is sold at the foreclosure sale, you can stop the foreclosure. However, once the home is sold at the auction, filing bankruptcy will not get your home back. Therefore, it is best to speak with a Gilbert foreclosure attorney as soon as you fall behind on your mortgage payments. Waiting to talk to an attorney limits your options and could result in the loss of your home.
A Chapter 13 repayment plan lets you spread out the past due mortgage payments (mortgage arrearage) over several years. Most Chapter 13 plans are for 60 months. By spreading out the mortgage arrearage, you can afford to resume regular mortgage payments outside of the plan.
In addition to your mortgage arrearage, your Chapter 13 plan includes your other debts. In most cases, debtors can lower their car payments and pay just a fraction of what they owe on credit cards, medical bills, personal loans, and other unsecured debts.
When you complete your Chapter 13 plan, your mortgage is current. Depending on your other debts, you could be debt-free when you exit Chapter 13. The only debts most people owe when they finish their Chapter 13 plan are their mortgage and any student loans they owed before filing Chapter 13.
Does Chapter 7 Stop Foreclosure Sales?
Yes, filing a Chapter 7 bankruptcy case can stop a foreclosure sale. However, the stay is temporary. Because Chapter 7 is not a reorganization plan, you would need to pay the full amount you owe to the mortgage company to keep your home.
However, filing Chapter 7 can be beneficial if you owe more to the mortgage company than your home is worth. You can surrender the home in Chapter 7 to get out from under the debt. Because you surrendered the home in Chapter 7, you do not need to worry about a deficiency judgment. The creditor cannot attempt to collect any more money for the mortgage loan.