Facing the fact that you could lose your home is devastating. Where will you and your family live? How will you recover from a foreclosure action on your credit report? Is there a way to save your home from foreclosure?
Our Glendale foreclosure attorneys can help you explore various options for stopping foreclosure and saving your home.
What is a Foreclosure Action?
A foreclosure is a legal process a mortgage lender must take to have your home sold at an auction when you fall behind on paying your mortgage payments. The mortgage company typically begins by calling you and sending you threatening letters if you fall behind on your mortgage payments.
However, at some point, the mortgage company turns the matter over to a foreclosure attorney. The foreclosure attorney sends you a letter notifying you that you have a certain number of days to catch up the mortgage payments in full to avoid a foreclosure auction.
Unfortunately, the mortgage lender typically wants a lump sum payment to catch up on the mortgage in full to stop the foreclosure. If you do not pay the balance due in full, the attorney files a foreclosure complaint. Ignoring the complaint results in a default judgment by the court, and your home is sold at a foreclosure auction.
Can I Stop a Foreclosure Sale By Filing Chapter 13?
Yes, you can stop a foreclosure sale in Arizona by filing a Chapter 13 bankruptcy case. The automatic stay provisions of the Bankruptcy Code stop the mortgage company from taking any actions to collect the debt without bankruptcy court approval, including proceeding with a foreclosure action.
As soon as you file your Chapter 13 bankruptcy petition, the automatic stay goes into effect and remains in effect until the court modifies the stay or your Chapter 13 case is discharged. As long as you file your bankruptcy petition before your home is sold at a foreclosure sale, you can stop the foreclosure process and save your home.
How Does a Chapter 13 Bankruptcy Case Save My Home?
You catch up on your past-due mortgage payments (arrearage) through your Chapter 13 repayment plan. Instead of paying a lump sum to the mortgage company, the arrearage is spread out over several years. Your regular mortgage payments resume outside of your bankruptcy repayment plan.
The Chapter 13 plan helps you afford to pay your regular mortgage payments by reorganizing your debts into an affordable monthly plan payment. Instead of paying your unsecured debts in full, you pay what you can afford based on your disposable income and financial situation. In most cases, unsecured creditors receive pennies on the dollar to satisfy their debts.
If you owe debts that are not dischargeable in bankruptcy, such as tax debt, you can spread that out over several years too. Most debtors are also able to reduce their car payments through their Chapter 13 plan.
Does Chapter 7 Stop Foreclosure Sales?
Yes, the automatic stay provisions apply to Chapter 7 cases. However, you must pay your mortgage arrearage in full to prevent a foreclosure sale in a Chapter 7 case. Your mortgage lender can ask the bankruptcy judge to allow it to proceed with the foreclosure sale during your Chapter 7 case, or it may wait until your case is closed to continue with the foreclosure sale.
A Chapter 7 bankruptcy case may be a good option if you cannot afford to keep your home and you want to get out of debt for a fresh start. The mortgage company cannot try to make you pay any money to satisfy the debt if you surrender the home through a Chapter 7 bankruptcy case.
Contact Our Glendale Bankruptcy Attorneys
If you are facing foreclosure, take steps now to save your home. Contact the Glendale bankruptcy lawyers of Allegiant Law Group to discuss your options.