Bankruptcy: File it to avoid having your home foreclosed

In the event that you’ve received a foreclosure notice from your bank, then there are ample opportunities for you to avoid having your home foreclosed. This can be done by filing chapter 13 bankruptcy. It’ll put a stay on the foreclosure proceedings on your home as soon as your bankruptcy petition is accepted by the court.

Mortgage lenders and the state foreclosure rules

The bank cannot sell off your property, the moment it notifies you of an impending foreclosure. Different states have different have foreclosure rules which every lender operating there is obligated to follow.

There are some selected states that demands a lawsuit to be filed by the lenders in the court before they can foreclose anybody’s property. This is known as judicial foreclosure. On the other hand, some states do not require any kind of court involvement before a property can be foreclosed and such a foreclosure is known as non-judicial foreclosure.

In any case, it is compulsory on your lender’s part to give you quite a lot of notice, informing about your repayment defaults on a regular basis, and that he or she wants to get your house foreclosed in order to cover up his or her loss.

However, your lender has to wait for a specific period and win a judgment against you before a foreclosure sale date can be fixed. Here, too you’ll receive a notification from your lender, informing you about the exact date on which the sale has been scheduled.

Thats why, you must review your foreclosure notice carefully to gauge the amount of time you have in your hand to get the issues sorted out before you house is sold.

Chapter 13 bankruptcy can stop foreclosure proceedings

Your lender is prohibited to sell your house, the moment you file for chapter 13 bankruptcy protection. The fact is that most of the lenders and that includes mortgage lenders as well, have to honor an automatic stay mentioned in the bankruptcy code and so, they must discontinue with their further collection efforts without taking prior permission from the competent court.

This will provide you with the opportunity to save your home unless it isn’t sold already in a foreclosure.

Chapter 13 will help you to get current with your mortgage payments

Chapter 13 bankruptcy will allow you to catch up with your mortgage payments and thus, help you to save your home. During the period of automatic stay, you can cover up all the missed payments through a court-approved Chapter 13 loan repayment plan. This repayment plan can be as long as five years and hence, its an affordable way to become current on your delinquent mortgage account.

Basically, the process goes like this, you pay off your pre-bankruptcy mortgage arrears by complying with repayment plan to a court-appointed official, known as trustee. Your trustee will disburse the paid amount to your lender/s, as specified in the plan. As a result, you repay all your debts and become debt free, thus preventing an impending foreclosure on your home.

Shubhi Gupta is a freelance author and writes for a variety of online publications. She actively writes blogs and articles and very fond of writing content on different trendy topicss related to Education, training,resources,health and technology.