How can a bankruptcy save your home from foreclosure? What’s the process? What are the requirements?

CAN A BANKRUPTCY SAVE MY HOUSE FROM FORECLOSURE?

The government estimates there are about 7,000 to 10,000 foreclosures every day in the U.S.

Like millions of other Americans, you may have fallen behind on your mortgage payments, and may be looking at a foreclosure. In some instances, a bankruptcy can save your house, or at least temporarily stop a foreclosure and buy you time.

CHAPTER 13: The Housesaver Bankruptcy. Chapter 13 Bankruptcy is often called a“house-saver” bankruptcy, because it can stop a foreclosure and help you get caught up on your missed payments, and all those late fees and other costs.

The bankruptcy court cannot change the terms of your loan, such as reducing the balance or the interest rate. But with the help of our office, we can put together a chapter 13 plan that the court will approve, that gives you from three to five years to catch up on missed payments.

How the Housesaver Works. First we will gather financial information about your income, asstes, and debts—especially your mortgages and how much you will need to catch up. We sit down with you and do a budget to see if you can afford a chapter 13 plan. If you qualify, we will prepare the complete chapter 13 case and chapter 13 plan, and file it with the court after you review and sign it. We will go through every page with you, and make sure you understand how you individual plan will work.

Stripping Off Second Mortgages. One of the benefits of a chapter 13 bankruptcy is that sometimes it allows people to strip a second mortgage (or other junior lien) off of their houses. This is only possible if the value of your house is less than the amount you owe on your first mortgage. If it is close, you may need to pay to have an appraisal done so that we can use that as evidence. Make sure to ask us about this option if you believe you meet these requirements.

Do I Qualify for a Housesaver Bankruptcy? To qualify for a chapter 13 plan that will save your house, you must have enough income left over every month to make the chapter 13 plan payment. The payment will include your regular mortgage payment(s), the amount needed to get the loan current divided by the months of your plan (from 36 to 60 months); any past due property taxes, home-owners association dues, house insurance, etc. also divided by the length of your plan, and any priority debts that must be paid, like back taxes and child support. If you show that you can afford the plan payment, we can prepare a plan that the court will approve.

What if I Don’t Qualify for a Housesaver Bankruptcy? If you do not have enough left-over income to catch up on the mortgage through a plan, you may need to surrender the house back to the bank. You could file a chapter 7 bankruptcy, and this will stop the foreclosure temporarily, for about 1 or 2 months, which will give you time to find somewhere else to live.

There are many options that may not be obvious at first, so please contact our experienced attorneys right away to see what those options are.

WE OFFER A FREE CONSULTATION TO GO OVER YOUR OPTIONS.

DON’T WAIT! IF YOU BELIEVE YOU MAY BE AT RISK AT LOSING YOUR HOME, CALL US IMMEDIATELY TO MAKE SURE WE HAVE ENOUGH TIME TO HELP YOU!

A Chapter 13 can offer protection for a homeowner in more ways than a Chapter 7. A Chapter 13 is a repayment plan that allows you to consolidate debt and pay back what you can afford. Part of the debt you can consolidate is back mortgage payments.

Because you can pay back mortgage payments through a plan, it is possible to save a home from foreclosure with a Chapter 13 even if you don’t have all the back payments all at once. You can stop a foreclosure up to the time the property is sold. After filing a Chapter 13, you will have to continue making your current mortgage payments along with an extra amount to catch up on the mortgage over three to five years. You can also pay for car loans through Chapter 13s and consolidate other debt, paying as little as 0% on some debt.

If the value of your home is less than the amount of your first mortgage, you can remove or “strip” the second mortgage in a Chapter 13. You cannot modify the terms of a first mortgage in a Chapter 13.

If your home is worth a lot more than the mortgages you have, your home could be vulnerable in a Chapter 7 where property can be sold to pay your creditors if it is not “exempt”. You can exempt up to $125,000 of equity in your home in Washington. If you have more equity than that, you can pay back what our creditors would get in a Chapter 7 through a Chapter 13 plan, so a Chapter 13 can save a home and get you some debt relief even if you own your home free and clear.

Washington Bankruptcy Attorney. Seattle | Everett | Tacoma. WA State Bankruptcy Lawyer.