If you are or have faced foreclosure on your home, you might have heard of filing a chapter 13 bankruptcy to stop it. But do you know exactly what it is and what it does? Read on to find out and how you can stop foreclosure on your home.
Can I Stop Foreclosure with Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a powerful tool that allows consumers to save assets, such as houses and cars, while also getting relief from debt collectors. Chapter 13 bankruptcy can:
- stop foreclosure and
- allow you to keep your home.
It can provide you with relief from debt collection while you pay back your debts over time. If you are delinquent on your mortgage, you can usually roll the delinquency into the Chapter 13 payment plan, paying the delinquency over a longer period.
How Do You Stop a Foreclosure Immediately?
Have you received notice from the bank that a foreclosure auction date has been set? If the bank is planning to sell your property because you are delinquent, there are still things that you can do to save your home—even if you have already received a foreclosure auction notice.
One of the surest ways to immediately stop a foreclosure—even days before the auction—is to file a Chapter 13 bankruptcy. Bankruptcy is a legal proceeding that helps consumers pay back debts and get relief from debt collection. During a bankruptcy, an automatic stay is immediately issued. This stay prevents the bank from continuing with foreclosure proceedings even if they have already begun the foreclosure process.
How Long Does It Take For a Bank to Start Foreclosure?
The length of time that it takes a bank to start a foreclosure depends on the bank. Although most mortgage contracts state that a borrower is in default after just a single missed payment, most banks don’t initiate foreclosure proceedings until you are three to four months behind.
Once the foreclosure process begins, you might have anywhere from one month to a year or more before the bank finally sells your home at an auction. During this time, you do have options to stop the foreclosure and save your home.
The best plan of action is to speak with an experienced foreclosure attorney. They can review your specific case and tell you what your best options are for your particular situation.
How Many Months Can You Not Pay Your Mortgage Before Foreclosure?
If you are unable to pay your mortgage because of a medical crisis, job loss or another unexpected event, you might be wondering how many months you can miss on your mortgage payment before the bank forecloses.
Depending on which state you live in and your lender’s particular policies regarding delinquencies, you may be able to miss your payments for three to five months before formal foreclosure proceedings are started.
You will get an official notice from your lender in the mail, called a Notice of Default, telling you that you are in violation of your mortgage contract and at risk of foreclosure. This is the first step in the foreclosure process.
If you have received a Notice of Default from your lender, now is the time to talk to a foreclosure attorney. They can advise you of your options and help you save your home.
What Can You Do When Your House is in Foreclosure?
If you are facing the prospect of foreclosure, you are not alone. According to the latest real estate trends from RealtyTrac, one in every 1997 homeowners will face foreclosure this year. If your house is in foreclosure, don’t panic. There are some things to consider:
- What is your long-term goal? Can you afford your home? Do you want to stay in it?
If the answer is no, you have some options to keep you out of foreclosure, including Chapter 7 bankruptcy, which could help you avoid foreclosure and lessen the blow of losing your home by eliminating your debt. By filing a Chapter 7 bankruptcy, you can get a fresh start and find a home that you can afford without the burden of high mortgage payments to weigh you down.
- If you want to keep your home – You can also file bankruptcy.
Chapter 13 allows you to keep your assets, including your home. During a Chapter 13 bankruptcy, you will be able to pay your delinquency over time and eventually catch up on your mortgage.
- Not sure? Talk to a Foreclosure Attorney.
If you are not sure what the right option is for you, talk to an experienced foreclosure attorney. They can help you weigh the pros and cons of your choices.
What is a Reinstatement Quote?
If you have received a foreclosure notice from your bank, one of your options is to reinstate your loan. This will allow you to avoid foreclosure without paying your mortgage in full. Although this is an option if you want to stay in your home, most people who are already struggling have difficulty coming up with the cash needed to reinstate the loan, which often includes additional fees.
To find out how much you would need to pay to reinstate your loan, talk to your mortgage company. They will provide you with a reinstatement quote. This quote will likely include the amount of payment that you are behind and any additional costs that are associated with the foreclosure. After you have paid this amount, you would then continue to pay your regular mortgage payments.
What is the Process of a Foreclosure?
When you default or fall behind on your mortgage payments, the process of foreclosure begins. Foreclosure allows the mortgage company to recover the amount owed on the mortgage by taking possession of your home and auctioning it off. The proceeds from the sale and then used to pay the mortgage. If your home does not sell for the amount of the mortgage, you will still be responsible for paying the mortgage company the difference that is left over.
The first thing that a lender must do to initiate the foreclosure process is to send you a Notice of Default. This notice indicates how much you are in default and what amount must be paid to bring the loan current. You are then given a short period to pay what you owe, or the bank will continue on the road towards foreclosure.
How long the foreclosure takes depends on your state laws and your lender’s internal foreclosure policy. It could take anywhere from 30 days from the Notice of Default to months before your home is sold at an auction.