The first thing to understand is that filing for bankruptcy automatically stops foreclosure proceedings. This is due to the “automatic stay” that comes into effect as soon as you file. The automatic stay is a court order that prevents your creditors from taking any further action to collect debts, including foreclosing on your home. This can give you some breathing room and time to work out a plan to keep your home.
However, it’s important to note that the automatic stay is only temporary. In a Chapter 7 bankruptcy, the stay lasts only until the bankruptcy case is closed or dismissed. In a Chapter 13 bankruptcy, the stay can last for the duration of your repayment plan. This means that if you want to keep your home long-term, you’ll need to take further action.
One of the options you have in bankruptcy is to “reaffirm” your mortgage. This means that you agree to continue making payments on your mortgage as if you hadn’t filed for bankruptcy. Reaffirmation can be a good option if you’re able to make your payments and want to keep your home.
However, it’s important to understand that by reaffirming your mortgage, you’re taking full responsibility for the debt. If you fall behind on payments again in the future, you’ll be in the same situation you were in before.
Another option is to use a Chapter 13 bankruptcy to catch up on your mortgage payments. In Chapter 13, you’ll create a repayment plan that lasts three to five years, during which time you’ll make regular payments to a trustee. The trustee will use these payments to pay off some or all of your outstanding debts, including your mortgage arrears. As long as you make your plan payments, you’ll be able to keep your home and get back on track with your mortgage.
It’s important to note that not everyone is eligible for Chapter 13 bankruptcy.
To qualify, you’ll need to have a regular income and have unsecured debts (like credit cards) that are below a certain threshold. If you have too much debt or can’t afford the payments in Chapter 13, you may need to consider other options, like selling your home or negotiating with your lender.
Facing foreclosure is a scary and stressful situation, but it’s important to know that you do have options. Bankruptcy can be a powerful tool for stopping foreclosure and giving you the time and space you need to come up with a plan.
For more information or to schedule a consultation to discuss the threat of foreclosure you’re facing, contact R. Flay Cabiness, II, P.C. at (912) 417-5041 (Brunswick, GA); (912) 809-2141 (Hazlehurst, GA) or; (912) 324-3176 (Jesup, GA) to schedule a consultation.
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