Chapter 13 Bankruptcy Saves a Lot of Homes- It could Save Yours

HERE IS HOW IT WORKS:

When you file a Chapter 13 bankruptcy petition, all foreclosure proceedings must stop regardless of what stage of foreclosure you home or real property may face.   This is my hands down my favorite type of bankruptcy to file.

This rule is true right up to the date and time of the Sheriff’s Sale (which is the foreclosure event).  The case must be filed before the Sheriff’s Sale as you lose title to the home after that event.

The halting of the foreclosure and any collection activity is a result of what’s known as the “automatic stay,” which arises from section 362 of the bankruptcy code.

In Chapter 13, we will prepare a “repayment plan” for your unique situation.  The plan is sort of like a trust agreement.  It lays out what you intend to do in the case.

The foreclosure is halted at the filing of your case (the petition) and that “stay of proceedings” becomes permanent if  the repayment plan we prepare for you promises that you will now begin making regular payments as well as for pay off the mortgage arrears within 36 to 60 months.   There are generally a few tweaks we need to make with that, but most of our cases confirm (are signed by the judge) if you can meet these few basic requirements.

A SIMPLE EXAMPLE:

As an example, if your mortgage payment is $800 and you are $5000 behind in your payments, the plan will offer to pay $800 a month plus about $100 extra so that it can pay those arrears over 60 months with a little interest (60 x $100 = $6,000).  So that’s about $900 a month.  Attorney fees and trustee fees will take that payment to about $1000 a month.  You will need to pay at least a little to your other creditors as well (this depends on whether your budget is tight).

PRIOR BANKRUPTCY CASES:

About the only exception to the rules stated above is when you’ve filed prior bankruptcies in recent years.  If so, then be sure to discuss with us so we can take the appropriate steps so that you also get to enjoy the automatic stay.

JUNIOR MORTGAGES AND LIENS:

In many cases, we find a huge benefit in Chapter 13 for those homeowners whose homes are now worth less than owed on the primary mortgage.  Any second or third mortgages and liens can be crammed down and treated the same as credit cards or medical bills (meaning it may be possible to pay them very little).

NON-RESIDENTIAL REAL PROPERTY:

The options may be even better with non-residential real property (vacant land, business property, rental property).  If you own such property we may even be able to modify the primary mortgage.

HOW MUCH DOES IT COST TO FILE:

The good news is that the Court sets the basic attorney fee in a chapter 13 case.  In most situations that fee simply lowers what your various unsecured creditors would otherwise receive (so they in effect pay your attorney fee).  Because of this we can file your case for very little money down.

WHAT TO DO NEXT:

Don’t wait any longer, call us today at (269) 344-0700 for a free consultation.   We assist people with all forms of debt concerns.

Although based in Kalamazoo, the local bankruptcy court operates on the federal system and we serve clients living throughout Southwestern Michigan, including Van Buren, Berrien, Cass, Allegan, Kalamazoo, St. Joseph, Calhoun, Branch, and Hillsdale counties.