Stop Foreclosure with Chapter 13

Chapter 13 “Wage Earners Plan”

Chapter 13 bankruptcy is a reorganization of debts that allows a debtor to make payments to creditors over a period of three to five years. Chapter 13 is sometimes called a "wage earner's bankruptcy" because it requires that the debtor have a steady source of income for the duration of the repayment plan.

While in a Chapter 13 debt repayment plan, the bank cannot advance a foreclosure, the creditors cannot collect from you, and the creditors are required by a Federal Court order to adhere to the terms of the plan.

Stopping Foreclosure

To Stop a Foreclosure is the reason many debtors file Chapter 13 bankruptcy.  In most cases, an automatic stay is entered as soon as a Chapter 13 bankruptcy petition is filed. The automatic stay should temporarily stop foreclosure, along with all other collection action, regardless of the stage of the foreclosure proceedings. It also allows:

• Curing Home Mortgage Arrears - If a debtor is behind in his or her mortgage payments and facing a foreclosure, Chapter 13 can permit the debtor to cure the defaults and reinstate the mortgage.
• Retain Non-Exempt Property - Chapter 13 enables debtors to retain property which would otherwise be liquidated in a Chapter 7.
• Control the Sale of Property - Chapter 13 permits a debtor to liquidate property in a manner and at a time which can generate the highest value.
• Refinancing Home and Future Credit - It may be easier and quicker to refinance a home purchased while in Chapter 13 than if that same debtor filed Chapter 7.

“Strip off” your 2nd and 3rd mortgages.

Chapter 13 may also help you eliminate the payments on your second or third mortgage. That's because, if your first mortgage is secured by the entire value of your home, you may no longer have any equity with which
to secure the later mortgages. That allows the Chapter 13 court to "strip off" the second and third mortgages and categorize them as unsecured debt --which, under Chapter 13, has last priority and often does not have to be paid back at all.

Qualify for Chapter 13

To qualify for Chapter 13 bankruptcy you must be working or have a consistent source of income for your repayment plan to be approved by the court. Not only must you be able to pay for your monthly living expenses, but you must also be able to make a payment to the court to consolidate your debts.

Find out if Chapter 13 works for you, click here to Start your Free Evaluation Today!