Filing for Chapter 13 bankruptcy gives debtors certain advantages over chapter 7 bankruptcy. One of the biggest of these advantages is stopping foreclosures. Typically, the foreclosure process begins when a homeowner fails to make a few of his or her mortgage payments. The lender kicks off foreclosure proceedings and advises the homeowner that the home will be sold in a foreclosure sale or at auction to get the loan paid off. There are debtors who can negotiate loan modification, but many are denied. For those who are denied because of significant consumer debt and bad credit, filing for Chapter 13 bankruptcy in Levittown may be the best option to stop the foreclosure. Bankruptcy attorney John M. Kenney is familiar with this area of law and can guide you through this complex process.How to Stop Pennsylvania Foreclosure Using Chapter 13
When you file for Chapter 13, you can temporarily stop foreclosure proceedings with the “automatic stay” if the lender has not already sold the house. If the foreclosure sale is complete before you file the Chapter 13 petition and repayment plan, you may lose your house, so it is important to consult a Bucks County bankruptcy attorney as soon as you realize that you might not be able to pay your mortgage and your other debt.
You will need to include mortgage payments and arrearages in your debt repayment plan and commit to paying mortgage payments throughout the plan. If you fail to make your payments, you could still lose your home, even though you stopped the foreclosure sale. You can cure the arrearage by dividing the past due amount by the number of payments you will be paying monthly over three to five years. You will only pay one monthly sum, which is distributed to creditors that include the mortgage lender.
Before the creditor meeting, you will need to demonstrate you have the income to follow the repayment plan. If you are self-employed, this means you will submit your last tax return and any documents that demonstrate other income, such as rental property income. You will also need to submit documents, such as an appraisal, that show your home’s value.
After your plan is approved, you will have to make a single monthly payment that includes the current mortgage as well as the mortgage arrearage payments. Failure to make payments can result in a dismissal of your bankruptcy case. You must also give a good reason for why you failed to make the mandated payments to prevent the lender from foreclosing on your home.
Also of note in connection with stopping foreclosures is another Chapter 13 tool called “lien-stripping.” This process allows you to eliminate a junior mortgage if your house has dropped in value and only a first, or senior, mortgage is secured by the house’s value. If you strip a second or third mortgage, you reduce the total amount that you owe various lenders, which can make your mortgage payments more manageable.Retain a Bucks County Bankruptcy Attorney to Stop Foreclosures
Your home is a shelter and place of safety. If you file for Chapter 13 before your home is sold in a foreclosure sale, you may be able to protect it with tools like lien-stripping and reorganization of debt. Stopping foreclosure in Bucks County may be one of your primary financial concerns. Contact experienced lawyer John M. Kenney to find out whether you can stop foreclosure and benefit from other advantages of Chapter 13. You can reach him by phone at (215) 547-3031, or by submitting an online inquiry. We serve clients in Bristol, Morrisville, Fairless Hills, Yardley, Langhorne, and throughout the state of Pennsylvania.