Although bankruptcy can be a tough pill to swallow, it can sometimes be the best defense when facing foreclosure on your home. Filing for bankruptcy can be a strategic way to prevent a foreclosure from progressing forward. At the Law Offices of Steven Dolson, we can help you determine if bankruptcy is the best way for you to counter the foreclosure of your home.
Many people strategically use Chapter 13 bankruptcy to halt the foreclosure process. When the petition for bankruptcy is filed and an automatic stay is activated, creditors can no longer collect on debts, including foreclosure. During that stay it is imperative that a plan of re-organization be filed within 15 days of the petition. All payments, such as mortgage payments, must also be current.
There are three main things that happen under Chapter 13 bankruptcy to prevent foreclosure:
Timely Mortgage Payments: Timely payments must be made in order to bring the mortgage current throughout the three-to-five-year repayment plan. Refinance options may also become available.
Real property tax extensions: Real property taxes are paid over an extended period of time, which abates the delinquent property tax and stops the foreclosure.
Second mortgage removal: The second mortgage can be removed or stripped if there is no equity available beyond the first mortgage.