If you are facing foreclosure on your primary home and you want to keep it, you may be able to do so through bankruptcy. Chapter 13 bankruptcy is designed to help debtors with regular income reorganize their debts and repay them over a period of three to five years. If the Debt exceeds the limits of Chapter 13, the Debtor may need to file a case under Chapter 11 (often under SubChapter V).
In Chapter 13 bankruptcy, the debtor proposes a repayment plan that sets out how they will repay their creditors over the course of the bankruptcy period. The repayment plan includes provisions for catching up on mortgage arrears and keeping the home. As long as the debtor makes the required payments under the plan, they can keep their home and avoid foreclosure.
In contrast, Chapter 7 bankruptcy does not provide a mechanism for catching up on mortgage arrears, and it may not be able to help you avoid foreclosure on your home. Chapter 7 bankruptcy is designed to discharge unsecured debts, such as credit card debts and medical bills, but it does not provide a way to restructure secured debts, such as a mortgage.
Loan Modifications
It is also possible to reduce or modify your mortgage under certain circumstances. One option is known as a mortgage modification program that is available in Bankruptcy Court. This program requires both sides to agree to a mortgage modification. Within this program, various documents must be provided. You may then retain a mediator for the program who tries to help come to agreed upon terms. During the process, the lender is not permitted to proceed with its foreclosure actions. Since this is a voluntary proceeding, lenders are not required to participate, but most of the major banks are willing to participate.
If you are facing foreclosure on your primary home, it is important to consult with a bankruptcy attorney to determine your options and whether Chapter 13 bankruptcy is right for you.
About the Finkel Law Group
Finkel Law Group, with offices in San Francisco and Oakland, has more than 40 of experience assisting our clients navigate federal bankruptcy laws and state insolvency statutes. Our attorneys have the experience and expertise needed to help you and your management team successfully complete the liquidation or reorganization of your corporation, partnership or limited liability company.
When you need intelligent, insightful, conscientious and cost-effective legal counsel to assist you with the bankruptcy and reorganization issues confronting your company please contact us at (415) 252-9600, (510) 344-6601, or info@finkellawgroup.com to speak with one of our attorneys about your matter for a cost-free consultation.