If you have received a notice of foreclosure sale concerning your home, you owe it to yourself to learn more about how a chapter 13 bankruptcy filing could stop the foreclosure sale. Filing a bankruptcy case in the U.S. Bankruptcy Court creates an instant and automatic “stay” that prevents a mortgage holder from holding a foreclosure sale.
Now, there are some prerequisites to filing a chapter 13 case. You would need to complete a credit counseling course before filing. You would also need to list all of your creditors (the people and companies that you owe money to) in your bankruptcy documents. This is typically accomplished by obtaining your credit reports from the three major credit reporting agencies or credit bureaus. There are rules on how often you may file a bankruptcy case and so, if you have filed a case in the past, you should discuss this with a lawyer so that s/he may analyze those rules against your situation.
With regard to the missed mortgage payments that have resulted in the foreclosure sale you are facing, a chapter 13 case allows you to formulate a chapter 13 plan, which you would submit to the bankruptcy court for approval. Your plan must demonstrate that you have sufficient income to resume paying your regular monthly mortgage payment within 30 days of the filing of your bankruptcy case plus your monthly chapter 13 plan payment and your other monthly expenses.
Your monthly chapter 13 plan payment is calculated by taking the missed mortgage payments figure, adding a 10% trustee’s fee to that figure and dividing the total figure by either 36 months or 60 months. Whether you qualify for a 36 or 60 months chapter 13 plan will depend on a number of factors, which you should discuss with a lawyer.
If you haven’t already considered a mortgage modification application, you should consider seeking advice on this topic, which you may use in conjunction with the filing of a chapter 13 bankruptcy case in order to stop a foreclosure sale and modify your monthly mortgage payment to a manageable figure.