The lure of a Chapter 13 Bankruptcy can be very tempting for homeowners facing foreclosure. Bankruptcy lawyers bombard homeowners with advertisements to use bankruptcy to save your home.
We will discuss whether chapter 13 is a good option for most homeowners in a future post but those who take the plunge into bankruptcy often do so thinking they will not be facing foreclosure. When it hits them while in a bankruptcy, it is very upsetting and jarring.
Here is how this works. Once you file chapter 13, the mortgage company (and all other creditors) are under an “automatic stay” which means they cannot take collection action against you. But if you don’t make your regular mortgage payment and you don’t make your bankruptcy court payments, you will be faced with a “motion for relief from stay” from your mortgage company. This motion asks the bankruptcy court to “relieve” or “lift” the stay so that your mortgage company can foreclose.
Here’s the bottom line – chapter 13 bankruptcy can be effective if you can afford your regular mortgage payment PLUS paying off the arearage and other debts you have but if you can’t afford all of these payments, you are just re-arranging the deck chairs on the Titantic.
If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447.
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