If you are facing a foreclosure notice, Chapter 13 can help prevent the bank from repossessing your home until issues related to your bankruptcy are resolved. In some cases, you may be able to keep your home so long as you can continue to make payments on both the arrearage and the mortgage. 

The Automatic Stay

Once you file for bankruptcy, any adverse creditor actions against you must stop. This includes foreclosure on a home. In the case of Chapter 7, it is usually a foregone conclusion that you will lose your home. However, Chapter 13 operates on a repayment plan that could potentially prevent the bank from foreclosing on your home, allowing you to make up the arrearage while also paying off future mortgage payments. 

Judicial Foreclosure

Indiana is a judicial foreclosure state. That means that the lender has to take the buyer to court before foreclosing on the home. In some cases, it may be a foregone conclusion that the lender will win the case. This is especially true if you are behind on multiple payments. Lenders usually send out notices giving borrowers 30 days to respond, or they will take the matter before a judge. The borrower would have 20 days to reply to the complaint. 

Chapter 13 Repayment Plan

Unlike Chapter 7, Chapter 13 involves a repayment plan to repay some of the creditors while discharging other unsecured debts. Your bankruptcy attorney would present the court with a repayment plan that addresses some debts while stripping others. In cases where a borrower is able to repay the arrearage plus make good on future mortgage payments, they should be able to protect their home from foreclosure. It is important to note that the automatic stay will prevent the lender from selling the home before you have made a decision. 

How Does Repayment Work? 

When you are in a Chapter 13 bankruptcy, you will need to make monthly payments to the bankruptcy trustee. Some of those payments will be arrears related to your mortgage. These can also include credit card debt, debt related to a personal vehicle, and more. The money is then paid monthly over a three- to five-year period, with the bankruptcy trustee divvying up the money among creditors. If you can meet the monthly bankruptcy payment plus continue to pay on your mortgage, you may be able to save your home from foreclosure.

Do Not Lose Your Home! Call Chris Arrington Today

Nobody wants to file for bankruptcy, but the bankruptcy process is there to ensure both debtors and lenders get a fair shake when someone cannot meet their expenses. Chapter 13 affords borrowers the ability to repay debts over the period that the bankruptcy remains active. Chris Arrington can help you file for bankruptcy, present a bankruptcy repayment plan, and keep your home if it is within your maeans. It never hurts to ask. Call today to learn more!