A chapter 13 bankruptcy is an awesome tool that allows people to get rid of most types of debt by allowing a person to pay as much as they can afford in a 3 to 5 year payment plan, after which they receive a discharge of their remaining debts. In addition to wiping out debt with the discharge, a chapter 13 bankruptcy is also a great tool that can enable people to get caught up on past-due car and home payments.
A person who is facing the potential of a foreclosure upon their home due to delinquent payments has an opportunity to not only stop the foreclosure but to get caught up on mortgage payments over the course of their repayment plan.
When a person files a chapter 13 bankruptcy case, the “automatic stay” immediately goes into effect from the very day the case is filed. The automatic stay legally prevents creditors from taking any action to collect upon the debt. This includes mortgage foreclosures. In Minnesota, mortgage companies are legally required to notify the homeowner of the sheriff’s sale, at least, 4 weeks prior to the sale. If the chapter 13 bankruptcy case is filed before the sheriff’s sale takes place, the automatic stay prevents the sale from occurring, and the mortgage company is prohibited from taking any further action. However, once the sheriff’s sale has occurred, it is too late for the bankruptcy case to stop the foreclosure process or help the homeowner save the home, and the homeowner’s options from that point onward are very limited.
The filing of a bankruptcy case before a sheriff’s sale stops the foreclosure process and allows the homeowner to remain in the home, at least, temporarily. In order for the homeowner to remain in the home, they must stay current on their ongoing monthly mortgage payments after their case is filed. The homeowner must pay also the entire past-due amount of mortgage payments (the “mortgage arrears”) in their 3 to 5 year repayment plan. If the homeowner is unable to make their bankruptcy payments the trustee may ask the court to dismiss their bankruptcy case, after which the mortgage can proceed with the foreclosure process. Also, if the homeowner fails to make their monthly mortgage payments to their mortgage company during the course of their chapter 13 repayment plan, the mortgage company will likely file a motion asking the court to “lift the automatic stay.” If the court grants the motion, the stay against the mortgage company effectively ends and the mortgage company can proceed with the foreclosure process. If the homeowner falls behind on making either their bankruptcy or mortgage payments during their chapter 13 case, having an experienced bankruptcy attorney can greatly assist them with modifying their chapter 13 repayment plan and/or working with the mortgage company to make sure the homeowner is able to stay in their home and successfully complete their chapter 13 plan. Once the homeowner successfully completes their chapter 13 plan by making all of their payments, they essentially get a fresh start by being caught up on all their current and past-due home mortgage payments.
CALL NOW FOR A FREE STRATEGY SESSION FROM A MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM
If you find yourself behind on mortgage payments, and are at risk of foreclosure in Saint Paul, Minnesota, you should consult with an experienced bankruptcy attorney as soon as possible. LifeBack Law Firm is a consumer bankruptcy law firm that helps individual people deal with their debts and protect their property. Please, come visit us at one of our offices, including our new office located at 370 Selby Ave, Suite 224, St. Paul MN 55102. Or, you can visit us online at Lifebacklaw.com!
