How a Chapter 13 Bankruptcy Can Save Your Home from Foreclosure


How a Chapter 13 Bankruptcy Can Save Your Home from Foreclosure

Receiving a foreclosure notice from your mortgage lender can be among the most dreadful experiences a person can undergo. When a person begins to fall behind on his or her mortgage, this creates a great deal of worry and anxiety; then, when a foreclosure notice is received, this suddenly amps up the emotions to a completely new level. The foreclosure notice makes you realize the severe consequences which can follow if you fail to act immediately. Fortunately, just because you receive this type of notice doesn’t automatically mean that your home is irretrievably lost. You still have the ability to save your home, but you certainly do need to move quickly and decisively. In this post, we will discuss how a Chapter 13 bankruptcy can save your home from foreclosure.

Florida is a Judicial Foreclosure State

Florida is a “judicial” foreclosure state which means that lenders in the state cannot immediately go from sending you a notice straight to auctioning off your home. Lenders for Florida homeowners must go through the courts and obtain a final judgment order for foreclosure before they can auction off your house. The judicial foreclosure process usually takes at least a few months before a foreclosure sale is schedule. You will need to act during this period – including defending in the foreclosure case and presenting any defenses to foreclosure you might have – and especially prior to the foreclosure sale if you intend to keep your home.

Chapter 13 Provides an Automatic Stay

Chapter 13 bankruptcy can be a viable option to save your home from foreclosure. This is something which many people don’t realize, partly because they mistakenly assume that bankruptcy invariably involves giving up your real property. The truth is that Chapter 13 can provide an avenue to keep your home as long as you complete the process properly and qualify for a repayment plan. When you file for Chapter 13 bankruptcy, you will immediately receive something called an “automatic stay.” The automatic stay basically stops all creditors in their tracks and prevents them from moving forward with any sort of collection activity. In other words, it basically freezes your debt while the court steps in and allows you to proceed through the bankruptcy procedure.

Pay Mortgage Arrears Through a Suitable Repayment Plan

A Chapter 13 is a great way to save your home from foreclosure. The Bankruptcy Court will allow a homeowner between three and five years (depending on the delinquent amount) to pay back their mortgage arrears. For example, a homeowner who is behind $12K on their mortgage could pay off the arrears over a 5-year period by paying an extra $200 a month while also maintaining their regular monthly mortgage payment. In this way, the debtor has modified his/her loan terms without needing the approval of the lender. Of course, there are other rules and procedures that must be followed for a Chapter 13 Repayment Plan but as long as the debtor makes the approved payments, the lender cannot foreclose on the property.

Contact Financial Freedom Advocates for More Information

If you’d like to learn more, or need immediate assistance, give Financial Freedom Advocates a call at 786-668-6688.
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