Winsor Law Group Blog

By: Joseph G. Urtuzuastegui III, Esq.

The United States Bankruptcy Code gives an individual many options to get back on track through filing bankruptcy. In America, we have long acknowledged the principle that every person should have every opportunity to own real property. But what happens when a lender wants to take property from a hard working American down on their luck and unable to make their monthly mortgage payments? The answer is harsh but simple, the lender will begin foreclosure proceedings and take the property away from them. If you or anybody you know is ever in a situation similar to the one described above, there may be some options available.

          First and foremost, if you are having trouble keeping up with payments to your lender and you have no intention of keeping the home it may be time to sell the property. Through the sale of the property, a homeowner may come out with a surplus of funds after paying back the lender and that money can be used to find more affordable housing.

          If your plan is to continue to live in the home, it is a good idea to contact a Prosperity Attorney. At Winsor Law Group we will discuss options and assist you in taking the steps toward getting you back on track, which may or may not be filing Bankruptcy. Depending on why you are falling behind on payments is a big factor in getting you back on track, and we may be able to help before the lender directs the trustee to file a notice of trustee’s sale. However, if the lender has filed a notice of sale and the date is fast approaching it is great to know that there may still be an option that can save your home, and filing bankruptcy may be the best path forward.

          Determining whether to file a chapter 7 or a chapter 13 bankruptcy depends on current circumstances, but regardless of which chapter you file, the trustee’s sale date will be halted immediately through what is known as the “automatic stay.” In a chapter 7 bankruptcy, the automatic stay will be effective for at least sixty days, which means the creditor (lender) cannot harass the debtor for payments, including arrearage payments during that time. Upon the expiration of the sixty days, the creditor must apply to the court to lift the automatic stay permanently and if the court grants a lift of the stay, the lender starts at the beginning of the foreclosure process by filing another notice of foreclosure. Effectively, filing a chapter 7 bankruptcy allows a debtor who is down on their luck, soon to lose their home an extension of at least 151 days (60 day initial stay and 91 day foreclosure process) but usually more. Of course, since we are trying to save the home, during that time the debtor should be working to get back on track so they can pay the money owed to save their home, which is why a chapter 13 bankruptcy may be more sensible to save your home in the long run.

          A chapter 13 bankruptcy allows a debtor to pay back its creditors through a payment plan approved by the Bankruptcy Court. The Code specifically gives a debtor the option to cure arrearages on a mortgage through the payment plan. The arrearages typically will need to be paid back during the duration[1] of the plan and are in addition to the regular mortgage payments. Upon the completion of the chapter 13 plan, if not earlier, the debtor will be current on their mortgage payments and will have been discharged from other dischargeable debts. While chapter 13 is the best path forward to save your home through bankruptcy, please be aware that failure to complete the chapter 13 plan could put a debtor back at square one when it comes to paying back their arrearages. If you or somebody you know is struggling with their monthly mortgage payments, be proactive and call us before it’s too late because at Winsor Law Group our Attorneys are here to help you and your family prosper. 

Disclaimer: This article is for informational purposes only. If you have questions about filing bankruptcy, please fill out our short questionnaire and Winsor & Reed will set up a consultation to see if bankruptcy is the right option for you. We are a debt relief agency. We help people file for relief under the Bankruptcy Code.