Can Filing Bankruptcy Save My Home?

Yes, Bankruptcy Can Save Your Home.

Yes, under certain circumstances a Chapter 13 bankruptcy filed in Fort Lauderdale, Florida, or in any county within the United States can save your home from foreclosure.

The instant you file your Chapter 13 bankruptcy petition, any foreclosure sale will be stopped due to an injunction issued by the bankruptcy court called the automatic stay. The filing of a petition automatically stays most actions against the debtor, co-debtors (even if the co-debtor does not file bankruptcy but this is only applicable in Chapter 13), and the debtor’s property. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally cannot initiate or continue any lawsuits, foreclosures, garnish wages, or make telephone calls demanding payments.

Chapter 13 bankruptcy can help you get caught up on past due mortgage payments. Here’s how it works:

Cure Past due payments:

When a person falls behind on their mortgage and starts to get calls and letters from their bank. They then try to negotiate a modification or also called a payment plan to get caught up. Unfortunately, in most cases, the mortgage modification attempt fails after many months of haggling with the loss mitigation department or the bank’s unreasonable demands, such as arrearages must be paid in one lump sum. When the person can’t afford to come current on their entire past due balance and eventually they lose their home to foreclosure.

Chapter 13 bankruptcy changes the playing field. The bankruptcy code, namely 11 U.S.C § 1325(b)(5), allows a person to “cure and maintain” payments in their chapter 13 plan. What does this mean for homeowners? It forces lenders to accept past-due mortgage payments in increments over a period of 3-5 years which gives many families a realistic chance of getting caught up and saving their home. In Chapter 13, in the Southern District of Florida, a homeowner may include their arrearage payments in a Chapter 13 plan along with their regular mortgage payment which will allow them to catch up over a period of 3-5 years.

For example, let’s say you’re behind 4 months on your mortgage, and your normal monthly payment totals $1,500. The bank demands you pay the $6,000 in arrearages plus late fees to avoid foreclosure. If you are unable to come up with the money, you may file for chapter 13 bankruptcy. Now, rather than being forced to come up with $6,000 all at once, your past due balance is divided over 36-60 months. $6