How to stop foreclosure through chapter 7 bankruptcy

By Bruno Silva on Sep 23, 2017 with Comments 0

You have a few options left open to you if you face foreclosure on your house. As desperate times call for desperate measure, consider filing for bankruptcy under Chapter 7. This drastic solution will severely affect your credit score, but today it remains one of the only ways to get out from under said situation. You can prepare for and file a Chapter 7 bankruptcy petition to stop a foreclosure by following these guidelines. After you are done with them, you should also read about this Steps To Prevent Foreclosure And Save Your Property.

  • Gather all the documents related to your house loan and make copies of them. You will need your original mortgage agreements as well as any amendments made over the years. Also include copies of all legal documents from your foreclosure case, including the petition filed against you. Attach all these documents to you bankruptcy petition, as they will serve to support your bankruptcy file, we recommend you to always count with legal support, bankruptcy san diego is great option for this.

How to stop foreclosure through chapter 7 bankruptcy

  • You will need copies of your most recent federal income tax return as well as your current pay sub to include in your Chapter 7 bankruptcy file. Include bank statements and information about all your financial accounts.
  • Include documents that cover all your debts. When you file for bankruptcy under Chapter 7, the court will take into account all your debts—up to and including your house loan. Make a list of all of your debts and submit all necessary documents to the court. Take note that the court might consider anything you omit a lie and then dismiss your bankruptcy filing as well as result in your facing a fine and/or jail time.
  • You can handle your file yourself or get a bankruptcy attorney to help. Fill out a bankruptcy petition, which you can find online, in office supply stores or at the clerk’s office.
  • File the petition and all documents related to the bankruptcy court in your district. Make several copies of your petition as well as all the documents.
  • If you cannot afford to pay the filing fee all at once, you might have the option of paying in installments.
  • Once you get the order from the court, immediately notify the mortgage lender that you now fall under the bankrupt classification. The court will also notify the lender, but you should still work to stop the foreclosure procedure as soon as possible.
  • You will have to attend a trustee’s meeting. The mortgage lender, as well as other creditors, can appear and challenge your file at that point.
  • Discuss with your mortgage lender the possibility of a Reaffirmation Agreement that allows you to keep your house during bankruptcy and start making mortgage payments in the future as set forth in the agreement. If you don’t enter such an agreement, you will get out of foreclosure but will need to continue making the payments. If you are yet again unable to make the payments and ultimately face foreclosure again, you will not have the bankruptcy option available to save you in a time of trouble.

Filed Under: General How To’s

About the Author: Bruno Silva is an entrepreneur from Portugal with over 15 years of experience in Online Marketing. He is also a blogger and writes on variety of topics from online marketing to designs, cars to loans, etc.

How to stop foreclosure through chapter 7 bankruptcyWhat Happens After you File Bankruptcy is that you begin to enjoy a fresh financial start. This means that if you owe someone a debt and you’ve filed a chapter 7 that debt is forgiven. You’re no longer living with the fear of a wage garnishment or the next asset hearing at the court house. Its now time to rebuild your confidence knowing that things are really going to improve from here on out.

Automatic Stay and Bankruptcy:

Among what happens after you file Bankruptcy is that the automatic stay goes in to effect. The automatic stay is part of your Oklahoma bankruptcy filing. It orders that any and all collection activity against you must stop. Thus the automatic stay is a powerful tool in bankruptcy. If a creditor continues to attempt collecting from you this is a violation of the stay. The bankruptcy court provides many remedies against those that violate the stay. Some of those penalties include attorneys fees and other fines and court costs. The automatic stay is why once you file all wage garnishments stop. If a debtor continues garnishing your wages after you file they’re in deep trouble.

Meeting of The Creditors:

One of the next things that happens after you file bankruptcy is your meeting of the creditors sets. This is a simple meeting and all bankruptcy cases have it. Where you have the meeting depends on which county you live in when filing the case. Given there’s only three federal bankruptcy courts in Oklahoma you’re going to one of the three. Those include Tulsa, Oklahoma City or Okmulgee. The meeting is simple. At the meeting you need to have your drivers license and social security card. The trustee will examine them and then ask you some questions. The questions are nothing different than what’s already been answered in your bankruptcy forms regardless of what kind of bankruptcy you file.. Things like where you live and what are your expenses is a good idea of the trustee question.

Rebuilding Your Credit:

Another thing that happens after you file bankruptcy is that now you can begin to rebuild your credit. Most people find out that even though the bankruptcy stays on the credit report for 8 years you’ll quickly begin rebuilding credit. One among many other reasons is that you no longer have the mountains of debt you once had. Because you filed most of your debt has been forgiven making your debt to income change in your favor. Moreover because you can only file every 8 years creditors know you cant file anytime soon. This with other factors combine to help you regain a good credit score.

Tulsa’s Local Bankruptcy Lawyers

Are you looking for Tulsa attorneys who will fight aggressively for you? Our team of bankruptcy attorneys have the experience needed in Oklahoma law to secure the outcome you deserve.

Call us today for a free consultation 918-743-2233 or contact us online.

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How to stop foreclosure through chapter 7 bankruptcy

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If your mortgage and other debts have become more than you can handle, filing for Chapter 7 bankruptcy could be your way out. The bankruptcy court will wipe out your debts, except for a few special categories such as child support and back taxes. The court may sell some of your property first to pay your creditors. Chapter 7 can erase your mortgage debt, but not the lender’s lien or legal claim on your house. That means the lender still has the right to foreclose, but you may be able to use bankruptcy to prevent that.

Talk to a credit counselor. Federal law requires counseling at least six months before you file for Chapter 7, the Credit Info Center website states.

File for Chapter 7 in the federal bankruptcy court for your area, and pay the filing fee. You can download the forms and instructions from the U.S. Courts website. You’ll have to present proof you can pass one of the Chapter 7 income tests–for example, that your income is below your state’s median–and provide information on your assets and debts. If you qualify for Chapter 7, the court will issue an automatic stay preventing your creditors from taking action against you, including holding a foreclosure sale.

Keep paying your mortgage if you’re not in default yet. If you’ve already defaulted on the loan, make up the back payments if you can. Chapter 7 can delay foreclosure, but it doesn’t eliminate the lien; if you don’t stay current on your mortgage, your lender will foreclose after bankruptcy.

Draw up a financial plan for life after bankruptcy. Chapter 7 erases medical debts, credit card bills and most other forms of debt, which means you’ll have more money available to put toward your mortgage. This could make the difference between losing your house and keeping it.

Either a Chapter 7 or a Chapter 13 bankruptcy can help a Florida family that is facing the loss of their home through foreclosure.

However, only a successful Chapter 13 plan can directly stop a foreclosure since, in a Chapter 13, a family can make catch up payments to get out of default.

Personal bankruptcy will be helpful to most people with foreclosure issues

Those who file a bankruptcy, whether it is a Chapter 7 or a Chapter 13, will ordinarily be entitled to an automatic stay.

An automatic stay requires a bank or other lender to stop foreclosure proceedings until the bankruptcy is over. This is true even if the lender already has a foreclosure sale scheduled.

At a minimum, this will give time for a family to calm down and think carefully about their financial situation and what they can do to improve it.

A Chapter 7 bankruptcy also offers some longer term relief. For one, a family may be able to discharge some other debts so that they can focus on paying back their house loan, assuming of course the bank is willing to negotiate.

Even though Chapter 7 bankruptcies may ultimately not stop a foreclosure, they do at least prevent the bank from pursuing a debtor personally if the bank does not make its money back in a foreclosure sale.

A Chapter 13 bankruptcy may be the best option to save the family home

Provided a family in the Miami area has enough regular income and can otherwise qualify, they may want to consider using a Chapter 13 to protect their family home.

Chapter 13 bankruptcy will involve a family submitting a monthly payment plan to the court for approval, with the monthly payments going to pay off all or part of their debts.

As part of the plan, the family can offer a monthly payment to make up any delinquency in their loan payments.

If they continue to make payments going forward and make catch up payments according to the approved plan, then they should be able to save their home.

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Simply because your mortgage lender filed a foreclosure case against you does not mean you must wave a white flag and surrender. Strategies exist that permit you to protect yourself from the lender prevailing in a mortgage foreclosure case. Depending on your overall financial situation, filing for bankruptcy is a viable option, according to Cornell University Law School. Indeed, if you find yourself behind in mortgage payments, you likely are in a situation where bankruptcy makes financial sense for you. Through a bankruptcy, you avail yourself of legal protections that work to beat the foreclosure case.

Request a petition for bankruptcy. The bankruptcy court clerk provides all necessary forms, if you lack an attorney. Forms also are available through the bankruptcy court’s website.

Complete the petition for bankruptcy. The form comes complete with instructions. List the real estate in foreclosure as an asset, noting that the property is involved in litigation with the mortgage lender.

File the petition. Filing is accomplished by taking the original form to the clerk of the bankruptcy court and paying the required fee.

Advise your mortgage lender of the bankruptcy filing. The moment you file for bankruptcy, the court issues an order of automatic stay. This order requires all creditors to cease their activities; therefore, the mortgage lender can no longer sue you. A period of time elapses before a creditor receives this notice from the court. You speed up the process of stopping the foreclosure case by sending your own notification to the lender, with a copy of the bankruptcy petition.

Inform the mortgage lender you want to enter into a reaffirmation agreement. A reaffirmation agreement is a new contract with the mortgage lender. Through the reaffirmation agreement, you agree to make mortgage payments in the future and the loan is brought current, with past-due payments added back into the loan.

Obtain and file a reaffirmation agreement form. The mortgage lender or the bankruptcy court clerk maintains the form. The lender usually completes the form. Make sure you review the document closely to ensure it meets your approval. File the reaffirmation agreement with the bankruptcy court clerk.

File a motion to dismiss in the foreclosure case. The mortgage lender may take this step. In any event, make sure the foreclosure case is formally dismissed by the court where that case was filed.

Foreclosure proceedings usually begin because homeowners have fallen behind on their mortgage payments. Usually, a homeowner misses multiple mortgage payments before the mortgage holder starts the legal proceedings to get the house sold at a foreclosure auction in order to get paid. The lender must notify the homeowner, and the foreclosure process can take some time, which allows the homeowner to use alternate measures like renegotiating the loan, organizing a short sale, or crafting a deed in lieu of foreclosure. In some cases, filing for bankruptcy can delay a foreclosure or save a debtor’s home.

When you file for bankruptcy, the court will issue an automatic stay. This order requires creditors to stop trying to collect debts. The order includes a requirement that a mortgage holder cease foreclosure activities. If the lender has already scheduled your home to be sold at auction, the sale will be legally postponed for 3-4 months, unless the creditor successfully brings a motion to lift the stay. Even if a motion to lift the stay is brought successfully, the sale will likely be postponed, which can give you time to make other plans.

The automatic stay does not stop the clock on the notice mandated in many states before the lender can conduct the foreclosure sale. Once the calendar months have passed for notice, the lender can file a motion to lift the stay even if you are already in bankruptcy.

Effect of Chapter 13 Bankruptcy on Foreclosure

In many cases, exemptions will not protect your home from being liquidated to repay creditors in Chapter 7 bankruptcy. However, if you want to stall the sale and try to negotiate with the lender, filing for bankruptcy can buy you that time. The Chapter 7 bankruptcy will also cancel any debt secured by your home, including the debt of junior mortgages or home equity loans. Filing for Chapter 7 is not a good choice for those who do not want to give up certain property, including in many cases their homes.

For most homeowners who want to keep their homes, Chapter 13 is a better choice because it affords more options. In a Chapter 13 bankruptcy, you can pay off the late payments over the length of the repayment plan, as long as you continue to meet your current mortgage payments as well. If you make timely payments under your Chapter 13 debt repayment plan, you can avoid foreclosure.

Sometimes the reason homeowners are late on mortgage payments is because they have multiple mortgages. For some homeowners, the value of their houses has dropped since the most recent economic crisis, and their second or third mortgages are no longer fully secured by the value of the house. If there is not enough equity to secure one or more junior mortgages, you can use lien stripping to save your home. This means that you can ask the Chapter 13 bankruptcy court to strip the junior mortgages that are not secured and re-categorize them as unsecured debt. Unsecured debts are the lowest priority debts in bankruptcy and may not be paid back fully or at all.

Some debtors may be legitimately concerned about the effect of bankruptcy on their credit scores. However, foreclosure not only damages your credit score for years, but it also does not get rid of other debt and can be harmful in future efforts to buy a house. If you receive a bankruptcy discharge, you may also suffer harm to your credit score, but because you are left with a fresh slate after the discharge, you do have a chance to rebuild better credit.

What Happens When a Mortgage Forbearance Ends?

During a mortgage forbearance, you may stop or reduce your monthly mortgage payments without action by your loan provider. For how every many months the forbearance lasts, your mortgage provider won’t initiate a foreclosure action due to missed payments. During times of financial strain, this can be a huge relief. However, the forbearance doesn’t eliminate the past-due balance. At the end of the forbearance, you will still owe any payments you didn’t make during that period, albeit without any late fees or other penalties you would typically be charged. If you’ve been taking advantage of a mortgage forbearance due to COVID-19, you may be wondering what to do once the forbearance ends.

How to stop foreclosure through chapter 7 bankruptcy

Options After Mortgage Forbearance

You should start formulating a game plan for your mortgage balance about a month before the forbearance ends. If your mortgage provider doesn’t reach out to work out an arrangement then, you should contact your mortgage provider yourself. One of the factors that will determine what options are available to you is whether your mortgage is government-backed.

An option that must be given to you at the end of your forbearance is to reinstate your mortgage. This means paying the full balance that you didn’t pay during the forbearance at once. Upon reinstatement, you will go back to making your usual monthly payments. This may simply not be possible for those who take advantage of a mortgage forbearance due to financial hardship.

One option your mortgage provider may offer you is a repayment plan. The amount you didn’t pay during the forbearance period will be spread out over a number of months, in addition to your usual monthly mortgage payments. Usually, your mortgage provider will give you 6 to 12 months to resolve the balance. This might be a great option for you if this is the only debt you need to catch up on at the end of the forbearance period.

If this type of arrangement isn’t feasible, your mortgage provider may offer for you to defer your forbearance balance. With this option, your mortgage lender may require you to pay your forbearance balance in one lump sum at the end of your mortgage term. You may also be given the option to extend your payment plan as opposed to a lump sum payment. However, this type of arrangement can cause issues if you sell the home before paying off your mortgage.

A final option your mortgage provider may offer is a loan modification. This is a permanent change to the terms of your original mortgage agreement. The term of your loan may be changed, or your monthly payments or your interest rate. You will most likely be required to complete a trial period of at least a few months before your modification can be finalized.

Your lender may not offer you all of these options, and the ones available might not work for you. Giving your home back to your mortgage provider isn’t your last option in these circumstances. Bankruptcy protects your assets from your creditors, and Chapter 13 bankruptcy provides a more realistic means for many to catch up on past-due mortgage payments. There will be several other advantages to filing bankruptcy if you struggle with other debts.

Can Bankruptcy Stop a Foreclosure in Arizona?

The moment a bankruptcy petition is filed, the debtor is protected by the “automatic stay.” The automatic stay freezes the assets of someone in an active bankruptcy so that they are safe from creditors. Creditors may not proceed with utility shutoffs, repossessions, wage garnishments, bank levies, and most importantly here, home foreclosures, while the automatic stay is in place.

The automatic stay will generally be active until the case is discharged or dismissed. However, creditors may request an exemption from the stay through a Motion for Relief from the Automatic Stay. If granted, the creditor may proceed with their chosen collection method, but other creditors are still precluded from pursuing payment from the debtor. Multiple filings could subject the debtor to an exploding stay, which expires after 30 days.

Forbearance & Bankruptcy

The two most common forms of consumer bankruptcy are Chapter 7 bankruptcy and Chapter 13. Both chapters trigger the automatic stay upon filing. However, Chapter 7 may not be as effective as Chapter 13 in stopping a foreclosure after a forbearance. You must remain current on payments for all financed assets that you want to keep in Chapter 7. You will only have 4-6 months, or how long a Chapter 7 bankruptcy typically lasts, to resolve the forbearance balance. If you are unsuccessful, you may end up with a home foreclosure, possibly a deficiency balance, and you will be disqualified from filing bankruptcy again for a certain number of years.

Forbearance & Chapter 13 Bankruptcy

Chapter 13 bankruptcy will give you much more time to address your forbearance balance than Chapter 7. Chapter 13 bankruptcy reorganizes your debts into a payment plan that lasts 3 years if you make less than your state’s median income, and 5 years if you make more. While most secured debts (e.g., your car loan) will need to be paid in full in your plan, your mortgage is excluded from this requirement. Your typical monthly mortgage payment will be rolled into your plan, as well as the remaining balance from your forbearance. When spread out over 3-5 years, it can be much more realistic to catch up on your past-due balance while remaining current on monthly payments.

Chapter 13 provides several other benefits besides giving you time to catch up on past-due mortgage payments. Depending on how much of your debt can be paid with your disposable monthly income, your unsecured debts (including some taxes) may be discharged with minimal repayment. Just like Chapter 13 can help you avoid a foreclosure, it can help you avoid a repossession of any item used as collateral for a loan, such as your car. You may also qualify to discharge junior mortgages on your home.

Learn About Your Options, Besides What Your Mortgage Company Tells You

If you’re one of the millions of people who have struggled due to loss of income during the pandemic, you may have been relying on a mortgage forbearance for several months. Your lender may be willing to work with you, or you may be left with limited options. Especially if you struggle with other debts, bankruptcy could be a fruitful course of action after a mortgage forbearance.

Contact Arizona’s Leading Bankruptcy Law Firm

To learn more about the benefits of bankruptcy, and receive a quote for Chapter 13 plan payments and legal representation, schedule your free consultation with our firm today. Our experienced Arizona bankruptcy attorneys have a thorough understanding of bankruptcy, and will represent you with the care and dedication to discharge your debts as efficiently as possible. Call or use our online form to schedule your free consultation today.

There are many myths surrounding foreclosure defense in California. Many individuals facing foreclosure turn to the internet for advice, investing countless hours reading articles promoting the effectiveness of loan modification or the “produce the note” defense. Some of these tactics are more effective than others, and a few homeowners actually benefit from protected foreclosure defense litigation due to predatory lending practices. However, for the majority of homeowners facing foreclosure an affordable and certain tactic is needed to save their home.

Chapter 13 bankruptcy is an affordable and effective method for stopping foreclosure and saving your home. Stop your foreclosure in Santa Rosa, Sonoma County or Marin County today by calling bankruptcy attorney Adam Garcia at (707) 200-6688.

How Chapter 13 Bankruptcy Stops Foreclosure

Both chapter 7 and chapter 13 bankruptcy will stop foreclosure immediately, but only chapter 13 bankruptcy can save your home from foreclosure. Here’s how.

The Automatic Stay

When a client files bankruptcy the automatic stay (see 11 USC 362) arises by operation of the U.S. Bankruptcy Code. The automatic stay acts as an immediate injunction against most collection actions, including foreclosure. In effect, once a bankruptcy petition is electronically filed with the U.S. Bankruptcy Court the foreclosure process must stop. Any action taken in violation of the automatic stay, such as the Trustee’s sale, is void and without legal effect. Therefore, as soon as our foreclosure attorney electronically files your petition with the U.S. Bankruptcy Court the scheduled Trustee’s sale cannot occur.

Repaying Late Mortgage Payments

In chapter 13 bankruptcy you can force your lender to accept a 3 to 5 year repayment plan in which your repay late mortgage payments. Once satisfied, you will no longer be in default on your home mortgage and the lender cannot reinstate foreclosure proceedings. This ability to force your lender to accept a repayment schedule is the mechanism by which you can save your home from foreclosure.

Stop Foreclosure Today

You can file chapter 13 bankruptcy today and stop the Trustee’s sale scheduled for tomorrow. This emergency bankruptcy filing is possible but requires coordination between you and the attorney. To learn more about filing an emergency chapter 13 bankruptcy petition call our attorney at (707) 200-6688.

SantaRosaForeclosureAttorney.com is a partner site of SantaRosaBankruptcy.us, the leading bankruptcy website for Santa Rosa. Bankruptcy attorney Adam Garcia can help you stop foreclosure and keep your home. If your goal is to eliminate a second mortgage, reduce the amount owed on your car, or just erase credit card debt contact bankruptcy attorney Adam Garcia. After a brief phone consultation you will better understand your bankruptcy options.

Do I Really Need To File Bankruptcy?

There is an unwarranted social stigma surrounding bankruptcy. Some people think bankruptcy is a last-resort while others believe bankruptcy is an “easy way out.” If you’re facing foreclosure chapter 13 bankruptcy may in fact be a last resort, but it’s also a highly effective one, and no, it’s not an “easy way out.”

In chapter 13 bankruptcy homeowners repay late mortgage payments over 3-5 years. In turn, banks cannot foreclose while the chapter 13 repayment plan is in effect. After homeowners have satisfied their 3-5 year repayment plan some debts may be discharged (eliminated) in whole or in part. Furthermore, at the conclusion of their repayment plan homeowners will no longer be in default on their mortgage and therefore no longer be at risk of foreclosure.

In summation, chapter 13 bankruptcy involves the consolidation and repayment of certain debts over time. Certain debts may be eliminated in whole or in part and petitioners generally do not lose any property. For those homeowners facing foreclosure chapter 13 bankruptcy is an effective and affordable method for stopping foreclosure.