Chapter 13 is often the best way to immediately stop a foreclosure lawsuit and give you many options to save your home, including curing past due amounts, disputing the amounts and seeking a Court supervised loan modification.
THE AUTOMATIC STAY
One reason that Chapter 13 Bankruptcy is such a powerful solution to mortgage problems is that it provides an "automatic stay" which means, the moment you file, all lawsuits and collections must stop immediately. This protection is automatic, even if a foreclosure sale has already been scheduled, so long as you file Chapter 13 before the foreclosure sale.
This is powerful relief from the very beginning. In fact, if a mortgage creditor (or any other creditor) ignores this, anything they do is legally void and the Bankruptcy Court can impose financial sanctions against them. In other words, they force your mortgage company or other creditors who violate the Automatic Stay Injunction to pay you money for ignoring the filing.
The Automatic Stay is one of the most powerful and unique remedies available, especially if you have waited until a foreclosure sale has already been scheduled.
Chapter 13 was most commonly used from its creation, to provide a way to repay past due mortgage payments over time. By making a monthly payment to a Trustee that consists of your regular mortgage payment, plus something toward the past due mortgage payments, you can cure the mortgage default and bring your mortgage current over time. The mortgage company cannot say no as long as you can afford to cure the past due payments and you complete your Plan.
Most people who use the "cure" aspect of Chapter 13 simply ran into a temporary income problem, like job loss, illness or divorce. If the existing terms of your mortgage are now affordable again, this type of Chapter 13 case forces your mortgage company to allow you to cure the past due payments of a 36 to 60 month plan. It allows you to keep your home and the mortgage company has to accept it.
By filing a Chapter 13 bankruptcy case, you can also take advantage of the Orlando Court Supervised Mortgage Mediation Program, which can greatly streamline the loan modification process. Many of our clients have tried to modify their mortgage on their own by trying to work directly with their mortgage company. But many times, this is a frustrating process that drags on for months and results in a denial of modification. Mortgage modification through a Chapter 13 bankruptcy in Orlando, Florida has a much higher success rate in allowing people to modify their mortgage and save their home.
Chapter 13 Benefits Summary
- Immediately stops the foreclosure lawsuit upon filing the case
- Allows you to cure past due mortgage payments over time
- Provides a Court supervised program to seek a mortgage modification
- Allows you to dispute the amounts in Court with a Judge who will listen
- Forces your mortgage company to play by the rules and file a claim of exactly what is owed
- Late fees and other charges do not add up during the case and are discharged when you complete your Plan
- Allows you to adjust other debts, like car loans, credit card debts to provide more of your income toward solving your mortgage problem
- The Discharge when you complete your Plan actually heals your credit