Mortgage foreclosure is the procedure by which the lender takes possession of the home or property because the borrower was not able to abide by the terms of the loan agreement. Usually, this happens when the borrower becomes delayed in his payments.
The most common type of bankruptcy is Chapter 7 in which non-exempt properties are sold and the proceeds are distributed to the creditors. In return, the debts of the person who filed for Chapter 7 protection are discharged and creditors would no longer be able to collect.
However, a Chapter 7 cannot prevent foreclosure. It is Chapter 13 bankruptcy that has been specifically designed to stop foreclosure, at least temporarily. Usually, an automatic stay is issued upon the filing of a petition for Chapter 13. This will put the foreclosure proceedings on hold no matter what stage it has reached. The debtor and his lawyer will be provided with more time to negotiate an acceptable repayment plan.
According to laws governing Chapter 13 bankruptcy, the debtor must submit a repayment plan within 15 days of filing. The plan will indicate his income, permissible living expenses, and his suggested schedule of payments to the trustee. In turn, the trustee will distribute the payments to the creditors. It should be noted that the debtor must be able to come up with all mortgage payments that come due during the repayment plan. If the debtor misses a payment, the court will lift the automatic stay and the lender is allowed to continue the foreclosure process.
If the debtor is able to make the scheduled payments on time during the span of three to five years of the repayment plan, he may be able to bring his mortgage payments up to date. Or, he may become qualified for a refinancing of the mortgage loan after a certain time.
Therefore, a debtor may be able to utilize Chapter 13 bankruptcy to stop foreclosure subject to certain conditions. His secured debts must be lower than $1,010,650 and his unsecured debts must be less than $336,900. He should have a regular source of income that can pay for the mortgage payments, living costs, and the Chapter 13 payments.
About Moe Bedard
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questions?
is it required for the servicer (wells fargo) that represents freddic mac
to make you send in a list of 21 items to see if you
qualify for a loan modification?
they now want this years profit and loss
but they only will use the last 30 days of
current bills to make decision if you qualify or not?
does not make sence.
what is the legal or guideline on this for presidents obama
loan modification program to help stop foreclosures
it is just way to difficult and way to much paper work
going on to ever see if you can afford the 31% which in my
case would be only $500.00 per month with the 40 year @2%
which I can easily afford and keep my home.
it just seemsd that they are trying not to do the loan modification
and make it so difficult that you just give up and walk away.
let me know what you think on this
thanks
duke