The alarming rise in the rate of foreclosures across the nation has been a familiar topic in the news over the last several years. Many families who never dreamed of being in this situation are struggling to keep their homes. For a large percentage of them, losing their home through foreclosure will become an unavoidable reality. But for others, filing for bankruptcy can help.
Foreclosure
A lender begins the foreclosure process when you become several months behind in your mortgage payments. When this occurs, the lender will notify you that you are in default and allow you time to get caught up with your payments. If you do not get caught up during the time allotted, the lender will then send a notice of its intention to offer your home for sale at public auction, typically within 30 days. If by that time you still haven’t resolved the issue, your home will be sold and you will lose the chance to “redeem” or reclaim it, unless your state allows a “redemption period” following the sale. In Oklahoma, it takes 15 days for the sale to be confirmed by the courts. During this time, you can get your home back by paying off the entire balance of your mortgage and the associated costs of the foreclosure action.
How filing for bankruptcy can help
Lenders are often willing to make arrangements with you to get out of default and keep your home. But when this is not the case, you will be left with few choices, and bankruptcy may be the best option available.
The two main types of bankruptcy proceedings are Chapter 7 and Chapter 13. Under each, an “automatic stay” goes into effect as soon as you file and the foreclosure process is put on hold until the end of your bankruptcy proceedings or until the stay is lifted by court order.
Chapter 7 Bankruptcy
Filing for a Chapter 7 bankruptcy will usually give you about four months before the foreclosure process resumes. Ultimately, Chapter 7 will not stop foreclosure, but the delay may give you time to arrange for its eventuality and prepare to move on. Also, during the bankruptcy period, you will be allowed to stay in the home without having to make any payments, which can give you the chance to save money to find someplace else for you and your family to live.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy can actually stop a foreclosure action if it is filed early enough. This is possible because under Chapter 13 you will be allowed to propose a plan to reorganize your debt and get caught up with your loan payments. If you can achieve this in within the allotted time (generally three to five years), you will be able to avoid foreclosure and keep your home.
In order to take advantage of the benefits of a Chapter 13 bankruptcy, you must qualify for it and have the court approve your reorganization plan. This normally means that you must have enough income left over to make steady payments after first satisfying certain other debts, such as child support, alimony, and taxes, which have priority over your mortgage.
Summary
In times of economic hardship, it may be harder to keep up with mortgage payments and the threat of foreclosure may seem ever-present. When the threat becomes a reality, filing for bankruptcy might offer some help. Although filing for bankruptcy is not a guarantee that you can keep your home in every case, it may delay the foreclosure process and give you and your family time to save some money and make preparations for life after losing your home, or even stop a foreclosure altogether.
Low-cost Consultation: Claremore Bankruptcy Attorney
Contact a Claremore bankruptcy lawyer for a low-cost initial consultation about your specific situation by simply calling our office at (918) 213-0950. Or, you can enter your legal question or concern for the firm at the top right of this page, and one of our attorneys will promptly email or call you.
