Say you own your own home and have fallen into financial difficulties, which has made it impossible to keep up with your mortgage payments. If this is the case, you may be wondering if Chapter 13 bankruptcy can stop foreclosure in New York.
At Grady BK, PLLC, we are committed to providing clarity regarding the bankruptcy process so that you can move forward with confidence and peace of mind. We also understand how unique every bankruptcy case is, which is why we will work with you one-on-one in order to find the best possible solution. In this article, we will discuss whether or not Chapter 13 bankruptcy stops foreclosure, and if so, how this process works.
How Does Chapter 13 Stop Foreclosure?
If you are planning on filing for Chapter 13 bankruptcy, the good news is that this can stop foreclosure in New York. So, it is very possible to save your home with bankruptcy, as long as you act quickly enough.
When you file for a Chapter 13 repayment plan, an automatic stay is initiated. This is a type of protection that prohibits creditors from pursuing collection actions against you, including foreclosure. The automatic stay will remain in place for the duration of your repayment plan, which lasts 3 to 5 years.
Chapter 13 bankruptcy offers foreclosure protection, even if the foreclosure lawsuit has started or has already begun to move forward. However, leaving things until the last minute can make this process more difficult and stressful. If the foreclosure is completed, this may also mean that it is too late for the automatic stay to work.
Catching Up on Mortgage Payments With Chapter 13
In addition to stopping foreclosure, Chapter 13 can also help you catch up on any past due mortgage payments. So, Chapter 13 allows you to continue paying your regular mortgage payments and also pay a separate amount each month towards any past due mortgage payments that you owe.
Keep in mind that mortgage payments are an ongoing financial responsibility, even after you file for bankruptcy. That is why you will need to strongly prioritize these payments when you create a budget so that you do not fall behind again.
Qualifying for Chapter 13?
Not everyone who wants to file for bankruptcy will qualify for a Chapter 13. Chapter 13 bankruptcy is designed specifically for individuals with a stable income. Because of this, Chapter 13 is usually the best option for homeowners with a regular or high income or homeowners who have simply experienced temporary financial hardship.
The main benefit of Chapter 13, besides stopping foreclosure, is that you can keep all of your assets/property. And if you have any remaining dischargeable debts (credit cards, medical, unsecured personal loans, etc.) at the end of your repayment plan, these may be wiped out altogether.
The general eligibility rule for Chapter 13 is that any individual is eligible if their unsecured debts and secured debts are within the annually adjusted limits. But a bankruptcy attorney in New York can help you better understand whether or not you qualify for Chapter 13 bankruptcy.
What Happens If You Miss Payments During Chapter 13?
If your goal is to keep your house with Chapter 13 bankruptcy, it’s crucial that you maintain your repayment plan until its completion. Failing to make the necessary monthly payments, such as your mortgage payments, can result in your repayment plan being dismissed by the court.
Even though the court uses your income and debt to determine a realistic repayment plan, sometimes circumstances change. So, if you find that you are unable to maintain your monthly payments, you need to request to have your plan modified. This can help you continue to make your mortgage payments so that your home is protected and your plan stays active.
If you are worried about falling behind on your mortgage payments after filing for Chapter 13, you need to consult with a foreclosure attorney in New York. Your attorney can help you decide what to do next so that you don’t risk having your repayment plan dismissed.
FAQ Section
How quickly does Chapter 13 stop foreclosure?
The automatic stay will immediately take effect when you file for Chapter 13, which will immediately stop any foreclosure proceedings or other collection actions, such as wage garnishment.
Can I save my home if the foreclosure process has already started?
In most cases, yes. The only time it is too late to stop foreclosure is usually when the foreclosure sale has already been completed.
What if I’ve missed several mortgage payments?
Any missed mortgage payments are added to your repayment plan in addition to your ongoing monthly mortgage responsibilities.
Can my lender continue for foreclosure after I file?
Not unless they get approval from the court. And even this is rare and is usually only approved if you haven’t maintained your repayment plan responsibilities.
Is Chapter 13 better than Chapter 7 for homeowners?
In many cases, yes. Chapter 13 provides a more straightforward solution for stopping foreclosure and protecting your home. Whereas Chapter 7 usually only allows you to keep your home if it is an exempt asset and you are able to pay back any missed mortgage payments.
New York’s Top Compassionate Bankruptcy Attorney
Just because you are filing for bankruptcy, this doesn’t mean that you have to lose your home. At Grady BK, PLLC, we can help you navigate Chapter 13 bankruptcy and your mortgage payments. Having the representation of a bankruptcy lawyer in New York ensures you to understand your options and move towards a better financial future.
At Grady BK, PLLC, we can help you with every step of the bankruptcy process, whether you have already begun or don’t know what type of bankruptcy to file for. And we will be here to address any questions or concerns you may have.
Contact us today at 315-299-9005 to discuss your financial situation with a bankruptcy attorney in New York. Our team at Grady BK, PLLC, is here to help you tackle your finances head-on with the right bankruptcy process.
