MY HOUSE IS IN FORECLOSURE.
WILL BANKRUPTCY HELP ME SAVE IT?
Filing a Chapter 13 Bankruptcy can help save your house provided that you have the ability to resume making your regular monthly mortgage payments within 30 days after your case is filed.
Keep in mind that there is no type of Bankruptcy that allows you to change the monthly payment, term or interest rate on your mortgage contract. What Chapter 13 does, however, allow you to do is to take all of the past due payments and spread them out over a 5 year period of time. It also allows you to take any other debt you have and put it into a 5 year payment plan. So for someone who has fallen behind on his or her mortgage payments as a result of a temporary set back, such as job loss or illness, but now has the ability to resume payments, this may be a good solution. Although you cannot reduce your mortgage payment, you may be able to reduce your payments on other debts such as credit cards and car loans, which may then make your mortgage payment more affordable.
A foreclosure proceeding can be stopped by the filing of a Chapter 13 Bankruptcy as long as the case is filed prior to the conclusion of the auction sale. If the sale has already taken place, then it is too late to file Chapter 13 and save your house.
In order to get a Chapter 13 case approved, you must show that you have enough disposable income to pay your mortgage payment each month and make the required payments under the Chapter 13 plan.
Chapter 13 is generally fairly inexpensive to get started because in most instances the legal fees are paid through the Chapter 13 plan and the only required up front money is the filing fee and the costs for required credit counseling.