To save your home and prevent the foreclosure, you filed for Chapter 13 bankruptcy. For the time being, you’ve saved your house. You can handle the issues with your mortgage in a safe legal atmosphere after declaring bankruptcy. You exhale in relief.
The battle to keep your home, however, is not ended just because there is a stay. You’ve just completed the preliminary round. To emerge from your bankruptcy with your house in tact, you must be vigilant throughout the duration of the match. Here’s what you need to know to keep your home. Make sure you contact Law Offices of Terrence Fantauzzi at (909) 552-1238 as soon as possible for a bankruptcy consultation.
Mortgage Lenders Are Given Preference
The mortgage lender is given special consideration in the bankruptcy process. The claims of property owners have always received special protection in Anglo Saxon law, from which US law is derived. After all, people who held property wrote the laws. Because the mortgage lender’s lien represents a property interest in your house, they are given unique treatment.
Regular payments are required under that lien, and if payments are not made, the lender is entitled to petition for relief from the stay of foreclosure. If the value of the collateral is less than the sum of the liens prior to the lien in question, then there is an exception. Consider a second mortgage that is underwater.
Pay Your Mortgage
The trustee typically pays your mortgage’s arrears under Chapter 13 plans, and you are responsible for making any payments that become due after filing. Pay your property taxes and insurance as well. Homeowners all too frequently neglect or struggle with making the regular payments since they are so focused on paying off their mortgage’s arrears.
Borrowers who request the bankruptcy stay but don’t take seriously their responsibility to make the monthly installments that become due after filing are not tolerated by the court. When debtors are unable to keep up with payments, such intolerance manifests itself in the dismissal of Chapter 13 cases without a discharge.
Consider Other Liens on Your Property
Chapter 13 can address issues beyond those involving mortgage liens. Your strategy can eliminate or lessen the amount of tax or judgment liens. Check the public records to discover whether any avoidable liens have been unknowingly connected to your home. If liens are discovered, your plan can reduce their magnitude.
Request a Mortgage Modification if Necessary
Your best option might be to work out a mortgage modification with the lender. Nothing in Chapter 13 prevents the parties from discussing amendment. Judges in bankruptcy in California have ruled that discussions about a modification do not conflict with the automatic stay.
The arrears are frequently included into the loan balance and paid throughout the course of the loan. Alternatively, a modification specifies that a portion of the debt is not accruing interest and is instead due at the end of the loan or upon sale. The likelihood of success is increased if a modification that cures the arrears eliminates the mortgage arrears element of a Chapter 13 monthly payment.
Talk to a Bankruptcy Attorney
The best thing you can do to ensure that you are filing correctly and protecting your home is to work with a bankruptcy attorney. Contact Law Offices of Terrence Fantauzzi at (909) 552-1238 now for a consultation to learn what your legal options are.