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In bankruptcy Chapter 13 mortgage foreclosure is either stopped or at least temporarily avoided.
Here’s how.

First, just in case you are not familiar with a Chapter 13 bankruptcy, it is a bankruptcy court approved payment plan where the debtor (the person filing bankruptcy) pays a bankruptcy trustee each month and then the trustee pays the debtor’s creditors.

There are several aspects of a Chapter 13 bankruptcy that work to help people facing mortgage foreclosure. The first aspect is actually applicable to all bankruptcies. It is called the “automatic
stay”.

By law, whenever anyone files bankruptcy, regardless of the type of bankruptcy, there is an immediate “automatic stay” (automatic temporary stopping) of most civil proceedings against the person filing bankruptcy. What this means is that if someone is facing mortgage foreclosure and the person files bankruptcy, the mortgage lender has to immediately stop its’ foreclosure action until it gets permission for the bankruptcy court to proceed.

In a Chapter 13, the bankruptcy court will not lift the “automatic stay” and grant the mortgage lender permission to proceed with a foreclosure until the debtor (the person filing bankruptcy) fails to make his payments to the bankruptcy trustee. As long as the debtor pays the monthly payments to the trustee and pays his regular mortgage payments, the “automatic stay” will remain in force and the mortgage lender can not do anything.

The second aspect of a Chapter 13 that works in favor of people facing foreclosure is that it allows a debtor to pay mortgage arrearage over time, normally 3 to 5 years. In most foreclosure cases, a person has not paid his monthly mortgage payment for several months and the mortgage lender demands full payment of the delinquent monthly payments (arrearage) in lump sum before the lender will consider stopping foreclosure. Most people cannot pay the lump sum.

In a Chapter 13 bankruptcy, a debtor can pay the arrearage over time. He does not have to pay it all at one time. Spreading the lump sum over time means paying smaller monthly payments until the total arrearage is paid. A creditor can object to the amount to be paid each month towards the arrearage, but once the bankruptcy court approves the payment plan, the creditor can not do anything except take the payments.

A third aspect of a Chapter 13 bankruptcy that helps people facing mortgage foreclosure is that unsecured creditors may be paid a portion or all of what is owed to them. What this is really doing is reducing the amount of debt that a person has to pay back each month. By paying unsecured creditors less each month, there is more money available with which to pay a secured creditor such as a mortgage lender. Therefore, it should be easier for a debtor to pay his monthly mortgage payment.

This is general information. If you need specific information or have any questions of any nature whatsoever, talk with a lawyer licensed in your state.

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By: Steve Bingman

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Are you considering filing bankruptcy? If so, then you know there is a Chapter 7, which is a fresh start type of bankruptcy, and a chapter 13, which is a debt repayment plan. There are many reasons why bankruptcy might be a good choice for you, but there are even more reasons why there is not a single type of bankruptcy that is good for you.

First, if you do not have debts that total over twice your annual income, then you should not be filing either of the two types of bankruptcy. You have to be in a very desperate situation that you just cannot even come close to getting out of. This is usually what happens when you lose a job and have to take a position that does not give you nearly the income you are used to.

Second, if you are even considering a chapter 13 bankruptcy, then you need to reconsider. There are plenty of ways to get yourself on a debt repayment plan that with do the same thing for you as a chapter 13 bankruptcy without killing your credit for many years. Plus the fee you will pay will be less than your lawyer fees and you will probably be able to get credit counseling to help you as well.

Last, do you understand what bankruptcy does to your credit? It will completely ruin you for at least 7 years. Not only that, but the loans and credit cards you will be able to get will have high interest rates and will cost you a fortune over the long run. Bankruptcy costs you your reputation, your lawyer fees, and all the interest you will pay over the following 10 years. Think about that before you choose any of the types of bankruptcy.

By: Benjamin Robert Ehinger

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Bankruptcy is on the rise thanks to the credit crisis affecting the US, Britain and most of Europe. However, many people are filing for bankruptcy without knowing the full story. This article explodes some bankruptcy myths.

Myth 1: You can Keep Inherited Money

If you come into any money while bankrupt, whether it be inherited or won, it must be declared. Any money newly obtained will be used to repay your creditors. If you are caught having not declared additional funds, a Bankruptcy Restraining Order will be imposed which will extend the terms of your bankruptcy.

Myth 2: Bankruptcy is an Easy Way to Escape Debt

Bankruptcy is a very serious matter, it affects your credit rating which damages your eligibility for future credit, your business, your career, and even your health. If you are planning on applying for bankruptcy you should be fully aware of bankruptcy consequences.

Myth 3: Your House and Car are Safe

Sadly you have every chance of losing your most valuable assets in order to make repayments on loans. For most people this means their home and car have to be sold to raise adequate funds. All going well you should be able to keep the contents of your home, such as your white appliances and sofa etc.

Myth 4: You Could Lose Your Job

Bankruptcy will not cost you a job unless you hold certain governmental or financial positions. Nor are you obliged to inform your employer of your bankruptcy, however, it will be a matter of public record. Click the link for alternatives to bankrutpcy and get debt help.

Myth 5: Bankruptcy Makes Future Credit Impossible

Even people who have filed bankruptcy can get a mortgage and credit card. Unsurprisingly, it puts the best mortgage deals out of reach if you have bankruptcy on your credit history, however, is it impossible to get a mortgage? No. What may be surprising however, is that bankruptcy can make getting a credit card easy. Card companies know that if you have filed bankruptcy you should have no debt.

Myth 6: Bankruptcy Discharges All Debts

Not all debts can be discharged under bankruptcy, such as child support contributions, fines and student loans.

By: Marcus Doherty

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