Does Chapter 13 Stop Foreclosure?
Chapter 13 bankruptcy was designed for individuals with a regular income to readjust the payment of debts. This article highlights the different terms of the chapter 13 bankruptcy, how it works and answers the question does chapter 13 stop foreclosure?
Background Behind Does Chapter 13 Stop Foreclosure
Chapter 13 bankruptcies have been called a wage earner’s plan. It allows those with an income that is regular to reorganize part of their debts or even all of their debts. The debtor will be able to pay creditors in installments over a period of three or five years. Many choose chapter 13as it allows debtors to keep their home, car and other secured debts. To be eligible, an individual must have a regular income, either self-employed or in an unincorporated business with unsecured debt of$360,475.00 or lower and secured debts of$1,081,400.00 or lower.
How Chapter 13 Works?
The debtor must put forward a proposed plan within 14 days of filing for a chapter 13 bankruptcy. This should include a plan, details on income, living expenses and the proposed payments for the creditors. It is the responsibility of the homeowner to ensure that all mortgage payments are paid out as stated in the plan. Failure to do so would allow the mortgage company to carry out foreclosure of your home.
So, does chapter 13 stop foreclosure of your home?
Foreclosure Of Your Home
Home foreclosure is the process by which the bank or mortgage company having a lien on a property takes it back as the owner has failed to abide by the terms of the mortgage payment agreement. This is usually because the borrower has failed to make payments on time. The foreclosure process varies in each state but usually happens when mortgage payments are overdue by 16 days.
However, does chapter 13 stop foreclosure is a popular question and many file for chapter 13 specifically to stop foreclosure. In majority of the cases, the automatic stay applies and will temporarily stop foreclosure in addition to other collection acts regardless of the stage. This gives the debtor time and space to come up with a repayment plan without the hassle of losing one’s home or possessions.
Since chapter 13 stops foreclosure in most cases, it would be ideal to file for if one is having payment problems.