A Chapter 13 bankruptcy is usually filed by homeowners to stop the sale of their home. A Chapter 13 bankruptcy consolidates all of your debts into one payment to a Chapter 13 bankruptcy trustee. When you file the Chapter 13 bankruptcy you receive an automatic stay from the bankruptcy court. The automatic stay is a type of temporary injunction that stops all State Court legal action against you. It specifically stops foreclosure lawsuits from moving forward. The foreclosure lawsuit is frozen in place.
What do I need to file a Chapter 13 bankruptcy?
Before filing a Chapter 13 bankruptcy you must obtain a list of all of your debts. You must outline your income and expenses when filing a Chapter 13 bankruptcy. It is necessary to develop a plan to show how you will repay your creditors over 5 years in the Chapter 13 bankruptcy.
Loss Mitigation Case
After you file the Chapter 13 bankruptcy you make one monthly payment to the Chapter 13 bankruptcy trustee’s office. In addition to filing a Chapter 13 bankruptcy you can simultaneously file for a loss mitigation proceeding. The general purpose of a loss mitigation proceeding is to obtain a modification of your mortgage. If your home is in foreclosure your creditor has called in your entire mortgage. Once this takes place the financial institution will not accept payments on your mortgage. Upon the filing of the Chapter 13 bankruptcy the financial institution now must accept mortgage payments. Making a payment to the trustee paying your full mortgage amount may create a situation that requires greater income than you have. Therefore, by filing a loss mitigation proceeding you can ask that your mortgage be modified to bring it down to a point being financially able to pay to the trustee with regard the arrears and pay the bank with regards to your new modified mortgage amount.
About the Author
Attorney Elliot S. Schlissel has been involved in representing clients in bankruptcies for over 35 years. Elliot is the managing partner of Schlissel DeCorpo LLP. Elliot and his staff of attorneys help homeowners throughout the Metropolitan New York area to fight foreclosure lawsuits, file bankruptcies and help clients obtain mortgage modifications. He can be reached for a free consultation at 800-344-6431 or e-mailed at Elliot@sdnylaw.com.