Posts Tagged ‘Automatic Stay’
If you’re behind on your mortgage payments with no feasible way to get current, the only way to keep your home may be to file a Chapter 13 Bankruptcy. A Bankruptcy under Chapter 13 is a structured repayment plan designed to save your house from foreclosure, other property from repossession, or (in some instances) to lower your payments on existing debts. Your best course of action is to work out a deal with the lender before filing for Bankruptcy. If you get too far behind on your mortgage payments, a lender may take steps to foreclose. The foreclose means that the lender is enforcing the terms of the loan by selling the house at a public auction and taking payment of your loan out of the auction. If you just cannot afford the house and your efforts to get mortgage relief through the lender has failed, then bankruptcy may help. When you file a Chapter 13 or Chapter 7 Bankruptcy in Wisconsin, the court automatically issues an Order for Relief that includes an “automatic stay.” The automatic stay requires creditors to immediately stop trying to collect from you. If your home is scheduled for a foreclosure sale, the sale will be legally postponed while the bankruptcy is pending. It is typical for it to be postponed for about 3-4 months. Please note, however, it is not uncommon for the lender makes a motion to “lift the stay.” When this happens, the creditor usually obtains the Bankruptcy court’s permission to proceed with the sale. In this case, a homeowner will probably not get the full 3-4 months, but perhaps more like 2 months. When you file Chapter 13 Bankruptcy you must submit a proposed payment plan that lets you pay off the late, unpaid payments over a period of 3-5 years. You must be able to show that your income is enough to make both (1) your current mortgage payment and (2) the late payments. If you make all the required payments up then you’ll avoid foreclosure and keep your home.
Foreclosure in Wisconsin is a fairly long process. Many people fear that the first time they are late on a mortgage payment they are a short time away from “getting kicked out.” It typically isn’t that simple, or that fast. Wisconsin law protects homeowners with redemption periods. The redemption period is a period of time that the lender must wait and see if the homeowner can make arrangements to get caught up. If the property is your home, Wisconsin law requires either a six or twelve month redemption period prior to selling it at a foreclosure sale. So how does bankruptcy fit into this? At any time during the foreclosure process a person can file a Chapter 13 bankruptcy. The automatic stay will stop the foreclosure process at whatever stage it is currently in. The Chapter 13 repayment plan will provide up to five years for a person to pay back any arrears they owe the mortgage company. So if you temporarily lost your footing due to a job layoff, extra holiday expenses or an unexpected illness, for example, Chapter 13 bankruptcy helps you get back on your feet and save your home.