Foreclosure Prevention Attorney in Lane County

When you default on your mortgage loan, the bank can foreclose on your home. Essentially, foreclosure means that the bank is cutting its losses on your mortgage payments and is in the process of selling the house out from under you. There are several ways to fight a foreclosure and bankruptcy offers one of the most successful options. Below, we’ll discuss how Chapter 13 bankruptcy can save your home from foreclosure.

The Automatic Stay

As soon as you file for bankruptcy, all creditor actions against you must stop. This includes your mortgage lender. While bankruptcy can interrupt the foreclosure process, those who cannot make their future mortgage payments or repay arrearages on their mortgage will face a creditor motion to lift the automatic stay. This is only an issue for those who want to walk away from the mortgage or have no intention of keeping their home.

Chapter 13 Bankruptcy and Foreclosure

Essentially, Chapter 13 bankruptcy allows you to reorganize all of your debts into a single lump-sum payment that is made over the course of three or five years. When you talk to your Lane County bankruptcy attorney, we will go over your finances, look at your debts, income, and monthly expenses and figure out a way to save your home, if it is possible.

When you submit your repayment plan to the bankruptcy trustee, your mortgage payments can be rolled into your Chapter 13 repayment plan. This is especially true for those with arrearages who are facing foreclosure. One of the primary reasons that people file under Chapter 13 is to prevent the foreclosure of their homes.

Before your repayment plan is accepted, however, you will need to demonstrate to the trustee that you are financially capable of making payments to keep your mortgage current while making up for any arrearages there may be. Luckily, Chapter 13 also allows you to discharge some of your unsecured debts without repaying them in full. You may also be able to strip off second mortgages and home equity lines of credit, discharging them at the end of your Chapter 13.

Chapter 7 Bankruptcy and Foreclosure

Chapter 7 bankruptcy can’t handle secured loans very well. If the majority of your debt is either credit card debt or medical debt and this is preventing you from making payments on your mortgage, you can file for Chapter 7 bankruptcy and discharge the unsecured debt. You will have to reaffirm your commitment to your mortgage lender and keep current on your payments.

Alternatively, for those who do not intend on keeping their home, Chapter 7’s automatic stay can buy them some time. While your bankruptcy is being processed, the mortgage lender will not be able to move forward with the foreclosure and you won’t have to make mortgage payments. Essentially, you can live there rent-free until the creditor files a motion to lift the automatic stay. This gives you more cash on hand to plan your next move.

Stripping Off Second Mortgages and HELOC Loans

Second mortgages and HELOC loans, also called junior mortgages, can be reclassified in Chapter 13 as unsecured loans. This is only possible if the value of your home is less than the original mortgage amount. This renders junior mortgages completely unsecured where they are considered the lowest priority in Chapter 13.

Talk to a Eugene, OR Bankruptcy Attorney Today

If you’re facing foreclosure, the time to act is now. Foreclosures are extremely time-sensitive matters. The sooner you meet with a bankruptcy lawyer to consider chapter 13 bankruptcy, the better off you may be. If you’re looking to stop the foreclosure of your home, contact Butcher Law Office, LLC at (541) 762-1967 for your free 60-minute in-office strategy session. Don’t delay.