If you are behind on your home mortgage filing for bankruptcy may give you the ability to save your home. There are two different chapters of bankruptcy utilized by most consumers – chapter 7 and chapter 13. An automatic stay will go into effect on the day your case is filed under either chapter, with a few exceptions for repeat filers. The automatic stay prevents creditors from enforcing or collecting on your debts.
The automatic stay in a chapter 7 bankruptcy case will stall a foreclosure action against you. The automatic stay in Kansas or Missouri will force the mortgage company to stop the foreclosure process – as long as your house has not been sold at auction or sheriff sale. If a foreclosure has already been filed against you, the foreclosure will be put on hold until your bankruptcy case closes. The mortgage company does have the option of requesting the Judge in your bankruptcy case to lift the automatic stay, so they can proceed with the foreclosure. The request to lift the automatic stay will take a few months allowing the debtor a brief period to catch up on their mortgage.
The chapter 7 will only help you out if you are able to catch-up on your mortgage during your bankruptcy case. Otherwise, once your case closes you will be in the same situation as before your case was filed, with the exception that your liability for your mortgage debt has been released if you chose to abandon your home.
A chapter 13 bankruptcy case allows you to catch-up on your mortgage arrears throughout the course of your bankruptcy repayment plan. A chapter 13 repayment plan will last between 3-5 years depending on your median income level. Your repayment plan amount is determined by the amount of your disposable income after necessary expenses are deducted from your gross income. The mortgage arrears amount will be divided by the months in your total repayment period. If you are attempting to save your home through a chapter 13 repayment plan, you will need to ensure you will be able to afford the ongoing monthly mortgage payments and a payment towards the arrears.
If you are behind on your mortgage and want to discuss your bankruptcy options in a casual, non-judging environment, arrange a consultation with our Kansas City Bankruptcy attorneys.
If you are wondering if you will lose your home simply because you are filing bankruptcy in the state of Kansas or Missouri you will want to read our post If I file bankruptcy can I keep my house?.