According to some observers, we’re in the last stages of the home foreclosure crisis that wreaked a path of havoc from coast-to-coast for the past five years or so. There is still a body of foreclosure actions to dispose of as the turmoil slowly winds down. In Florida and other states, a bankruptcy petition remains available as a possible measure to stop home foreclosure and ultimately keep your house.
Homeowners on the tail end of the crisis continue to file bankruptcy to stop mortgage and tax foreclosures. In comparison to the numbers of foreclosure filings a year ago, the numbers of new filings are less. The pool of those homeowners in the active foreclosure process is getting progressively smaller as the economic picture slowly improves.
Where homeowners are again steadily employed, there is a reasonable chance that the home can be saved through a Chapter 13. This is the main vehicle that’s used to stop home foreclosure and catch up on your mortgage payments. A Chapter 7 is not appropriate for trying to retain a house that is behind on mortgage payments. To keep the home in a Chapter 7 you must be up-to-date on the mortgage payments and continue to pay them. Chapter 7 is great for quickly discharging unsecured credit cards and medical bills but is not designed to try and keep a home that’s in mortgage default.
A Chapter 13, however, is based on a three to five-year payment plan that allows homeowners the chance to get caught up by way of monthly installments. During that time, the homeowner pays the usual mortgage amount on time each month. In addition, a separate ‘plan’ payment is made every month to a Chapter 13 trustee. The plan amount includes payments toward the mortgage arrearages.
In Florida and all other bankruptcy jurisdictions, the mortgage arrears will be cleared out at the end of the five-year Chapter 13 Plan. The homeowner will have just the regular monthly mortgage amount to continue paying after the bankruptcy. The bankruptcy successfully helped you stop home foreclosure and keep your house. At the successful conclusion of the five-year plan, the bankruptcy is ended with an order of discharge.
Source: Source: journaltimes.com, “Fallout from foreclosure,” Alison Bauter, July 29, 2013