Are you behind on your mortgage? Is there a Sheriff Sale on the horizon? Do you need mortgage foreclosure help? If so, then listen up: You may be able to stop foreclosure and save your home. In a Chapter 13 Bankruptcy you can pay back any past due payments, interest and fees over a 3 to 5 year Chapter 13 plan.
One of the most powerful features in the bankruptcy code is § 362, titled “Automatic Stay”. When you file a bankruptcy, whether a Chapter 7 or a Chapter 13, the automatic stay goes into effect. The automatic stay stops or halts any pending Sheriff Sale and will stop foreclosure proceedings.
It is also equally effective in stopping creditors from attempting to collect on a debt whether through garnishments, harassing phone calls, repossession, threatening letters or any other means. The automatic stay is not permanent; however, it does give the debtor a much needed break to catch their breath and collect their thoughts.
In a Chapter 13 Bankruptcy filed in Kansas, the debtor proposes to the court a “Plan” to pay back all past due payments (arrears). The plan will also pay back any and all late fees, attorney fees, as well as something called a Standing Order reserve. The SO reserve is two full regular monthly payments at the contract rate on the date of the petition plus two late fees. The reason for this is to reimburse the mortgagee for any “post-petition delinquencies that may accrue until the Trustee begins payments to that creditor.”
If all you are paying back through the plan is your mortgage arrears, then the Plan will consist of: Attorney fees, filing fees, the mortgage arrears, the SO 9-2 reserve, plus the conduit payment. The conduit payment is your normal monthly mortgage payment.
Some times the debtor is so far behind, that even if the mortgage arrears are allowed to be paid back to the bank over the maximum time period of 5 years, the debtor simply does not have the money to make the monthly plan payments. If this is the case, the debtor needs to start thinking hard about walking away from the home. It is an incredibly difficult decision to make, but if after a thorough budget counseling session with your attorney does not turn up any alternatives, it’s time to walk away.
If you have questions about how to stop foreclosure in bankruptcy and you would like an immediate answer, please give us a call at 785-379-3600 for a FREE Consultation over the phone or in person or you can email us now.