October 17, 2013 /24-7PressRelease/ -- How Chapter 13 can save your home from foreclosure---
Article provided by The Law Offices of Raymond J. Antonacci, LLC
Visit us at http://www.rjalegal.com
Across the nation, economic troubles and sudden personal emergencies cause people to be in a position where they fall behind on their mortgages. A sudden medical need, for example, can easily result in a few missed mortgage payments. Because of missed payments, many people face foreclosure. If you find yourself in this situation, you may wonder if there is a way out. Fortunately, if you have a regular income, Chapter 13 bankruptcy can stop foreclosure proceedings and help you eliminate many types of debt.
Basics of Chapter 13
The relief that Chapter 13 provides begins as soon as you file the bankruptcy petition. At this point, the automatic stay goes into effect, which prevents your creditors from continuing to collect debts against you. In addition to stopping debt collectors' calls, the stay also stops your mortgage lender from continuing foreclosure proceedings until the court allows it to continue.
After the stay has gone into effect, the Chapter 13 process begins. Chapter 13 works by consolidating your debts into a monthly payment plan. Under the plan, you pay off your debts in full or partially over a three to five-year period. Your monthly payments are kept affordable, as the amount you pay is based on your disposable income. As long as you continue to make payments each month, your mortgage lender cannot foreclose on your home.
You make each monthly payment to the bankruptcy trustee. The trustee is appointed by the court and has the task of dividing your payments and paying each of your creditors by order of priority. Under the bankruptcy laws, secured creditors such as car finance companies and mortgage lenders get priority treatment, meaning that they are paid first. As a result, Chapter 13 filers are able to catch up on all missed payments.
Conversely, unsecured creditors such as credit card companies or healthcare providers (i.e. medical bills) are paid last under the bankruptcy laws. Depending on how much money is left to go around after paying the secured creditors, these creditors are normally paid only partially or not at all.
After you have finished making payments under the plan for three to five years, the bankruptcy court discharges most of your remaining unsecured debt. If there were any unsecured debts that were not fully repaid under the plan, this means that you no longer have to repay the balance. Free of this debt, you have the opportunity of a fresh financial start.
Chapter 13 and second mortgages
In addition to preventing the foreclosure of first mortgages, Chapter 13 can help those who are underwater (i.e. owe more than the home is worth) on their second or third mortgages. In a process called lien stripping, second or third mortgages are treated as unsecured creditors in Chapter 13, so they are the last to be paid (if at all). Once the court grants a discharge, the remaining balance on these mortgages is wiped away with the other unsecured debt.
If you are struggling with your mortgage, bankruptcy may or may not be for you. It is important to consult with an experienced bankruptcy attorney before taking any action. An attorney can evaluate you situation and recommend the best course of action for you.
Press release service and press release distribution provided by http://www.24-7pressrelease.com
# # #Read more Press Releases from FL Web Advantage: