You come home one day and see a Notice of Foreclosure taped to your front door. If you wish to save your home, stopping the foreclosure sale is a critical issue. Prior to the foreclosure sale you have to pay what you are behind, plus fees and interest. If you do that, there will not be a foreclosure sale. This is known as “curing” the mortgage. If you do not catch up on the mortgage and the foreclosure sale is held, you have a six month redemption period if you remain in the property. If you leave the house and no longer live there before the six months has run, the redemption period ends and the mortgage company can take possession of your home.
“Redemption” means that by the end of the six month period you must pay the entire amount owing under the mortgage, not just what you were behind. I have never personally seen someone fail to catch up on the mortgage pre-foreclosure sale but then redeem the property after the sale and remain in their home. If a bankruptcy is filed prior to the scheduled foreclosure sale, it will stop the sale. A chapter 13 bankruptcy would allow you to catch up on your mortgage payments over three to five years rather than a matter of days or weeks like the mortgage company is demanding, and there would be no foreclosure sale.
Every Chapter 13 bankruptcy has what is referred to as a “Plan.” The Plan length is anywhere from three years at the shortest to five years at the longest. The Plan describes how you propose to pay your creditors. When a Chapter 13 bankruptcy is used to catch up on your mortgage payments, you pay your ongoing monthly mortgage payment as well as a portion of what you are behind each month over the life of the Plan. This is possible because unlike your mortgage payments or your vehicle payments, debts such as credit cards, medical bills, civil judgments, deficiencies on automobile repossessions, etc. get paid last in the Plan and typically receive only pennies on the dollar. Not having to pay those types of debts in full makes it easier to cure your mortgage so you can stay in your home.
The above information is a general overview and is not intended to be used as legal advice. If you are considering filing for bankruptcy, the best thing to do is call our office at 248-557-3645 and schedule a free consultation so you can receive advice which is tailored to your specific circumstances.