One of the worst things a homeowner ever receives notification of is the initiation of foreclosure proceedings from their mortgage lender. A foreclosure is a serious event that leads to losing your home; however, you can stop this from happening through Chapter 13 bankruptcy.
The Basics of Chapter 13 Bankruptcy

Filing for bankruptcy offers pros and cons, but it is not something to rush into or take lightly. It comes with both benefits and consequences. Chapter 13 gives you the chance to repay any debts you owe or are behind on. You might only have to repay a portion of the debts you owe, or you might have to repay all of them.
When you file for Chapter 13, the filing remains on your credit report for seven years. Until it falls off your report, you might experience problems getting lines of credit.
The Way It Stops a Foreclosure

Through Chapter 13, you will repay your debts through a repayment plan. This plan lasts up to five years, and you must pay weekly, biweekly or monthly payments to a bankruptcy trustee. The trustee takes this money and pays your creditors.
If you make every payment required of you, you will not lose your home through foreclosure. As soon as you file for Chapter 13, the court will issue an automatic stay. This is a legal term that stops your creditors from contacting you for payment.
Your creditors can communicate with the trustee during your repayment plan, but not with you. Your creditors must also cease all forms of communication for repayment or collection, and this includes stopping the foreclosure proceedings they initiated.
Your lender cannot fight a Chapter 13 case. They must follow the orders of the automatic stay, and they must stop all collections, including foreclosure.
When your lawyer helps you through this, he or she works with the trustee to create a repayment plan for you. They will determine the amount you must pay for your payments by viewing the amount of income you have.
A good portion of your income will pay off your debts; however, they will make sure you have enough money left over from each paycheck to pay for normal types of living expenses, including groceries, gas and clothing.
One key thing to know is that you must report any changes in income or expense to the trustee handling your case. These changes could affect the amount you must make for your Chapter 13 payments.
The Way It Reduces the Balance of Your Home Loan

If you owe more on your home than what it is worth, and if you have a second mortgage on your home, Chapter 13 offers a way to help you remove some of the debt owed on the house. This occurs through the process of lien-stripping.
With lien-stripping, Chapter 13 removes a second and third mortgage if the borrower owes more on the home than its current value.
For example, if you owe $150,000 on your first mortgage and $30,000 on your second mortgage, Chapter 13 could strip away the second mortgage if your house is worth less than $150,000. If you have a third mortgage too, Chapter 13 would also strip that loan too.
When this occurs, the mortgages disappear. The balances owed become $0, and you do not have to pay them off. This is one key benefit of Chapter 13 that many people do not know about.
You should not wait too long to call a bankruptcy lawyer if you are facing foreclosure on your home. Contact Frances H. Hollinger, Attorney at Law today to learn how Chapter 13 could stop the foreclosure you are facing.