Fraud on Finance

Forelosure Bankruptcy Tips

If you’re facing foreclosure and wondering, “Will I be able to keep my home if I file bankruptcy?”, there may be options for you. Filing for a Chapter 7 Bankruptcy can possibly delay your foreclosure for a few months. A Chapter 13 Bankruptcy filing may even help you save your home altogether.

Reaffirmation Agreement

In bankruptcy, a contract signed between the lender and the debtor.

  • Reaffirms the personal liability for the debt.
  • Must be entered into before the Discharge in Bankruptcy is filed.
  • Must be approved by the court.

Pros of Reaffirmation Agreement

  • Usually to lenders advantage because it keeps you binded to the debt.
  • You have 60 days after signing the document to revoke.

Loan Modification

  • Permanent change in your mortgage loan terms.
  • Allows the loan to be reinstated under the new terms.
  • New terms include a new mortgage you can now afford.

FDIC Sponsored Loan Modification Program

The Homeowner Affordability and Stability Plan

  • Helps borrowers who cannot make their payments due to insufficient income.
  • Provides options for borrowers who are up-to-date on their payments, but can’t refinance because of a major decrease in the value of their home.
  • No fees for borrowers through this program.

Can I Keep My Home in Bankruptcy?

When you’re asking yourself, “Can I keep my home in bankruptcy?”, keep a few things in mind.

Order of Relief

When you file for bankruptcy, an Order for Relief is automatically issued by the bankruptcy court.

  • Includes an “automatic stay” ordering all creditors to immediately stop all collection actions and activities.
  • Any scheduled foreclosure sales are legally postponed during the pending phase of the bankruptcy.

Chapter 13 Bankruptcy Mortgage

1st Mortgages & Chapter 13 Bankruptcy

  • Arrearage is paid off over the length of the new repayment plan.
  • As long as the repayment plan is followed, foreclosure will cease.

2nd and 3rd Mortgages & Chapter 13 Bankruptcy

  • Court can “strip off” 2nd and 3rd mortgages.
  • 2nd and 3rd mortgages can be re-categorized as unsecured debt, making them last priority.

Chapter 7 Bankruptcy Mortgage

  • Time to Save – During the pending phase, you can live in your home free for up to several months. This gives you time to save money to relocate, or possibly save your home.
  • Get Debt Canceled – Chapter 7 Bankruptcy cancels all debt secured by you home. This includes your 1st mortgage, 2nd mortgages and home equity loans.

* These are just tips to help you understand whether bankruptcy can help you. For legal advise, please contact a bankruptcy attorney.

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