When you find yourself in dire financial circumstances and unable to pay your bills, saving your home from foreclosure is likely your biggest concern.
While you have several options for accomplishing this goal, the U.S. Courts explain that filing Chapter 13 bankruptcy may be the best one because it applies to all your debts, not just your mortgage loan.
Qualifying for Chapter 13
To qualify for Chapter 13, often called a wage earner’s plan, you must have a regular income. In addition, you must meet the following requirements:
- You must be current on your state and federal income taxes.
- Your unsecured debts, such as credit card debt, must total no more than $394,725.
- Your secured debts must total no more than $1,184,200.
Saving your home
As soon as you file for Chapter 13, the court issues an automatic stay. Not only does this stop any foreclosure proceeding in its tracks, but it also forbids all of your creditors, not just your mortgage lender, from starting or continuing lawsuits against you or harassing you by phone, email or snail mail for repayment of their debts.
You and the bankruptcy trustee then meet with your creditors, generally within 21 days after your filing, but it could be as long as 60 days if the meeting will take place at a location that does not have a regular trustee or administrative staff.
Thereafter, you and the trustee devise a repayment plan that you must follow throughout the course of your bankruptcy. Assuming that you catch up on your mortgage payments and make your other payments according to the plan, you will not lose your home to foreclosure.
