Can I Save My Home by Filing?

For the most part, families/individuals choose to file Chapter 7 or Chapter 13 bankruptcy. When your home is being foreclosed upon by the bank, Chapter 13 may be the best option, simply because this type of bankruptcy makes it possible for you to catch up on payments that are in arrears. Chapter 7 bankruptcy results in an automatic stay, which means the foreclosure may be stalled as long as your Kansas or Missouri home has not been sold at sheriff sale or auction. However, the mortgage company may proceed with the foreclosure by requesting that the Judge in your case lift the automatic stay. Ultimately, this type of bankruptcy is the right option only if you are capable of catching up on the arrears during the course of your bankruptcy case.

Chapter 13, however, makes it possible for you to catch up on your mortgage via the repayment plan, which generally lasts over a period of three to five years, depending on your median income level. The arrears paid on your mortgage is determined by the amount of income you have available to you after essential or "necessary" expenses are deducted from your gross income. The amount you pay in arrears depends on the amount determined after dividing the number of months in your total repayment period. Before you decide Chapter 13 bankruptcy is the right option for your family, you will need to make certain that the amount of the monthly mortgage payments that will continue for three to five years is an amount you can actually afford.

Your mortgage lender must follow the foreclosure rules for Missouri or Kansas. Receiving a foreclosure notice in the mail does not indicate the bank can put your home on the market immediately, and your lender is required by law to give you ample notice regarding the fact that you are in default, and that the lender wants or intends to foreclose on your home. Generally speaking, homeowners will receive a notice of foreclosure from the lender prior to the actual sale date, so that you know how much time is available before your home is actually sold. However, the filing of Chapter 13 bankruptcy prohibits the lender from conducting this sale, meaning you do have an opportunity to save your home.

Ultimately, through Chapter 13 bankruptcy, you may be able to prevent foreclosure and catch up on mortgage arrears by making payments to a bankruptcy trustee, who in turn makes payments to your lender. The amount you are behind on is caught up over the term of the bankruptcy through these payments, while you continue to make regular mortgage payments. When all is said and done, you retain ownership of your home and are no longer in default.