When you face financial difficulties, your mortgage payment can be particularly imposing. For many people, it is the single largest payment they make every month. If you have fallen behind on your house payments and can seem to catch up, even though you are working or have income, you may wonder whether a Chapter 13 debtors’ reorganization will help you keep your home. This blog post addresses how the bankruptcy laws affect foreclosure proceedings.

At the office of bankruptcy attorney Carrie Weir, in Rockwall, Texas, I provide a free initial consultation to anyone considering filing for bankruptcy. For a private meeting, contact my office online or call me at 972-772-3083 to set up an appointment.

Bankruptcy and Home Mortgage Foreclosure

As a consumer, you generally have two options in bankruptcy: a liquidation proceeding under Chapter 7 and a reorganization petition under Chapter 13. In a Chapter 7 proceeding, you are allowed to permanently rid yourself of certain debts in exchange for the sale of some of your assets. Chapter 7 bankruptcy generally governs unsecured debts, such as credit card obligations and medical expenses. As a general rule, you cannot discharge the debt on property, such as a house or car, and still keep the property.

In a Chapter 13 filing, you enter into new payment agreements with your creditors. Often, as part of the process, your creditors may be willing to waive penalties and late fees, and allow you to roll any arrearages into a new note.

Whether you file for protection under Chapter 7 or Chapter 13, you are entitled to the benefit of the automatic stay under the bankruptcy laws. The automatic stay prohibits your creditors from calling you, writing to you or taking legal action against you, other than through the bankruptcy proceeding. This means that they cannot initiate legal action (file any lawsuits against you) and cannot proceed with any legal claims that have already been filed. So, if you have filed under Chapter 7 or Chapter 13, a lender cannot start foreclosure proceedings against you. If a foreclosure action has already been filed, it must be suspended while the bankruptcy is in process.

A Chapter 7 bankruptcy proceeding will end once debts have been discharged, assets have been sold and the proceeds distributed among creditors. Because you can’t discharge your mortgage debt and keep the house, when the Chapter 7 proceeding is over, you will again be responsible for paying mortgage payments.

A Chapter 13 proceeding can last three to five years. Throughout the duration of the Chapter 13, you have the protection of the automatic stay. You must, however, make all agreed payments or you risk the loss of the automatic stay.

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.

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Call Rockwall bankruptcy lawyer Carrie Weir at 972-772-3083 or fill out the contact from below for a free, confidential consultation to discuss your options.

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