Foreclosure
Most people file a chapter 13 Bankruptcy to save a house
from foreclosure sale. The filing of the bankruptcy stays
any foreclosure action and allows a debtor to cure the
delinquent mortgage payments over three to five years. For
example, a homeowner fell behind in mortgage payments and
is now six months in arrears and the mortgage company wants
the full $9,000.00 arrearage to be paid in full or
foreclosure proceedings will commence. By filing a chapter
13, the homeowner will pay the $9,000.00 arrears (with
interest) over the course of three to five years depending
on the monthly disposable income. As long as the payments
are paid monthly, the lender cannot foreclose on the
property. The homeowner continues to make the regular
monthly mortgage payment plus an additional fixed amount
per month. When the plan is completed, the mortgage
payments will be current, and the homeowner would continue
to pay the lender under the normal course of the mortgage
contract.