Every day I speak with home owners who had sufficient income to pay their home loan when they purchased it, but suffered a temporary interruption in income which prevented them from making some mortgage payments. This could not be truer after the coronavirus pandemic put so many Americans out of work temporarily. Now, banks have started to schedule these homes for foreclosure auctions.
Our firm prevents the banks from foreclosing on these homes by filing Chapter 13 repayment plans. More than fifty percent of all Chapter 13 cases are filed with the primary intent of saving a home from foreclosure sale. You’ve probably heard commercials about Chapter 13, or seen billboards while driving to work, but how does Chapter 13 actually help you? Let’s make it easy to understand:
The Chapter 13 process is also called a “Cure and Maintain” plan. Each month (starting in 30 days after filing), you make two separate payments. 1) Cure payment; and 2) Maintain payment.
The Maintain payment is simple. Whenever your next mortgage payment is due, you make the payment directly to your mortgage lender. Don’t worry about them giving you a hard time; THEY WILL BE FORCED TO ACCEPT YOUR PAYMENT. Then each month after, you just “Maintain” making mortgage payments.
Next, we calculate how much you are behind on mortgage payments. The good news is that the law allows us up to sixty months to repay that debt in installments. For the next sixty months (or sooner if you are able to afford it), we will slowly “Cure” the default.
The bank will be forced to accept your payments each month, will not be allowed to foreclose on the home, and most importantly, your home remains yours!
Here is a recent example: Sam and Stephanie (a couple) earn combined take home pay of $4,000 per month. Sam worked. Stephanie was in school and stayed at home with their new born. They had a $1,500 monthly mortgage payment.
When the coronavirus pandemic hit, Sam was laid off from his job. The family went without any income for 8 months. The lack of income forced the couple to stop making their mortgage payments and use their saving to keep the water on and feed their baby. Eventually, Sam was re-hired and back to work.
Just last month, the mortgage company sent Sam and Stephanie a notice stating they need to pay the full 8 month balance in past due payment all at once. Sam and Stephanie desperately try to work out a modification or repayment plan, but the mortgage company refused to take partial payments or work with them at all. When Sam and Stephanie did not qualify for refinancing, the bank sent a notice of foreclosure and included outrageous attorney’s fees. They were told their only choice was to pay $20,000 at once, or a foreclosure sale would occur the next month.
They were in luck! Using Chapter 13, Sam and Stephanie were able to force the mortgage lender to stop their foreclosure sale and start accepting payments. Their attorney helped file a plan which permits them to pay the future mortgage payments of $1,500 per month, plus an extra $400 per month for 60 months to cure the $20,000 default the bank alleges. As part of this process, the mortgage company is prohibited from proceeding with a foreclosure sale or taking any further action to collect the debt outside of the bankruptcy process. Sam and Stephanie can breathe again. Their home remains theirs!
Visit https://www.msflaw.org/foreclosure to learn more about how you can protect your home. MSF Law is a debt relief agency who helps consumers file for relief under the US Bankruptcy Code.
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