Bankruptcy Cases Under Chapter 13, 7 and 11 Will All Stop a Foreclosure Sale and Stay a Foreclosure Proceeding and are Used towards Reorganizing or Eliminating Mortgage Arrears.
A Bloomberg Video on Facing Foreclosure
A bankruptcy case has the advantage of providing a
sense of certainty by immediately stopping
a foreclosure process and any possible actions
within the foreclosure litigation such as a foreclosure
sale. A bankruptcy case has the advantage of not relying
on the consent or agreement of the mortgage holder
who under federal Bankruptcy Law is required to abide
by the automatic stay which immediately goes into effect
upon the filing of the bankruptcy case. There are several
types of bankruptcy cases available to persons in foreclosure
or threatened with foreclosure: Chapter
13, Chapter 11 and Chapter
7. Chapters 13 and 11 reorganize debt and revolve
around a plan which allows a "catch up" over time on
mortgage arrears and other debt, while Chapter 7 eliminates
or "discharges" debt. More detailed descriptions of
these types of bankruptcy cases and how they can help
in a foreclosure situation follows below:
Chapter 13
A
Chapter 13 bankruptcy case is often used to stop the
foreclosure process, including foreclosure sales, with
the goal of curing mortgage arrears over a designated
period of time. The Chapter 13 plan also cures debt
other than mortgage arrears, such as credit card balances,
often without interest and at a reduced rate. Under
a Chapter 13 case, a monthly payment plan is developed,
which allows the gradual curing of debt, including
mortgage arrears, over time for up to five years. During
this process, on a monthly basis, you will go back
to making post-petition mortgage payments, as well
as making Chapter 13 plan payments to a court-appointed
trustee. The combination of such payments will allow
you not to fall further behind in mortgage arrears,
while at the same time curing the arrears that existed
before the filing of the case. A budget, a Chapter
13 plan and bankruptcy schedules, as well as other
significant documentation need to be submitted to the
Chapter 13 trustee and Bankruptcy Court as part of
the process needed to confirm the Chapter 13 plan.
The Law Office of Ronald D. Weiss, P. C. will represent
you in the entire Chapter 13 case, in preparing and
filing the many papers initiating the case, in representing
you at the creditor's meeting and confirmation hearing
and in preparing the Chapter 13 plan for approval by
the Court.
Chapter 7
A
Chapter 7 bankruptcy case will allow the "discharge"
or the legal forgiveness of non-mortgage unsecured
debt such as credit card debt, personal loans and medical
bills. In appropriate cases the elimination of such
burdensome unsecured debt would allow the client to
concentrate on curing their mortgage arrears. If a
client decides to allow a foreclosure action to proceed
against their main or secondary property, Chapter 7
will allow the discharge of debt that may still remain,
if the amount owed in secured debt on the property
exceeds the property's fair market value.
Chapter 11
Reorganizations
can be either within or outside the context of a bankruptcy
case. Outside the context of a bankruptcy case a business
or an individual may try to workout formal agreements
with several of its creditors in what is considered
to be a reorganization. Within the context of a bankruptcy
case, a Chapter 11 reorganization case allows a business
or an individual with significant debts and assets
to protect itself from its creditors while it concentrates
on reorganizing its affairs. A Chapter 11 reorganization
case requires the debtor to offer a plan of reorganization,
which extends, and in some instances, reduces many
of the debtor's obligations. A Chapter 11 reorganization
is an involved and potentially lengthy bankruptcy case
and requires special knowledge and expertise. The Law
Office of Ronald D. Weiss, P.C. has represented many
businesses and individuals in Chapter 11 reorganization
cases.
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A
Chapter 13 bankruptcy case is often used to stop the
foreclosure process, including foreclosure sales, with
the goal of curing mortgage arrears over a designated
period of time. The Chapter 13 plan also cures debt
other than mortgage arrears, such as credit card balances,
often without interest and at a reduced rate. Under
a Chapter 13 case, a monthly payment plan is developed,
which allows the gradual curing of debt, including
mortgage arrears, over time for up to five years. During
this process, on a monthly basis, you will go back
to making post-petition mortgage payments, as well
as making Chapter 13 plan payments to a court-appointed
trustee. The combination of such payments will allow
you not to fall further behind in mortgage arrears,
while at the same time curing the arrears that existed
before the filing of the case. A budget, a Chapter
13 plan and bankruptcy schedules, as well as other
significant documentation need to be submitted to the
Chapter 13 trustee and Bankruptcy Court as part of
the process needed to confirm the Chapter 13 plan.
A
Chapter 7 bankruptcy case will allow the "discharge"
or the legal forgiveness of non-mortgage unsecured
debt such as credit card debt, personal loans and medical
bills. In appropriate cases the elimination of such
burdensome unsecured debt would allow the client to
concentrate on curing their mortgage arrears. If a
client decides to allow a foreclosure action to proceed
against their main or secondary property, Chapter 7
will allow the discharge of debt that may still remain,
if the amount owed in secured debt on the property
exceeds the property's fair market value.
Reorganizations
can be either within or outside the context of a bankruptcy
case. Outside the context of a bankruptcy case a business
or an individual may try to workout formal agreements
with several of its creditors in what is considered
to be a reorganization. Within the context of a bankruptcy
case, a Chapter 11 reorganization case allows a business
or an individual with significant debts and assets
to protect itself from its creditors while it concentrates
on reorganizing its affairs. A Chapter 11 reorganization
case requires the debtor to offer a plan of reorganization,
which extends, and in some instances, reduces many
of the debtor's obligations. A Chapter 11 reorganization
is an involved and potentially lengthy bankruptcy case
and requires special knowledge and expertise. The Law
Office of Ronald D. Weiss, P.C. has represented many
businesses and individuals in Chapter 11 reorganization
cases.
