By John G. Merna, Esq.
Everyday thousands of hard working homeowners fall behind on their monthly house payments due to unforeseen and often uncontrolable circumstances.  If they fall far enough behind on making the monthly payments they will face the threat of foreclosure.

Everyone knows that a foreclosure will result in them losing their home to the bank or mortgage lender.  What many people don’t know is the details of the process and how their home can can be saved from a foreclosure using a bankruptcy to halt the foreclosure process and restore their ability to work with the mortgage company to become current on the payments.

What Is A Foreclosure?

Foreclosure is the legal title of taking back the title to real estate due to a default under the mortgage lending agreement.  The ownership document for real estate is the deed for the property, which is recorded at the Land Records office in the circuit court of the city or county where the property is located.  The lending agreement is incorporated in the “deed of trust”, which is also recorded at the land records office.

Reasons for Foreclosure

Any breach of the mortgage lending agreement incorporated in the deed of trust could be grounds for a foreclosure.  However, the primary reason for foreclosure is a default or failure to make the monthly mortgage payment on the loan to the lender.  There are other reason a foreclosure could occur beyond the failure to uphold the terms of the mortgage agreement.  If you were to fail to pay the annual real estate taxes assessed by the city or county where the house is located the local government can foreclose of the property to recover the unpaid taxes.  Additionally, if the development where your house is located is obligated to pay homeowners fees the homeowners associate can foreclose on your property to recover the unpaid fees. Also, if one of your creditor sues you for payment and puts a lien on your real estate they could ultimately begin foreclosure proceedings to recover payment for the judgment.



How Does A Bankruptcy Stop A Foreclosure?

With the filing of a bankruptcy under any chapter of the bankruptcy code an “Automatic Stay” halting all collection actions, including foreclosure, garnishment, and repossessions, immediately goes into effect regardless of notice to the creditor.  This automatic stay is the legal concept that halts all collection actions.  The easy part of using the bankruptcy to halt a foreclosure sale is filing a bankruptcy case.  Many homeowners have filed their own bankruptcy to halt a foreclosure based on poor advice from friends or family only to find out that actually solving the problem, which is being behind on the loan, is more complicated than they realized.

What Can A Bankruptcy Do To Fix Being Behind On Your Mortgage Payments?

The question of how a bankruptcy can assist in foreclosure situations depends first on whether you have an immediate ability to afford the payments.  For some, they are in foreclosure because the circumstance that cause the default was a loss of income and they cannot afford the mortgage payment.  If this is the situation a bankruptcy to halt the foreclosure can buy the homeowner time for them to find a solution whether it is to get more income or another solution.  For those who fell behind due to a temporary interruption in income a Chapter 13 bankruptcy can provide a plan of reorganization that allows them to begin repaying the missed mortgage payments at an affordable monthly amount as well as restructure their other debt to assist them.

Chapter 7 Bankruptcy versus Chapter 13 Bankruptcy to solve being behind on the mortgage.

If you want to surrender your property the decision on the type of bankruptcy is easy.  However, if you want to keep your house before determine the type of bankruptcy to pursue you have to first ask yourself “can you afford the mortgage at this time?”  If the answer is “no”, then a legal strategy to buy time for your circumstances to change while restructing your debt.

If the situation that caused you to fall behind on your mortgage payment has resolved itself and you can afford the payment but just don’t have the resources to pay the missed payments a Chapter 13 may help.  A Chapter 13 bankruptcy not only halts the foreclosure but also sets up a payment plan to bring you current over a 36 to 60 month plan.

Strategy, timing, and the structure of your bankruptcy is crucial to your success.  For this reason you need a qualify bankruptcy law firm to assist you in assessing your situation and structuring a strategy that will either help you extract yourself from the debt or save the house and keep your family in the home your family loves.


Call Merna Law today at 800-662-8813.

Keywords:  Foreclosure, automatic stay, Chapter 13, Chapter 7

Locations:  Virginia Beach, Newport News, Virginia Beach, Chesterfield, Hampton, Newport News, Chesapeake, Portsmouth, Henrico, Richmond