My mortgage company sent my payments back saying I am 3 months late. If I file bankruptcy, can I keep my house and land? I need to prevent them from foreclosing on the mortgage.
-- Anthony
A.
A bankruptcy filing halts a foreclosure by reason of the automatic stay. What happens next depends on which chapter bankruptcy case you filed and whether there is any non exempt equity in the property from which creditors other than the mortgage lender could be paid.
The stay in Chapter 7 (a "straight" or liquidation case) lasts only as long as it takes for the debtor to get a discharge, which is usually 4-5 months. Assuming the Chapter 7 trustee is not seeking to sell the property, the lender is free to resume foreclosure when the debtor get a discharge.
Chapter 13 is a reorganization plan for individuals with regular income. In Chapter 13, the debtor prepares a plan that outlines how much he will pay each month toward his old debts. Chapter 13 can be used to catch up the payments that are in default.
For Chapter 13 to work, you have to be able to make the current monthly payment and have money left over to make the Chapter 13 payment, which will cure the default over time. If you can't make the current payments, Chapter 13 might give you a short period in which to sell the house and realize some or all of your exempt equity. What is exempt differs from state to state. An experienced bankruptcy lawyer can walk you through your options.
