The alarming rise in the rate of foreclosures across the nations has been a familiar topic in the news over the last several years. Many families who never dreamed of being in this situation are struggling to keep their homes. For a large percentage of them, losing their home through foreclosure will become an unavoidable reality. But for others, it may be possible to stop foreclosure with bankruptcy.
Foreclosure usually doesn’t happen until you are several months behind in your mortgage payments. At this time the lender will notify you that you are in default and allow you time to get caught up with your payments. If you do not get caught up during the time allotted, the lender will then notify you of its intention to offer your home for sale at public auction, typically within 30 days. If by that time you still haven’t resolved the issue, your home will be sold and you will lose the chance to redeem it, unless your state allows a “redemption period” following the sale. In Oklahoma, it takes 15 days for the sale to be confirmed by the courts. During this time, you can redeem your home by paying off the entire balance of your mortgage.
Often, lenders are willing to make arrangements with you to get out of default and keep your home. But when this is not the case, you will be left with few choices, and bankruptcy may be the best option available.
The two main types of bankruptcy proceeding are Chapter 7 and Chapter 13. Under each, an “automatic stay” goes into effect as soon as you file and the foreclosure process is put on hold until the end of your bankruptcy or until the stay is lifted by court order.
Chapter 7 bankruptcy
Filing Chapter 7 will usually give you about four months before the foreclosure process resumes. Ultimately, Chapter 7 will not stop foreclosure, but the delay may give you time to arrange for its eventuality and prepare to move on. Also, during the bankruptcy period, you will be allowed to stay in the home without making any payments, which can give you the chance to save money to find someplace else to live.
Chapter 13 bankruptcy
Chapter 13 bankruptcy can actually stop a foreclosure. This is possible because under Chapter 13 you will be allowed to propose a plan to reorganize your debt and get caught up with your loan payments. If you can achieve this in within the allotted time (three to five years), you will be able to avoid foreclosure and keep your home.
You must, however, qualify for Chapter 13 bankruptcy and have the court approve your reorganization plan. This normally means that you must have enough income left over to make steady payments after first satisfying certain other debts, such as child support, alimony and taxes, which have priority over your mortgage.
In times of economic hardship it may be harder to keep up with mortgage payments and the threat of foreclosure may seems ever-present. But if this threat ever becomes a reality for you and your family, you may be able to use bankruptcy to stop foreclosure and maintain possession of your home. Even if keeping your home is not possible, filing bankruptcy can delay the foreclosure process and give you time to save some money and preparations for life after.
Free Consultation: Oklahoma City Bankruptcy Lawyer
To find out more about how to file bankruptcy in Oklahoma, contact an experienced Oklahoma bankruptcy attorney. For a free confidential consultation about your rights in bankruptcy court and the potential benefits of filing bankruptcy, contact the Debt Line Law Office at (405) 563-7888. If you prefer e-mail, send us your question using the form at the top right of this page and we’ll answer your question as soon as possible.