Massachusetts homeowners facing foreclosure have cause for concern about a bank or lender gaining possession of their home due to late payments or missed payments on a mortgage. It is not uncommon for a Massachusetts homeowner to run into financial or other difficulties, making it difficult to make mortgage payments on time or in full. When mortgage payments are missed most banks and lenders will work with you for a period of time, but then, if the mortgage payments continue to be late or missed, the bank or lender will probably foreclose on the home. Not only is the foreclosure process financially devastating for a homeowner but it is emotionally devastating as well.
Chapter 13 Bankruptcy Can Help
When a person files for bankruptcy in Massachusetts the automatic stay is triggered. The automatic stay is a provision under the federal bankruptcy code that forces creditors to stop dead in their tracks. With respect to mortgage holders, that is, banks and lenders, the automatic stay means that they must stop (at least temporarily) all foreclosure activity. The automatic stay allows someone who has filed for bankruptcy time to sort out their financial situation and possibly make other arrangements.
Here Is Where Chapter 13 Bankruptcy Comes In
With chapter 13 bankruptcy, the amount you owe in late fees, penalties, basically all arrearages you on the mortgage are spread out in repayments over a 3-to-5-year period. By spreading out your arrearages you in a much better position and can keep your home provided you meet other post-petition obligations.
What Are the Other Post-Petition Obligations?
After filing for bankruptcy in chapter 13 It is true that you will get to keep your home. But keeping your home requires you to stick to the repayment schedule.
1. Make all repayment plan payments – any plan for repayment that is structured in chapter 13 must be followed to the letter. This means that you will need to make sure that you pay every payment under the plan monthly, in full, and on time for the full 3 to 5 years that you are in the plan. If you do not keep up with the schedule for any reason, it is very possible that the mortgage holder, that is the bank or lender, will ask for relief from the automatic stay from the bankruptcy court and attempt to reenter the foreclosure process.
2. Make all current monthly payments on the mortgage – not only will you be required to make all of the arrearage payments which were structured in the chapter 13 repayment plan, but, you will also be required to make your normal, regular, monthly mortgage payments on time and in full.
Failing to follow number 1 or 2 above could result in the, gaining relief from the automatic stay and obtaining your home through the foreclosure process.
Develop a Financial Strategy
In my opinion, the key to success under a chapter 13 bankruptcy plan is two-fold. First, you want to consider how to stop the bleeding. Losing your home is an emergency and dealing with that emergency first is very important. For this reason, you want to file chapter 13 bankruptcy most likely so that you can gain the benefit of the automatic stay and stop the foreclosure process. Next, it makes no sense to stop the bleeding if the patient is not going to survive. You should consult with your bankruptcy attorney to determine your ability to make payments under the repayment plan and to do so faithfully, timely, and in full. If you are able to make all payments set up under a chapter 13 bankruptcy plan then, it makes perfect sense to file for chapter 13 bankruptcy to stop foreclosure on your Massachusetts home.
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