Foreclosures Stop with a Bankruptcy Automatic Stay
Foreclosures are regulated by state law and procedures in every county in United States. The permissible procedure is always similar. Each homeowner must receive written notice of the mortgage holder’s intent to foreclose upon a home. Homeowners also have an absolute right to bring payments current and use bankruptcy to stop foreclosure sales. The notice period is at least 30 days, and individual notices are posted within county real estate records. In the past, mortgage companies did not file notices until a borrower missed three or more payments. Today, posting is much quicker and many people are caught by surprise in the midst of an ailing economy.
Foreclosure places each homeowner, their family and loved ones at risk. Alternate living arrangements must be made. In most situations, mortgage payments are paid voluntarily each month so long as funds are available. For many homeowners, when assets are depleted, filing bankruptcy is the only feasible alternative.
The U.S. Bankruptcy Code, in 11 U.S.C. Section 362, creates a powerful right to stop creditors and their collection actions. An automatic stay arises when a case is filed. A stay is similar to a statutory injunction that prevents all further debt collection in all chapters. The stay necessarily prohibits conducting foreclosure sales. After filing, mortgage lenders cannot sell homes after receipt of actual notice that a stay is enforce. Written notice by certified mail is advisable yet any provable means is sufficient. Phone calls stop reputable creditors before a letter arrives.
The automatic stay may be temporary. In Chapter 7 bankruptcy cases, homeowners must bring all payments current. If payments are not current, the court will terminate the stay. In Chapter 13 bankruptcy cases, debtors include all past due payments in a proposed repayment plan. All past due payments included in a plan are deemed current by operation of law and the stay will remain intact. When filing a Chapter 13 case, each debtor must make a trustee payment within 30 days of filing. If this payment is not made, the stay terminates and the case is dismissed for non-compliance.
The best time to begin planning bankruptcy strategies is months before receiving collection notices. By allowing more time to formulate a great plan, the benefits of filing bankruptcy grow many times over. Each debtor may change his or her means test result with only one month to plan. Each additional month allowed for planning creates greater advantages and larger savings. The means test determines if you qualify for a Chapter 7 discharge and also determines the amount of required plan payments in Chapter 13.
Planning bankruptcy does not require a lawyer. Most lawyers provide only one free initial consultation. The means test results fluctuate monthly. All debtors may calculate the means at home, without an attorney, and save $400 or more with each test. All debtors must remain aware of test results during the weeks and months before filing to obtain maximum benefits. To complete the test accurately, use custom drafted forms designed for debtors. The official form required by the court is unnecessarily complicated and instructions offer little meaningful guidance for optimizing results.
