Falling behind on your mortgage payments in Chapter 13 bankruptcy can create a series of events that lead to foreclosure.
- After the Chapter 13 bankruptcy debtor has failed to pay their mortgage for about 2 to 3 months, the mortgage company’s attorney will send a letter giving them the opportunity to catch up on their payments.
- If the bankruptcy debtor fails to immediately catch up on their payments, the mortgage company will file what’s called a “motion for relief.” The motion for relief basically is a request from the creditor that the bankruptcy trustee lift the automatic stay protection and allow them to foreclose on the property.
- Once the motion for relief is filed, the debtor’s bankruptcy attorney will most likely suggest that the debtor settle the issue with the mortgage lender by agreeing to catch up on their payments over the course of 6 to 8 months plus pay the filing costs and attorney fees associated with the motion for relief. This will usually cost the debtor about $600 to $800 dollars and that’s in addition to the delinquent mortgage payments they must make.
- If the bankruptcy debtor decides against settling the issue with the mortgage company and the issue comes before the bankruptcy trustee, there is a possibility that the trustee will grant the creditors request. If the creditor’s motion for relief is granted they will have the right to foreclose on the property and collect attorney’s fees despite the debtor’s bankruptcy status.
Debtors who fall behind on their mortgage payments in Chapter 13 bankruptcy need to contact their bankruptcy attorney immediately. If their financial circumstances have changes, they may be able to have their Chapter 13 bankruptcy payments reduced or even have the case converted to a Chapter 7 bankruptcy and still save their home from foreclosure.