Bankruptcy and Foreclosure in Michigan

Getting behind on mortgage payments can be nerve-racking for homeowners.  It may be that the homeowner has paid faithfully for years only to have recently fallen on hard times.  For others, it may be that they took on more than they could afford and have never been able to keep up their payments.   In these and other situations, foreclosure will be a likely reality.  The homeowner who is thinking about bankruptcy and worried about potential foreclosure should consider the following:

For those who wish to keep their home, there are steps which can be taken prior to foreclosure which may help.  One option would be to contact the lender and try to negotiate an agreement which allows you to continue making payments on the mortgage.   However, if you simply cannot afford the home or your lender is not agreeable to a plan, bankruptcy may offer you the opportunity to avoid foreclosure and repay debt.

For those not yet in foreclosure, there may also be an option under bankruptcy which allows the homeowner to keep their home.  Under a Chapter 13 bankruptcy, the borrower agrees to enter into a repayment plan on their debts.  If the borrower is delinquent on mortgage payments, they can propose a plan which allows them to make their payments going forward while also paying for any past unpaid or late payments.   As long as the borrower complies with the terms of the repayment plan, they should be able to pay off their debt and keep their home.  Whether this option will be available will depend on the terms of the agreement which can be reached under this type of bankruptcy.

For those individuals who file a Chapter 7 or 13 bankruptcy, the bankruptcy court will issue what is referred to as an “automatic stay.”  The automatic stay functions to stop your creditors from attempting to collect the debts identified as being owed to them.  By having your home included as part of the bankruptcy estate, it will be included as a debt covered by the automatic stay.  For those with a home which is in the foreclosure process, the sale of the home can be delayed while the bankruptcy is pending.  However, the mortgage lien holder can ask permission from the bankruptcy court to allow the sale to occur while the bankruptcy is pending.  Once this is granted, the lender may proceed with the sale.   Essentially, when your home which is in foreclosure is included in your bankruptcy, you may be able to buy yourself a few months to catch up on your mortgage or work something out with your lender before the bankruptcy is complete or the lender has the automatic stay lifted.

Determining how bankruptcy will relate to your home and its future can be complicated.  With the advice of an experienced bankruptcy attorney, you can evaluate the options for your home during bankruptcy.  We have the knowledge and experience you need to help you understand your choices and find solutions. Please contact us online or by phone if we may be of assistance.

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