Not if you file chapter 13. Only a chapter 13 bankruptcy can save a house from foreclosure. The typical manner in which to save real estate from foreclosure is to cure all pre fling arrears through a bankruptcy plan, while making all future monthly mortgage payments on a timely basis. If the debtor is financially able to make the trustee payments, in addition to the monthly mortgage payments, the mortgage company cannot stop a person from saving their property. It is your right under the bankruptcy laws.
A person that files a chapter 13 must make monthly plan or trustee payments, which includes the total mortgage arrears, as of the filing date. However, the debtor may be required to pay additional creditors, as part of the bankruptcy plan. The payments to these additional creditors are based on the debtor’s financial situation and the type of debt that is owed. In other words, if a person has child support arrears, theses arrears must be paid together with the mortgage arrears. Also, the debtor may be required to pay certain income tax liability If the debtor cannot pay all of the required creditors, through the plan, including their mortgage arrears, in addition to paying their monthly mortgage payments directly to the mortgage company, the debtor will be unable to save his house.
In every case, the mortgage company files a proof of claim that should reflect a detailed breakdown of the arrears and total amount due, as of the date of the filing. There are numerous costs and expenses included on the claim, representing the arrears, which may be inaccurate. The court accepts the mortgage company’s claim as accurate and the trustee will pay the amount of the claim. However, if the debtor believes that the claim is inaccurate, he can file an objection and request to reduce the claim amount.
The other atypical manner in which to save a house is by way of a loan modification, through the bankruptcy process. It is possible for a debtor to pursue both a mortgage cure and a loan modification, through their bankruptcy case. There is no bankruptcy law or any other law that can require a mortgage company to enter into a loan modification. Therefore, the loan modification process depends on whether the mortgage company will consent to enter into a loan modification. If the mortgage company will not agree to a loan modification, a debtor can save their house, if possible, by curing the arrears. However, if the mortgage company will not agree to a loan modification and the debtor is unable to cure the arrears, the debtor will be unable to save his house.
Please call NJ bankruptcy expert Robert Manchel at (866) 503-5655 to discuss how bankruptcy protection can save your house from foreclosure.