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Bankruptcy and Home Foreclosure

As a bankruptcy attorney, I’ve seen people actually that have filed bankruptcy that were under foreclosure, or imminent foreclosure was coming. They have been able to reside in the home for several years in that status. I’ve heard of at least one attorney in southern Ohio that is on his seventh year without making any mortgage payments.

Obviously, he’s handling his own case as far as fighting the foreclosure, and his knowledge helps him tremendously.  Filing for a Chapter 13 obviously provides more time.  The entity with the highest priority is always going to be on whoever the lien holder or mortgage holder is.

Is Bankruptcy a Defense for Foreclosure?

Interviewer: Is bankruptcy used for a foreclosure defense?

Adam: I’ve used bankruptcy as a defense for foreclosure successfully quite a few times.  There are many new programs out there that I know of and can utilize. In my practice, I do not handle a great many foreclosure defense cases myself, but I know enough to get around, research the programs and use them to my advantage.

Filing Bankruptcy Can Stop Foreclosure and Allow You to Retain Ownership of Your Home

In my opinion, the foremost way to get around any type of foreclosure is just to file bankruptcy.  Especially now, as I said, the homestead exemption has expanded so much, there’s more equity that they can retain.

A Chapter 7 Bankruptcy Filing Can Stay Foreclosure for 90 Days; Chapter 13 Bankruptcy Allows Homeowners to Retain Their Properties by Maintaining a Payment Plan

Interviewer: Bankruptcy itself is a natural foreclosure defense because in Chapter 7, the filing it automatically stays foreclosure for at least 90 days. In a Chapter 13 bankruptcy filing, how long can it potentially stay a foreclosure?

Adam: It’s going to depend on, first of all, how quick they’re going to set the hearing.

You’re going to have hearings for the creditors, and these are usually multiple hearings.  Then, the bankruptcy trustee sets up some type of Chapter 13 payment plan for the individual to follow.

Again the priority is going to be on whoever the mortgage holder is at that point in time for any for any type of payments. And a lot of the other creditors just don’t have position because the assets they are holding liens on are not secured.

Can You Cancel Your Chapter 13 Bankruptcy after It Is Filed? What If You Cannot Maintain Your Chapter 13 Bankruptcy Payment Plans?

Interviewer: After someone files a Chapter 13 bankruptcy, can they change their minds and have the case dismissed? Also, what happens to people who are unable to maintain their Chapter 13 bankruptcy payment plans?

Your Chapter 13 Bankruptcy Can Be Converted into a Chapter 7 Bankruptcy

Adam: There are grounds, if the person can’t make payments under the Chapter 13 payment plan, the case would be dismissed.  The other option is, and this is one that saves a little bit of money, converting a Chapter 13 to a Chapter 7 bankruptcy filing.

At that point in time you will have to pay a conversion fee, but it’s not as high as what an actual filing fee would be. That option does save some money in that respect.

There are lots of Chapter 13 filings that convert over to Chapter 7.  It’s a fairly common occurrence.  It is a better option than having the Chapter 13 dismissed altogether.

By Adam Hunt

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