Bankruptcy and Foreclosure

Saving Your Home

     If you have fallen behind in your mortgage payments, foreclosure can be avoided
     by filing bankruptcy under Chapter 13. Im most cases, your mortgage company will not      accept late or partial payments if you have fallen behind. They usually demand all past
     due payments plus late charges.  In addition, you will be asked to pay attorneys' fees
     and court costs if a foreclosure has been filed. Under federal law, if you are able to
     make your current mortgage payments, the judge may order your mortgage company
     to accept payments on your mortgage arrearage to allow you to become current over
     a period of up to 24 months. This gives most people the time needed to catch up and      save their home after an illness, job layoff or other financial difficulty.

     The court will also order your other creditors, such as charge cards, hospitals, or
     financial companies, to stop collection procedures and wait until payments have been      made to your mortgage company so that you may save your home.

     A credit report will be obtained on the borrower and any lates, collections, judgments,      foreclosures, bankruptcies, etc. must have a justifiable explanation in writing by the
     borrower. In the event of a foreclosure, the borrower has three years from the date the      claim was paid until he/she is eligible for another FHA loan, unless the foreclosure was
     the result of extenuating circumstances beyond the borrower's control and the borrower      has since established good credit.

     Chapter 7 bankruptcy requires the borrower to wait at least two years from the date of      discharge.

     Chapter 13 bankruptcy requires the borrower to have been paying on the bankruptcy for
     at least one year, performance must have been satisfactory and the borrower must also      receive court approval to enter into the mortgage transaction.