How to Prevent Foreclosure When Your Loan Is Coming Out of Bankruptcy
One of your objectives in pursuing a bankruptcy may be to maintain your residence when the case concludes. A home is the most important investment many people make during the course of their lives, both financially and emotionally. Therefore, the potential loss of your residence during the bankruptcy process is something to be avoided if at all possible. Whether you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, there is a procedure in place through which you can prevent foreclosure when your loan is coming out of bankruptcy.
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Instructions
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Obtain from the bankruptcy court clerk the standard forms necessary to pursue a bankruptcy case, including a petition and matrix of creditors.
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Prepare a bankruptcy petition. Select a Chapter 7 bankruptcy if you desire to obtain a discharge of your debts. File a Chapter 13 bankruptcy if you want to pay off your debt over time under court supervision.
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List your residence as exempt property in your bankruptcy petition. Exempt property cannot be seized by creditors or the bankruptcy court.
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Complete the matrix of creditors. The matrix of creditors (sometimes called an index of creditors) is a master list of creditors. Include your home mortgage lender on the matrix of creditors.
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File the bankruptcy petition and matrix of creditors with the bankruptcy court clerk.
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Contact the lawyer representing the home mortgage lender in your bankruptcy case and advise her that you desire to enter into a reaffirmation agreement. A reaffirmation agreement is a contract available to a debtor in bankruptcy. You enter into this agreement with your home mortgage lender. Through the agreement, your mortgage loan terms are modified. You are permitted to keep your home--even after the conclusion of the bankruptcy case--provided you make the payments required pursuant to the reaffirmation agreement.
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Tips & Warnings
Consider engaging the services of a qualified attorney to represent you in a bankruptcy case. She is trained to negotiate an appropriate reaffirmation agreement that permits you the ability to keep your home and avoid foreclosure at the conclusion of a bankruptcy case.
Do not fail to make your recurring mortgage payments set forth in the reaffirmation agreement. The failure to follow the terms of the reaffirmation agreement result in the possibility of foreclosure.
