Bankruptcy & Foreclosure Laws in California
If the bank is threatening to foreclose on a person's house in California, he needs to find some solutions. He can either surrender the house to the bank or look at his options for keeping the house. If he plans on keeping the house, he should take a serious look at bankruptcy. Upon the filing of a bankruptcy petition, the bank must immediately stop all efforts to foreclose on the house.
Other People Are Reading
-
Order for Relief
-
Upon filing a bankruptcy petition, the clerk of the California bankruptcy court will send out an order for relief to the debtor's creditors. Those creditors include the bank that holds the mortgage to his home. All creditors are forbidden from attempting collection actions, such as soliciting payments and ultimately foreclosing on the home. The stay remains in place for the duration of the bankruptcy case. Any creditor violating the stay can be penalized.
Chapter 7
-
If the debtor files for Chapter 7 bankruptcy, his home will be protected from foreclosure. The automatic stay remains in place until the debtor receives a discharge of his debts. In a Chapter 7 case, a bankruptcy trustee sells the debtor's property and uses the cash to pay creditors. Chapter 7 does not provide for the payment of a mortgage. When the case is discharged in as little as three months after the debtor filed the petition, his home will still be in jeopardy of being foreclosed if he has not become current on the loan in those three months.
-
Chapter 13
-
Chapter 13 bankruptcy would be a better option for a California debtor who wants to save his home from foreclosure. After the debtor files his bankruptcy petition, the creditor receives an order for relief. The automatic stay remains in place for the duration of the bankruptcy case, which will last for three or five years. The debtor proposes a debt repayment plan, and Chapter 13 allows the debtor to incorporate missed mortgage payments into the debt repayment plan.
Mortgage Repayment
-
The debtor's missed mortgage payments should be spread over the length of the debt repayment plan. The debtor's family income compared to the median family income in California will determine the length of the debtor's repayment plan. If the debtor's family income is below California's median family income, the debtor will have three years to pay off the missed mortgage payments. If the debtor's family income is above California's median family income, the debtor will have five years to pay off the missed mortgage payments.
-
References
- Photo Credit home sweet home image by David Dorner from Fotolia.com
