What if I Get Behind in My Mortgage Payment While in Bankruptcy?

/2 Comments/in , , , , , , , /by
[youtube]http://www.youtube.com/watch?v=VHw5ZrxXYM4[/youtube]

We understand that sometimes after filing bankruptcy different situations come up that may cause you to fall behind on your mortgage payment. It’s important to realize there are a number of consequences that come from falling behind on your bankruptcy. We will look at them depending on which type of bankruptcy you file, a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.

Chapter 7 Bankruptcy:

In a Chapter 7 bankruptcy, one must be current on their mortgage payment at the time of filing and throughout the duration of the bankruptcy in order to keep the house. If you were to fall behind on your mortgage payments there would be two important time periods to consider. In other words, you need to know where you stand in the bankruptcy.

Before the Final Decree (End of Bankruptcy):

If you fall behind on your payment before the bank has received the final decree, the mortgage company could potentially take legal action.  The mortgage company may choose to file a Motion for Relief from Automatic Stay.  In other words, they would be asking the court for permission to begin foreclosure proceedings on the home.  The Motion for Relief from Automatic Stay will likely be granted to the mortgage company unless you are able to bring the payments current by the hearing date.

After the Final Decree (End of Bankruptcy): 

If you fall behind on your payment after the Final Decree, then it’s the same as if you haven’t filed bankruptcy.  The mortgage company no longer has to ask for permission from the court to begin foreclosure since your bankruptcy is over once the Final Decree is entered.  Therefore, the mortgage company would decide when they wanted to begin foreclosure proceedings on the home.

Prevention:

Be aware of when your mortgage payments are due each month and make a valuable effort to make sure they get to your mortgage company on time. It is common in Chapter 7 bankruptcy for the mortgage company to stop sending statements and/or to stop automatic drafts. You should keep an eye on your automatic drafts to be sure your payments are being made on time. Be sure you pay the mortgage payment on time every month, even if you do not receive a bill or a statement.

Chapter 13 Bankruptcy:

What’s important to consider in a Chapter 13 is at what point in the bankruptcy you have fallen behind on your payment.

Not Behind at the Time of Filing Bankruptcy

If you are not behind at the time your Chapter 13 bankruptcy is filed, the mortgage payment will not be included in your monthly payment to the Trustee.  This is considered “paying outside of the plan” since it will continue to be paid as a separate payment.  You will continue to make a separate payment to the mortgage company only if you are current at the time of filing and throughout the duration of the bankruptcy.

Behind at the Time of Filing Bankruptcy

One reason why people choose to file a Chapter 13 bankruptcy is because they are behind on their mortgage payments and need to get caught up.  If you are behind on your mortgage payment at the time of filing, it will be included in your Chapter 13 monthly payment to the bankruptcy Trustee.

Not Behind at the Time of Filing But Later Fall Behind

If you are not behind on your mortgage payment at the time of filing but then fall behind during the bankruptcy, your Chapter 13 monthly payment will increase.  The mortgage company is a secured debt and must receive a monthly payment. Therefore if you fall behind it then needs to be included in your Chapter 13 monthly payments.  Your monthly payment to the Trustee will increase, because the mortgage company is one of the first creditors to receive payment. The Chapter 13 office will request that the mortgage company be added to your monthly payment, which will increase as a result.

Prevention:

If you are making your mortgage payments “outside of the plan,” or in other words, making separate payments to the mortgage company, be aware of when they are due and be sure the mortgage company receives your payments on time. As we discussed in the Chapter 7 section, it is common for billing statements and/or automatic drafts to be stopped during bankruptcy, so be sure you pay the mortgage payments on time, regardless of whether you receive statements.

Will My Employer Find Out About My Bankruptcy?

/in , , , , , , /by

Duncan Law was founded by Terry Duncan in Charlotte, North Carolina, in 1996. At that time Terry decided to create a law firm that was dedicated to helping those who are facing tough times. In 2009, Damon Duncan and Melissa Duncan joined the firm in the Greensboro, North Carolina office. Together, this family is here to serve you. We know that too often bad things happen to good people. We are here to help.

Read more

What If My Mortgage Company Refuses Payment?

/in , , , , , /by
[youtube]http://www.youtube.com/watch?v=PPl537o3Klc[/youtube]

Your mortgage company has most likely refused your payment because the mortgage company has received notice of the automatic stay that goes into effect as soon as your bankruptcy is filed. They are probably concerned that they will be in violation of this “stay” if they agree to accept a mortgage payment. A lot of the time this can be cleared up with a simple phone call. If they send the payment back, try sending it again certified mail and keep copies of your receipts. This will help prove that you have been trying to make the payments if needed.

You can always contact you bankruptcy attorney’s office. Usually they will contact the mortgage company for you and make it so that they will begin to accept your payments again.  Most importantly, if the mortgage company does not accept your payment, do not go and spend that money! You will eventually pay that mortgage payment and the fact that they did not accept it when you tried to make the payment is not a sufficient excuse to no longer have the payment. Put the money that would be going to the mortgage company in your bank account and leave it there until you have cleared up the misunderstanding with the mortgage company.

How to Pay Attorney's Fees for Bankruptcy

/in , , , /by
[youtube]http://www.youtube.com/watch?v=82s9K2skA_Y[/youtube]

We also understand that because times are tough, funds are limited. That’s why we set up an Easy Payment Plan with all of our clients for your attorney fees. Through our Easy Payment Plan, YOU set the payment schedule for your attorney fees based on your income and how often you get paid. After you have paid the attorney fees, federal court filing fee, completed and paid the credit counseling fee, submitted the proper paperwork and met with an attorney at Duncan Law, your case will be filed with the Court and you can begin your new financial life.

What to Bring to My Free Bankruptcy Consultation

/in , , , /by
[youtube]http://www.youtube.com/watch?v=ho3pmb7-4BE[/youtube]

Thank you for your interest in our firm. We know the decision to pursue bankruptcy was not easy for you. Our goal is to make the process as simple as possible for you and your family. We also want your free consultation to be helpful to you. As a result, we have a list of items for you to bring to your free consultation. Although you are not required to bring every document below, the more information you are able to bring to your consultation, the more precise we can be in determining your eligibility for bankruptcy.

What is Chapter 13 Bankruptcy?

/in , , , , /by
[youtube]http://www.youtube.com/watch?v=q6WU94qWjiQ[/youtube]

Generally, a Chapter 13 bankruptcy is a reorganization plan bankruptcy, or a legal way to pay back a portion or all of the debts that you owe. In Chapter 13 bankruptcy, you are usually able to keep your house and/or car. The most common reason for filing a Chapter 13 bankruptcy is to allow you to catch up on your house and/or car payments and stop a foreclosure or repossession. In a Chapter 13 bankruptcy, your secured debts including what you are behind on your house, your mortgage payment(s) and what is owed on your car, and a portion of your unsecured debts including credit cards and medical bills will be repaid over a 3 to 5 year time period.

How Does Chapter 7 Bankruptcy Affect My Credit?

/in , , , , , /by
[youtube]http://www.youtube.com/watch?v=WInu8l5WCN8[/youtube]

Chapter 7 bankruptcy will likely make your credit score drop initially.  After an initial drop we have seen our clients steadily rebuild their credit scores to the level, or better, of many of their friends or family members.  Bankruptcy allows you to wipe out your debt so you can start fresh and have a legitimate opportunity to have your fresh financial start.  Most people find it incredibly difficult, if not impossible, to improve their credit when they have large amounts of debt.  Chapter 7 bankruptcy will wipe out the majority of this debt and allow you to reestablish your credit worthiness.

How Does Chapter 13 Bankruptcy Affect My Credit?

/in , , , , , , /by
[youtube]http://www.youtube.com/watch?v=FjliDI4jKDw[/youtube]

Contrary to what you may hear from some people, there is either little or no difference to your credit score based upon you filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.  You should first understand the difference between your credit score and your ability to obtain credit. Often, these words are used interchangeably and confusion can occur. Your credit score is the number the credit reporting agencies assign to your credit. It is based on your history of making payments on your debts. Your ability to obtain credit is based on your ability to make payments in the future and is determined by your income and your debts. If your debts exceed your ability to make payments, you may be unable to obtain credit even if you have consistently paid your debts on a timely basis. In other words, you may have a good credit score yet be unable to purchase a car because you have too much debt. Filing Chapter 13 bankruptcy will most likely reduce your credit score in the short-term. However, filing bankruptcy also eliminates many of your debts and may improve your ability to obtain credit in the future.

What is Credit Counseling?

/in , , , , /by
[youtube]http://www.youtube.com/watch?v=Xg0IUGzVYb4[/youtube]

With the new bankruptcy laws in 2005, Congress passed legislation requiring a person filing bankruptcy to take a credit counseling course within the 180-day period preceding the date the bankruptcy case is filed with the court. A certificate of completion must be filed with your bankruptcy. Most of the approved credit counseling companies provide the course online and the fees vary by company. However, it is important that you take your credit counseling course from an approved credit counseling company.

What is the Financial Management Course?

/in , , , , , /by

As you know, you must take a financial management course and file the certification with the bankruptcy court to receive a discharge in your bankruptcy. We recommend you take the financial management course as soon as you receive your case number but before your creditors meeting. If you are married, each person must take the course separately, and you and your spouse will receive two different control numbers. Most of our clients take the course online at Hummingbird Credit Counseling. This is important. If you have any questions regarding when to take the financial management course, please contact our office. If you have questions regarding the actual course on the Hummingbird Credit Counseling website, please contact Hummingbird at the phone number listed on their website.

Read more