How Do I Handle Foreclosure with Bankruptcy?

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Hi, my name is Robert Geller and I am a consumer bankruptcy lawyer in the Tampa Bay area. Today, I would like to talk to you about how you can handle your foreclosure by filing bankruptcy. So, first, I want to talk to you about if you don’t want your house, you want to get rid of your house, or maybe owe too much on it. Maybe you can’t afford it, and you just want to move on. Well, you can file a chapter seven bankruptcy, assuming you qualify. A chapter seven bankruptcy will get you a bankruptcy discharge. A discharge means that you don’t owe the mortgage debt anymore. The mortgage company can never collect from you the money you borrowed to buy the house.

Example: Chapter 7

So, let’s say your house is worth a hundred thousand dollars, and let’s say that you owe $200,000. Maybe you even have a second mortgage that you owe 70. So let’s say you owe 270 on the house. Well, you can file a chapter seven, if you qualify, and get your discharge in a period of three months. You can move on and then you can work on rebuilding your credit. In a couple of years, you may be able to get back to a 720 credit score.

Generally, within two years of filing bankruptcy (a chapter seven), you can buy a new home. Chapter Seven is really potentially a good vehicle for getting rid of your home, but maybe you want to keep your house. Most of my clients do want to keep their house. Some people experience a job loss for a period of time and they’d gotten behind on their payments or they had some health issues or something that’s kept them from making their payments.

Chapter 13 is generally a repayment plan over a period of three to five years. What you can do with a chapter 13: there’s kind of two ways that you can save your home. One is, over a period of three to five years, you can catch up all the back payments that you’re behind.

Example: Chapter 13

Let’s say you’re behind $12,000 on your house and your mortgage is a thousand dollars. If you’re behind 12,000 and you’re doing a five-year plan, which is 60 months, you basically would pay the 200 a month. 200 times 60 would equal 12,000, and that would catch you up over five years of the back payments. Plus you would pay the monthly mortgage payment of a thousand. That’s what we commonly call a cure and pay chapter 13 plan. And for a lot of the chapter 13 that I follow for clients, that’s what we do.

I have helped many, many clients do that over the years. The next way you can keep your home through filing a chapter 13 is maybe seeking a mortgage modification. There’s different types of mortgage modifications. There are some modifications where you have to pay a lump sum upfront and then resume payments. There are some modifications where you can actually reduce your monthly payment and the interest rate.  For some, whatever you’re behind, the mortgage company can put in the backend. Sometimes the mortgage company will even forgive a period, a portion of what you are behind on your mortgage. If you need more information about filing bankruptcy, click on the link, and we’ll be glad to provide you with more information. My name is Robert Geller, and I want to help you build a bridge to a brighter future.