When an Arkansas resident files for Chapter 13 bankruptcy, they may be able to keep their home. During the repayment period, the mortgage company generally has no choice other than to wait until the homeowner completes said plan. Typically, a repayment plan takes three to five years to complete. However, a lender may be able to proceed with foreclosure proceedings if the debtor misses even a single payment during this time.
If the lender had already started the foreclosure process, it may continue where it left off after a stay is lifted. In some cases, it may not be necessary to file for bankruptcy to avoid foreclosure. Lenders are often as eager to avoid bankruptcy as the homeowner is, and it may be possible to negotiate a new payment plan by contacting the lender at the first sign of financial trouble. The lender may be able to offer a modified payment plan best suited to the homeowner’s needs.
Once in bankruptcy, your lender may be limited in the action it may take based on whether the mortgage is a first mortgage or a second mortgage. If an individual is upside down on a home, a second mortgage may be changed to an unsecured debt. This means that the second lender is a lower priority when it comes to repaying debts during bankruptcy.
Those who have been threatened with foreclosure or just wish to keep their property during bankruptcy may wish to file for Chapter 13 bankruptcy. This may be done with the help of a bankruptcy attorney who may be able to help guide a debtor throughout the process. An attorney may also be able to explain other benefits of bankruptcy such as an automatic stay of certain creditor actions like foreclosure.
Source: SF Gate, “What Do Mortgage Companies Do With Chapter 13 Bankruptcy?”, M.C. Postins, Accessed on Jan. 10, 2015