If you’ve fallen behind on your mortgage, you may be worried about losing your home. While there’s no foolproof way to stop foreclosures because every situation is unique, declaring Chapter 13 bankruptcy could provide the breathing room you need to catch up financially. 

What Happens During Foreclosure Proceedings?

Under federal law, a lender cannot commence foreclosure proceedings until the borrower has fallen at least 120 days behind. At least 45 days before starting these proceedings, though, they must notify the borrower of the past-due amount. They must also provide contact information for an agent who can assist with avoiding foreclosure and for an HUD-approved housing counseling agency. 

If the borrower cannot catch up on payments over the ensuing 45 days, they will eventually receive a notice of default, followed by a notice of hearing. If the lender can prove they followed all protocol at the hearing, the court will authorize a foreclosure sale.

In North Carolina, borrowers are granted a redemption period between when the notice of sale is published and when the property actually sells. During this period, they may reclaim their property by curing the default or declaring bankruptcy. 

How Might Bankruptcy Prevent Foreclosure?

Immediately after filing the petition for Chapter 13 bankruptcy, the court will implement an automatic stay. This stay stops all ongoing legal actions against you and prohibits creditors from filing new suits until the case is resolved.

During Chapter 13 proceedings, petitioners must propose a three- to five-year repayment plan that allows them to catch up on overdue debts. This plan essentially reorganizes applicable debts so the petitioner’s financial obligations are more manageable from month to month. If you have enough income to include the missed mortgage payments and associated fees in this plan—while simultaneously making the regular monthly payments so you remain current on the loan—you should be able to stop the foreclosure altogether. 

If you want to learn more about bankruptcy and how it can stop foreclosures, turn to C. Roland Krueger Attorney and Counselor at Law  in Lexington, NC. This seasoned lawyer has nearly 40 years of experience representing residents of Davidson County. With a commitment to providing legal advice that’s tailored for each client, he assists with both bankruptcy filings and asset protection. To request a consultation, reach out on his website or call (336) 248-8464.