How Chapter 13 Bankruptcy Stops Foreclosure
Tennessee allows for non-judicial foreclosure. Therefore, your lender does not have to go to court in order to foreclose on your property. The usual process is for you to receive notice by mail 20 days or more before the scheduled auction date. A trustee performs the actual sale, not the lender.
Tennessee allows for non-judicial foreclosure. Therefore, your lender does not have to go to court in order to foreclose on your property. The usual process is for you to receive notice by mail 20 days or more before the scheduled auction date. A trustee performs the actual sale, not the lender.
At any time before the sale is performed a person who owns the house in foreclosure may file a Chapter 13 bankruptcy and stop the foreclosure sale (there are a few exceptions to this, but it need not concern us here). The reason filing a Chapter 13 bankruptcy stops the sale is because when a person files a bankruptcy an automatic stay goes into effect. The automatic stay stops most creditor actions against the person and the property the person owns. This means the foreclosure sale cannot take place or is voidable by law if it does take place.
Before you can file a Chapter 13 bankruptcy there are some things you need to do. Some of the common requirements include filing your taxes for the most recent year due. Proof of your filing of taxes must be given to your attorney. A list of ALL of your creditors is also required in order to give notice to them. Evidence of pay for the previous two months must also be provided to your attorney. You will also need to bring proof of your social security and a government issued photo ID.
One element of a Chapter 13 bankruptcy that is different than a Chapter 7 ("straight" or "liquidation") bankruptcy is the Chapter 13 Plan. It is the Chapter 13 Plan where you propose to pay your creditors, most importantly your mortgage holder. This will always include paying the regular monthly note along with an "extra" amount that will be large enough to pay off the arrears in a period of 36 to 60 months.
After filing for Chapter 13 you will have to pay for any property you wish to keep if that property has a lien on it. The debts are referred to as "secured" debts - examples include mortgages and financed vehicles. A debt that does not have a lien attached to property is referred to as "unsecured" debts. In a Chapter 13 you may be able to pay anywhere from 0 cents on the dollar up to the full amount, depending on things like current income, income over the previous six months, and the total value of your personal and real property.
Some property, like automobiles, are subject to possible cram downs. A cram down is where a debt secured by property is reduced to the value of the property rather than the value of the contract. An example would be an automobile that has a $15,000 payoff but is only worth $10,000, the cram down would result in the secured claim being reduced to $10,000 and the remaining $5,000 becoming an unsecured debt. There are a few rules that determine if you can cram down your property.
In order to go into effect, a Chapter 13 Plan must be "confirmed." Upon confirmation the Chapter 13 Trustee will begin paying your creditors. You make payments on your Chapter 13 Plan either directly or through a payroll deduction.
Once you have paid into your Chapter 13 Plan as you proposed and completed all payments you will be current on your mortgage. At that time you will resume paying your mortgage directly to the lender. Any unsecured debts that were not paid during the bankruptcy will be "discharged" - meaning creditors cannot take any action to collect the debts.
Tennessee allows for non-judicial foreclosure. Therefore, your lender does not have to go to court in order to foreclose on your property. The usual process is for you to receive notice by mail 20 days or more before the scheduled auction date. A trustee performs the actual sale, not the lender.
At any time before the sale is performed a person who owns the house in foreclosure may file a Chapter 13 bankruptcy and stop the foreclosure sale (there are a few exceptions to this, but it need not concern us here). The reason filing a Chapter 13 bankruptcy stops the sale is because when a person files a bankruptcy an automatic stay goes into effect. The automatic stay stops most creditor actions against the person and the property the person owns. This means the foreclosure sale cannot take place or is voidable by law if it does take place.
Before you can file a Chapter 13 bankruptcy there are some things you need to do. Some of the common requirements include filing your taxes for the most recent year due. Proof of your filing of taxes must be given to your attorney. A list of ALL of your creditors is also required in order to give notice to them. Evidence of pay for the previous two months must also be provided to your attorney. You will also need to bring proof of your social security and a government issued photo ID.
One element of a Chapter 13 bankruptcy that is different than a Chapter 7 ("straight" or "liquidation") bankruptcy is the Chapter 13 Plan. It is the Chapter 13 Plan where you propose to pay your creditors, most importantly your mortgage holder. This will always include paying the regular monthly note along with an "extra" amount that will be large enough to pay off the arrears in a period of 36 to 60 months.
After filing for Chapter 13 you will have to pay for any property you wish to keep if that property has a lien on it. The debts are referred to as "secured" debts - examples include mortgages and financed vehicles. A debt that does not have a lien attached to property is referred to as "unsecured" debts. In a Chapter 13 you may be able to pay anywhere from 0 cents on the dollar up to the full amount, depending on things like current income, income over the previous six months, and the total value of your personal and real property.
Some property, like automobiles, are subject to possible cram downs. A cram down is where a debt secured by property is reduced to the value of the property rather than the value of the contract. An example would be an automobile that has a $15,000 payoff but is only worth $10,000, the cram down would result in the secured claim being reduced to $10,000 and the remaining $5,000 becoming an unsecured debt. There are a few rules that determine if you can cram down your property.
In order to go into effect, a Chapter 13 Plan must be "confirmed." Upon confirmation the Chapter 13 Trustee will begin paying your creditors. You make payments on your Chapter 13 Plan either directly or through a payroll deduction.
Once you have paid into your Chapter 13 Plan as you proposed and completed all payments you will be current on your mortgage. At that time you will resume paying your mortgage directly to the lender. Any unsecured debts that were not paid during the bankruptcy will be "discharged" - meaning creditors cannot take any action to collect the debts.
Author:
If you want to stop foreclosure in Tennessee then call Tennessee bankruptcy attorney W. Alan Alder at 1-800-706-7863.