How does filing bankruptcy stop the foreclosure of my home in Oklahoma?

The Automatic Stay & Foreclosure:

Generally immediately upon the filing of a Chapter 7 or Chapter 13 bankruptcy case, an “automatic stay” goes into place.

The automatic stay prohibits a creditor, such as a mortgage company, from taking any action against the person filing the bankruptcy. Therefore, the automatic stay immediately halts a foreclosure proceeding. In order to continue with the foreclosure, the lender must get permission from the bankruptcy court.

The automatic stay is effective to stop a foreclosure in Oklahoma up until the hearing confirming the sale occurs. After that point, it’s too late to save the property being foreclosed.

Chapter 7 Bankruptcy & Foreclosure:

If a Chapter 7 bankruptcy is filed, the automatic stay will stop the foreclosure but generally only for a brief period of time. Chapter 7 bankruptcy itself provides no means to catch up on the delinquent mortgage payments. Therefore, unless the homeowner can come up with a lump sum payment to bring the mortgage current, including not only missed mortgage payments but also costs of the foreclosure action, the lender will ask for and receive permission from the bankruptcy court to continue with the foreclosure proceeding.

Chapter 13 Bankruptcy & Foreclosure:

If a homeowner wants to save his home from foreclosure but cannot come up with the necessary lump sum payment to bring the mortgage current, a Chapter 13 bankruptcy can solve the problem.

In Chapter 13 bankruptcy, a homeowner who is behind on his mortgage payments is allowed a 3 to 5 year period in which to catch up the amount he is behind.

For example, if you are 6 months behind on your mortgage payments and each payment is $1000.00, you have a $6000.00 “arrearage.” The lender’s position will generally be that it wants the $6000.00 paid in a lump sum plus late fees, and if a lawsuit has been filed the lender will tack on court costs and attorneys’ fees. Understandably, you may not have that type of money to pay in a lump sum in order to stop the foreclosure of your home.

A Chapter 13 bankruptcy filing will immediately stop a foreclosure and allow you to pay the arrearages over 36 to 60 months in a repayment plan administered through the bankruptcy court.

If you are facing home foreclosure in Oklahoma and would like to know more about how bankruptcy may be able to help you, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. Or just pick up the phone and give me a call at 918-615-8260. I’ll answer all of your questions in plain English so that you’ll have the information you need to make the decisions that will help you the most.