This happens all the time. You fall behind on your mortgage because of an unanticipated event. You then collect a large amount of money, but not the total amount due and the bank refuses to accept part-payment.
The reason they refuse is because they have taken the first step in the foreclosure process, and they will have to start all over again if the accept part-payment. This is really their problem, but they make it yours.
What are your choices? Sometimes people apply for a mortgage modification, a forbearance agreement for a couple of months or a deferment of the arrears until the end of the mortgage. But these options usually take a long time, require you to send and re-send the same information multiple times to the lender and usually are not successful. It is a highly stressful and frustrating experience, leaving you constantly on edge, and worried about denial. You feel completely frustrated and your blood pressure soars. It can feel like your are talking to a wall.
There is a simple solution, entirely within your own control, but it requires you to act quickly. By filing a Chapter 13 Bankruptcy case, you can pay the arrears over 5 years (with no interest) so long as you are able to make current mortgage payments at the same time (and the bank must accept it, once Chapter 13 has been filed). This works best if you owe less than one year of back mortgage payments.
Too often, people “kick the can down the road.” By the time they consult a bankruptcy specialist, the amount of arrears is so large that the monthly payment to the bankruptcy trustee of 1/60th of the arrears is unaffordable, because you must simultaneously pay the bank the regular monthly mortgage payment each month.
By the time a foreclosure sale is scheduled, the the arrears are usually too great to manage. In that case, Chapter 13 can be used to stop the sale and allow you to time to sell the property on your own for fair market value, rather than having your equity wiped out in a foreclosure auction.
Another situation in which chapter 13 is useful is when you have assembled an amount equal to the full amount of arrears, but the bank refuses to accept just the arrears. Instead, they demand full payment of the entire mortgage balance. They are allowed to do this between the time of entry of the judgment of foreclosure and the scheduled auction.
Even at this late date, you can save the house by filing chapter 13, paying the trustee just the mortgage arrears under the plan (rather than the full mortgage balance). This will reinstate your mortgage. Then you can start making your regular monthly mortgage payments again directly to the bank. If you have accumulated the full amount of arrears we can pay that to the Trustee in one lump sum. If you have accumulated most but not all of the arrears, we can make a single payment of what you have collected, pay the rest of the arrears to the Trustee over 60 months, reinstate your mortgage and allow you to immediately make your regular monthly payments directly to the bank again.
Chapter 13 is a great tool. Perhaps it can help you, Look us up. Staten Island Bankruptcy Lawyers
Paul Hollender Board Certified. SuperLawyers
Staten Island’s only Board-Certified Bankruptcy Lawyer
15 years listed in Super Lawyers Directory
Avvo Rating 10 out of 10
48 years specialization in Bankruptcy Law
1200 South Avenue, Suite 201, Staten Island, NY 10314
718-442-4424
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