Avoiding a mortgage foreclosure

Many people file a Chapter 13 simply because they have no other choice to avoid a mortgage foreclosure or Sheriff’s sale.

Jack and Kate had owned their home for 12 years and had been very happy with both their neighborhood and the surrounding facilities, including the local school district. They had been current on their mortgage payments since purchasing the home and were also able to pay their other bills.

Then Jack experienced a sudden jolt. He walked into work one morning to find he had been given a temporary layoff. Even though Kate had a full-time job, Jack’s unexpected layoff left them short on cash.

Jack registered for unemployment compensation, but that amount was not close to his former salary. Jack and Kate were unable to make the mortgage payments on their house and they received notices that foreclosure proceedings had begun. In addition, they had also fallen behind on their utility bills and credit card payments. They felt lost and hopeless.

By the time they contacted Steidl and Steinberg, there was a Sheriff’s Sale pending on their home. They were in serious danger of losing it.

Fortunately, Jack received a call to return to work and he was earning his full salary again. He offered to make payments to the mortgage company to cover his past due balance, but the lender refused to accept any payment less than the total amount due. The lender also expected Jack and Kate to compensate them for all late charges due and the attorney’s fees for the foreclosure work.

Jack and Kate were in trouble. They could try to sell their house for an amount necessary to fully repay the mortgage and their other creditors. But they didn’t want to sell their house, and, even if they had wanted to sell it, the housing market was sluggish. Jack and Kate needed to take action quickly to avert the foreclosure.

A Chapter 13 repayment plan was an excellent alternative. The Chapter 13 Plan allowed them to pay the regular monthly mortgage payment each month and still pay an additional amount per month toward the mortgage arrears and the other unsecured debt. In the end, they could stay in the home and neighborhood they loved.