Saving a house from foreclosure is the single reason most people file bankruptcy.
Bankruptcy stops foreclosure- that’s a given.
But then what?
How can bankruptcy save the house, rather than just putting off the inevitable loss?
The mortgage lender has a lien on the house, and liens aren’t discharged in bankruptcy.
So, how does bankruptcy help? Meet Chapter 13 of the Bankruptcy Code.
Chapter 13 bankruptcy is the chapter of choice if your goal is to keep living in the house, as opposed to selling it to realize equity or to avoid the credit hit of a foreclosure.
Chapter 13 imposes a payment plan on lender
Baked in to Chapter 13 is the power to cure defaults on long term debts like mortgages.
Gone is the ability of the lender to refuse to take catch-up payments or to insist on cure in a single payment.