Chapter 13 and Mortgage Foreclosures

Jordan E. Bublick is a Miami bankruptcy lawyer with over 25 years of experience in filing chapter 13 and chapter 7 bankruptcy cases. He has filed over 8,000 bankruptcy cases. His office is located at 1221 Brickell Ave., 9th Fl. Miami, Florida. Telephone: (305) 891-4055. www.bublicklaw.com

Chapter 13 and Mortgage Foreclosures
Chapter 13 bankruptcy may be the appropriate solutions for many homeowner's facing foreclosure of their mortgage.

In using chapter 13 to deal with a mortgage foreclosure, certain time deadlines and special considerations may be present.  

Answer of Foreclosure Complaint. One time limitation is that once a foreclosure case has been served upon you, you should answer the foreclosure. It must be answered within the time period set forth in the summons. If you fail to answer it, you may lose all rights to contest the case and not receive any further notice before the Clerk of the Circuit Court sells your home.
 
b. Filing of Bankruptcy Case. A bankruptcy must generally be filed before the foreclosure sale takes place if you desire to cure a mortgage default and reinstate such mortgage under a chapter 13 or 11 plan.   
 
c. Other Factors Regarding Filing of Bankruptcy Case.   The first payment under a Chapter l3 bankruptcy plan is normally due 30 days after the bankruptcy case is filed. You should normally not file a Chapter 13 case unless you are in a position to begin making such timely payments.
 
d. Junior Mortgages.  Junior mortgages (i.e. all mortgages besides a first mortgage) often have the right to payoff in full any senior mortgage (i.e. higher priority mortgages) if you are in default in order to protect their positions. Such advanced amount would then be part of the "reinstatement amount" due for such junior mortgage. This may make it difficult for you to reinstate such junior mortgage as such reinstatement amount may be a substantial sum--even when divided into installments over 3 or 4 years.  This factor may make it wise for one with a junior  mortgage to file a Chapter l3 bankruptcy case as soon as  possible and before a junior mortgagee has an opportunity  to payoff a senior mortgage.
 
e. Income Taxes. In addition, you should realize that there might be negative tax consequences in the event of a foreclosure sale.  Your lender may report the foreclosure  sale to the I.R.S.  This firm was not consulted or retained for tax matters.  You should review the tax consequences with a competent tax advisor at once.
 
f. Deficiency Judgment. Foreclosure of your mortgage loan may not relieve you of responsibility for your entire debt.  If your property does not bring a price at the foreclosure sale sufficient to satisfy your debt, you may remain liable for balance owing after foreclosure, i.e. the "deficiency".  Even though your lender may be insured against loss (for example, V.A. mortgages), their insurer may be in a position to sue you for the balance due.
 
.Jordan E. Bublick is a Miami Personal Bankruptcy Lawyer with over 25 years of experience in filing chapter 13 and chapter 7 bankruptcies. Miami Personal Bankruptcy Lawyer Jordan E. Bublick has filed over 8,000 chapter 13 and chapter 7 cases.