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foreclosure & bankruptcy

Help with Chapter 13 and Foreclosure – Columbia, SC

Facing foreclosure
Keeping a roof over your family's head is essential to their mental and physical wellbeing. Avoiding a foreclosure in Columbia or anywhere in South Carolina may be the easiest and least painful way of keeping your home. However, runaway debt can jeopardize your ability to keep your mortgage payments current.  

It is legal for the lender to commence a lawsuit or file documents to foreclose on your property and to sell it at a public auction, but such steps can be nonetheless painful for you. If you want to keep your home, you need to take a pro-active role. All lenders must adhere to certain processes in order to regain control of property when monthly payments fall behind.

What is Foreclosure?
Foreclosure is the legal process that a lender uses to reclaim real property, land or house when monthly payments fall behind.


What happens if you do nothing?

The lender must take certain legal steps in order to complete a foreclosure sale on your property.

Knowing where you are in the process will help you determine your options. Here are the steps that the lender will take if your payments fall behind:

  • The lender sends you a letter stating the amount that is past due on your home loan and a date that foreclosure will proceed if the payment is not caught up to date.  
  • If you never contact the lender, you will receive another letter stating that the loan is in default and the lender will demand the full amount.  
  • If no agreement with your lender is worked out, you will be served with a lawsuit seeking to foreclose on your home.  
  • Unless you file an answer within thirty days, the judge will order your home to be sold at public auction.
  • When your home is sold, you will be ordered to vacate the premises.
  • It takes only two to four months for the entire foreclosure process to take place.


  • Do not panic.
  • Act quickly, proactively, and rationally.
  • Select an experienced and skilled certified bankruptcy debtor-creditor law specialist to represent you.
  • Make an appointment with your lawyer to discuss preventative actions.
  • Assemble all of your legal loan documents and correspondence.
  • Be open-minded about new budget possibilities and credit counseling.
  • Decide if you want to keep your home. This is both a heart and a head decision.
  • Review the benefits of filing for Chapter 13 bankruptcy protection.

Chapter 13 Bankruptcy

In Columbia or anywhere in South Carolina, filing a Chapter 13 Bankruptcy relief can help you save your home from foreclosure, and sometimes it may be the only solution. A successful Chapter 13 bankruptcy filing reduces all non-mortgage debt to a manageable level so that you can make your monthly mortgage payment. It often means that unsecured creditors, such as credit card companies, will receive only pennies on the dollar for the outstanding debt you have with them.

Secured debt, such as your car payment, is often significantly reduced and can be spread out over an extended period of time as part of the Chapter 13 plan. All past-due mortgage payments are incorporated into the Chapter 13 plan and are therefore spread out over an extended period of time. Once the Chapter 13 case is filed, you are usually required to resume monthly mortgage payments in addition to the payments agreed upon in your plan. A Chapter 13 bankruptcy protection lasts from three to five years, depending on the income of the family and the needs of the homeowner.

A Chapter 13 filing alone will not stop an adjustable rate mortgage from adjusting; thus, as the interest rate increases, your monthly house payment may also increase. Although a Chapter 13 Bankruptcy cannot stop adjustable rate mortgages from rising, some lenders are willing to freeze the interest rate for the length of the bankruptcy case or longer.  

Keeping your house under Chapter 7
If you are current with your mortgage payments and the equity in your home is less than $50,000 per debtor ($100,000 for a joint filing), filing a Chapter 7 bankruptcy petition may be the better option. Keeping up with mortgage payments will be easier if you can eliminate most of your other debt.  

Keeping your house under Chapter 13
If you are in the midst of a foreclosure, Chapter 13 might be the best option for you. Under Chapter 13, you can make up late payments over the three- to five-year life of your bankruptcy plan. All future mortgage payments have to be paid in addition to the payments agreed upon in the bankruptcy plan.  

Filing for Chapter 13 protection well in advance of the foreclosure sale date is the safest way to keep your home. You will also save money by filing early because you will not have to continue to pay the lender's costs and lawyer's fees for the foreclosure proceedings. All past-due house payments are part of your Chapter 13 plan.

Since every situation is unique, you must decide, with the help of your certified bankruptcy law specialist, exactly which plan is best for you. Below are some comparisons that may help.


Chapter 7

Chapter 13

Mortgage payment current and equity is within the exemption.

Home should not be affected.   Regular payments continue.

Home should not be affected.   Regular payments continue.

Mortgage payments are behind, but equity is within the exemption.

Your home is safe, but you will lose it unless the mortgage company agrees to a catch-up agreement.

Monthly house payments resume, and past due mortgage payments are caught up over the life of the plan.

Equity is greater than the exemption.

Trustee can sell your home, pay you the amount of the exemption, and pay the rest to your creditors.

Trustee cannot sell your home. However, plan payments will be higher to cover the amount of your nonexempt equity over the life of the plan.

No equity, the mortgage is more than the property is worth, and you are behind on your payments.

Will not save your home, but can temporarily stop foreclosure and can erase personal liability on the loan.

If the mortgage does not qualify for restructuring, bifurcation may be an option.

NOTE: As you can see, there are many variables involved in preserving your home. You can lose your exemption if you are not extremely careful. Don't run that risk. Consult a certified bankruptcy law specialist before refinancing your home, renting it out, moving, signing a contract to sell, making improvements, or allowing a judgment or tax lien to be filed.

Help with Chapter 13 and Foreclosure – Columbia, SC

Foreclosure - Chapter 13 | Columbia, SC

Copyright 2008, Michael J. Cox Attorney at Law | Foreclosure - Chapter 13 | Columbia, SC | All Rights Reserved




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