Chapter 13 Bankruptcy And Foreclosures
Me again. Hello.
Can anyone describe for us the relationship of Chap 13 bankruptcies to foreclosures? I was talking to a homeowner who was in pre-foreclosure and decided to declare bankruptcy to ward off the bank. Is this an impermeable block to bank foreclosures or does it just delay the inevitable? Can an investor still buy the home from the homeowner if they are in bankruptcy?
Thanks to all,
-presley
If the mortgagor can qualify for a repayment plan under a Chapter 13 bankruptcy, that will forestall the foreclosure process. however, if the mortgagor misses a schedule payment to either the mortgagee, or the bankryptcy trustee, the mortgagee may petition the court to lift the automatic stay and the foreclosure would resume.
Usually, unless the mortgagor can resolve and reverse their financial hardship... they'll not be successful with the Chapter 13 repayment plan.
Yes, it's certainly possible to purchase a property while the mortgagors are in a bankruptcy plan, but they would need explicit approval from the bankrptcy trustee. Any transaction without said approval is voidable, and could easily be rescinded.