Often clients do everything in their power to avoid bankruptcy but then another legal event like foreclosure, repossession, or a lawsuit pushes them into bankruptcy suddenly. It is very important to understand that a bankruptcy can stop a repossession or foreclosure but it cannot get your property returned to you after it has been sold. Your car may be sold within two weeks of it being repossessed, so you must move very fast to get it back by filing bankruptcy within about a week of the vehicle being seized. In a foreclosure you must file before the foreclosure sale, so you need to contact a bankruptcy lawyer as soon as you get a foreclosure notice.
Many clients ask if a bankruptcy may change their mortgage payment, and the answer is generally no. There is nothing under the bankruptcy laws that allow for changing the mortgage contract except there is a rare instance where a second or third mortgage be classified as unsecured in a Chapter 13 plan when the home’s value has declined below the value of the first mortgage leaving the secondary liens unsecured. What that means is that if you make all of your Chapter 13 plan payments the second mortgage may be stripped from home and discharged as an unsecured debt just like your credit cards and medical bills. There are also programs offered by the government and banks to modify mortgages for consumers experiencing financial difficulty, but that is something handled by your mortgage lender not your bankruptcy lawyer.
In all Chapter 13 cases involving automobiles the entire debt must be paid off during the plan, but if your regular car note will be paid off before the plan ends you can refinance your car note in the plan to be stretched out for the length of the plan. For example you may have a car note at $550 per month at 12% that has $5000 left to pay. In your Chapter 13 plan the payment could be reduced to $95 as part of your total payment, so you can get substantial savings to your monthly budget in a Chapter 13 bankruptcy.