You’ve been working with your bank on a mortgage modification, short sale, or deed-in-lieu of foreclosure. For whatever reason, your preferred course of action doesn’t work out, and you receive a foreclosure notice. The worst thing you can do is ignore it, but what happens if you do?
A complete Chapter 13 filing can take your attorney some time to prepare, and is usually approximately 30-50 pages long, depending on the complexity of your case. However, you may not have that much time, especially if a foreclosure auction is only days away, or the IRS has started to levy your paycheck. If you find yourself facing a foreclosure auction and want to try to keep your home, an emergency Chapter 13 filing may allow you to keep your home, pay back mortgage arrears over a 5 year period, and get current on other non-dischargeable debts, such as taxes and student loans.
Your attorney will work with you on the following documents, which can be prepared within hours, and filed with the court.
1. Ensure all tax filings are current.
2. Take pre-petition financial management course on-line.
3. Prepare and file voluntary petition.
4. Prepare and file Statement of Social Security Numbers.
5. Prepare and file Declaration of Electronic Filing.
6. Prepare and file Chapter 13 Agreement between Debtor and Debtor’s Attorney.
7. Prepare and file Joint Certification of Section 522(q) Obligations.
Once the above are filed, the Automatic Stay in bankruptcy will prevent further collection actions by your creditors. Foreclosure auctions will be postponed, lawsuits and other collection actions will be stayed, and garnishments will cease.
Immediately begin preparing all documents your attorney tells you to prepare the remainder of your bankruptcy case. The Court will issue an Order to Update regarding the missing filings. Generally, the order will require that you file all deficient (missing) documents in a period of time set by the court. This is a typical timeline for these filings:
1. In one week: File the Creditor Matrix (a list of all individuals and corporations you owe money to).
2. In two weeks: File all Schedules (outlining Real Property, Personal Property, Property Claimed Exempt, Creditors Holding Secured Claims, Creditors Holding Unsecured Priority Claims, Creditors Holding Unsecured Non-Priority Claims, Executory Contracts and Unexpired Leases, Co-Debtors, Current Income of Debtors, and Current Expenses of Debtors), Declaration Concerning Schedules, Statement of Financial Affairs, Statements of Intention, B22C Statement of Current Monthly and Disposable income with Calculation of Plan Duration, the Chapter 13 Plan, Evidence of Current and Sufficient Liability and Property Insurance, and the Disclosure of Compensation of Attorney.
Requests for more time must be made by motion, and the court will often grant a 2-week extension.
In any case, the most important thing you can do is immediately prepare your financial records, and provide them to your attorney. If this is not done immediately after filing the skeletal petition, then you may not meet these court deadlines. The Bankruptcy Court’s deadlines are very strict, and missing one or more may be grounds for having your case dismissed. If your case is dismissed you'll be back to square one and may not be able to file again.