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Oregon Bankruptcy Blog

Chapter 7 & Chapter 13 Bankruptcy Information

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Facing foreclosure is a very scary reality for many Oregonians.  While there are many government programs that may help, bankruptcy can be used as a means of delaying a foreclosure or stopping it completely.  When a Chapter 7 or Chapter 13 bankruptcy case is filed, the "automatic stay" goes into effect.  This "stays" (or stops temporarily) any collection action by a creditor, including foreclosure.  A creditor in a bankruptcy case can file a motion with the Bankruptcy Court to lift the automatic stay, which allows the creditor to move forward with the foreclosure process.  This is what sometimes happens in Chapter 7 bankruptcy cases or in Chapter 13 cases where the Chapter 13 plan does not propose to "cure" or catch up the back mortgage payments, or "arrears."  In these cases, the bankruptcy really just delays the foreclosure process.  However, in many cases, the debtor in bankruptcy is given new opportunities to work with the mortgage company to restructure the loan outside of bankruptcy.  Filing a bankruptcy case can delay a foreclosure by months or even years in some cases.  

Many people facing foreclosure use Chapter 13 bankruptcy cases to stop the foreclosure and to catch up the missed mortgage payments. This is done by proposing a repayment plan, called a "Chapter 13 Plan" to repay the back mortgage payments over a 3 to 5 year period. The debtor in the bankruptcy case must also resume regular mortgage payments at this point.  Chapter 13 cases that propose to catch up back mortgage payments are very useful for individuals who suffered job loss or some other sort of financial set back but who are now back on their feet and able to make ongoing payments but unable to make up all of the payments that were missed.  You should consult a bankruptcy attorney regarding your specific situation before deciding to file a bankruptcy case to stop a foreclosure.  Chapter 13 bankruptcy cases are particularly complicated, so you will probably need to hire a bankruptcy attorney if you plan to file a Chapter 13 case.  Many bankruptcy attorneys offer free consultations to discuss both Chapter 7 and Chapter 13 options.