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Foreclosure Bankruptcy Help in Iowa
Worried about losing your home? Bankruptcy may stop the foreclosure and give you time to catch up.
Bankruptcy can stop a foreclosure and give you a way to address missed mortgage payments. Filing bankruptcy triggers the automatic stay, which stops most collection activity. Chapter 13 can give you three to five years to catch up while you keep making your regular payments. In most cases, a large percentage of eligible debt is wiped out after successful completion of the plan.
Key Takeaways
- Filing bankruptcy can halt a foreclosure while the automatic stay remains in effect
- Chapter 13 can spread missed mortgage payments across a three-to-five-year repayment plan
- Chapter 7 can clear many unsecured debts, meaning debts such as credit cards and medical bills
- Iowa law protects the value in many homes, but that protection does not replace missed mortgage payments
- The dates in your foreclosure papers can affect whether bankruptcy can help you keep your home
Chapter 13 Can Help You Catch Up
Chapter 13 is often used when someone wants to keep a home but has fallen behind. 11 U.S.C. 1322(b)(5) allows you to catch up on missed mortgage payments through the plan while making your regular monthly payments. Plans run three to five years. This gives you time to catch up instead of paying all the missed payments at once.
Your total debt does not set the monthly plan payment. The payment comes from income left after payroll deductions and necessary living expenses. The court compares those expenses with IRS standards and rejects amounts above the standard for that category. You can read more about catching up missed mortgage payments in Iowa.
Chapter 13 does not require full payment of every debt. In most cases, a large percentage of eligible debt is wiped out after successful completion of the plan. The result depends on your income, expenses and the types of debt you have.
Chapter 13 usually does not change your regular mortgage payment or the other terms of your home loan. Your regular loan terms remain in place, but the plan gives you time to pay what you missed.
Where Chapter 7 Helps A Homeowner
Chapter 7 can help when other bills are making the mortgage hard to pay. It can discharge many eligible unsecured debts, which means the court ends your responsibility to pay them. Common examples include credit cards, medical bills and personal loans. Clearing those bills can reduce monthly pressure and make the mortgage easier to manage.
Chapter 7 can also help if you have decided not to keep the property. A deficiency is the amount left unpaid when a foreclosure sale brings less than the mortgage balance. Depending on the foreclosure and your facts, the lender may be able to collect that shortfall. A judgment is a court order stating that you owe the money. Chapter 7 may discharge an eligible mortgage shortfall.
What Chapter 7 Does Not Do
Chapter 7 does not provide a plan for catching up missed mortgage payments. Filing can pause a foreclosure while the stay remains active, but the unpaid amount is still due. If you are far behind and want to keep the home, Chapter 13 is usually the chapter used to address that problem.
A lender can ask the bankruptcy court for permission to continue the foreclosure. The lender may also resume the process after the case ends if the missed payments have not been addressed.
How Iowa Law Protects Your Home
Equity is the difference between what your home is worth and what you owe on it. Iowa’s homestead exemption is the legal protection that can keep some home value from being used to pay other debts. Under Iowa Code 561.16, the home you live in is protected from many court-ordered sales.
Iowa generally limits this protection by land area rather than value. Iowa Code 561.2 allows up to one-half acre within a city plat or 40 acres outside one. A household can claim one homestead. These rules do not prevent your mortgage lender from foreclosing when payments are not made.
Federal law may cap the protection at $214,000 if you acquired the home within about three years and four months before filing. 11 U.S.C. 522(p) has an exception for equity transferred from another home in Iowa. Whether this limit applies depends on when you bought the home and where you lived before.
Limits On The Stay After A Prior Case
A prior bankruptcy case can change how long the stay lasts. Under 11 U.S.C. 362(c), the automatic stay may last only 30 days if you had another bankruptcy case pending and dismissed during the prior year. In some cases, the court can extend the stay.
If you had two or more bankruptcy cases pending and dismissed during the prior year, the automatic stay does not start automatically. The court can put the stay in place after reviewing the new case. The dates of your prior cases and the court’s orders control how these rules apply.
This can make timing especially important when a foreclosure sale has been scheduled. We review the prior filings, the current foreclosure papers and what you want to do with the home. We use that information to explain whether Chapter 7 or Chapter 13 may help.
Which Chapter May Fit Your Situation
Chapter 13 can help you catch up on missed mortgage payments before a foreclosure sale. Your foreclosure papers control the dates in your case. Our page about foreclosure in Iowa explains the usual timeline. If a sale is scheduled, read about sheriff sale bankruptcy help in Iowa.
We help Iowa homeowners use bankruptcy to halt most collection pressure, catch up on missed payments and deal with several debts in one filing. Our foreclosure work is limited to bankruptcy. We do not handle separate collection lawsuits, loan modifications or negotiations with mortgage servicers.
The right chapter depends on your income, missed payments, prior cases and whether you want to keep the home. You do not need to know whether bankruptcy is right before you call. That is part of what the free consultation is for.
You can request a free consultation or call us at 641-472-5141.
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What Our Clients Say
Past results do not guarantee a similar outcome. Each case is unique.
Frequently Asked Questions
Can Chapter 7 Keep My Home Out Of Foreclosure?
Chapter 7 can pause the foreclosure, but it does not provide a way to catch up missed payments. The automatic stay halts most collection activity after filing.
Which Chapter Can Help Me Keep My Home?
Chapter 13 is usually used when you want to keep the home and need time to catch up. The plan runs three to five years while you continue making regular mortgage payments. In most cases, a large percentage of eligible debt is wiped out after successful completion of the plan.
Can Chapter 7 Still Help If I Own A Home?
Yes. Chapter 7 can discharge eligible unsecured debts such as credit cards and medical bills when those payments are making the mortgage hard to manage. Chapter 7 may also discharge an eligible mortgage shortfall if you decide not to keep the property.
Could I Lose My Home Because It Has Equity?
Iowa law protects the value in many homes, but the answer depends on your facts. The state protection usually has no dollar limit, although land limits and a federal limit for some recent purchases can apply. It does not prevent foreclosure for unpaid mortgage payments.
Can My Lender Ask To Continue The Foreclosure?
Yes. A lender can ask the bankruptcy court for permission to continue the foreclosure in some situations. The court decides based on the facts of the case.
Will A New Filing Stop The Sale If My Earlier Case Was Dismissed?
A prior dismissal can shorten the automatic stay or keep it from starting automatically. If one bankruptcy case was dismissed during the prior year, the stay may last only 30 days. The dates and orders in your prior case control. Two or more dismissed cases can prevent it from starting unless the court orders otherwise.
How Late Can Bankruptcy Help Me Keep The House?
Chapter 13 can help you catch up on missed mortgage payments before the foreclosure sale. The sale date and other deadlines in your own court papers control. Once the property has been sold, the available options change.
Can A Repayment Plan Lower My Regular Mortgage Payment?
Usually not. A plan can give you three to five years to catch up what you missed, but the regular loan terms on your home generally remain in place.
