Payment Notice

• The mortgage lender's attorney mails a late payment notice stating that payments have not been received. The notice provides the total amount owed since the bankruptcy case started. The lender gives the debtor an opportunity to make payment arrangements and become current. Sometimes payments are sent to the wrong address or not properly credited to the debtor's account. As a result, the notice is also submitted to make the debtor aware that there may be a discrepancy between the payments submitted and the mortgage lender's records. The notice states that the lender will pursue its legal options through the bankruptcy court if the payment issue is not resolved within a certain time frame.
  
  

Motion for Relief from Automatic Stay

• The mortgage lender files a Motion for Relief from Automatic Stay with the bankruptcy court when the account doesn't become current before the deadline set in the late payment notice. Receipt of the motion and hearing date arrives in the mail. The motion states the payment arrangement set up in the Chapter 13 plan, the number of payments that weren't received, the cost of attorney's fees and the total amount owed. The lender requests that the court remove the house from bankruptcy protection so that it can begin foreclosure proceedings.
  
  

Foreclosure

• The mortgage lender starts foreclosure after the Motion for Relief from Stay is granted by the court. Read the foreclosure paperwork and notice of default. Discuss all of your options with the bankruptcy attorney. Start looking for other places to live when the house is no longer affordable based on the terms of the mortgage contract or if obtaining a loan modification isn't feasible. As of 2010, many banks have a large inventory of foreclosed properties and it may take a few months before the foreclosure process starts. Talk with your bankruptcy attorney to get an estimated time of how soon you may need to leave the house.
  
  

Modification or Conversion

• Homeowners often file for bankruptcy in order to keep their homes. They usually stop making payments because their income has decreased or some unforeseen expense has made their mortgage unaffordable. Modify the Chapter 13 plan when the finances have changed. File an amended Schedule I and Schedule J to accurately reflect current income and expenses. Change the payment terms of the Chapter 13 plan accordingly and file it with the bankruptcy court. Converting the case to Chapter 7 is an option if the income fits within the median income parameters for the household size within the state. Discuss the various options with your bankruptcy attorney to determine the best course of action.