Does Filing Chapter 13 in Connecticut Prevent Foreclosure?
- In Connecticut, foreclosures are carried out judicially. The lender will need to file a lawsuit to obtain permission from the judge to foreclose the home. Your lender is required to send you a 60-day demand letter prior to initiating the procedure. Mediation and counseling are available through the state to help you avoid foreclosure. If a solution cannot be reached, a hearing date will be scheduled. If the judge grants the foreclosure, a sale date will be set. A Connecticut foreclosure typically takes three to four months.
- Chapter 13 bankruptcy allows you to keep your home. Certain unsecured debt, such as a second mortgage, can be discharged through bankruptcy. Interest and late fees are often reduced or eliminated, lowering your expenses each month. To qualify, you must be able to afford your current mortgage payment. Even if you have a delinquent balance, resume making the required mortgage payment. Under Chapter 13, debt is repaid through a court-approved repayment plan. You will no longer deal with creditors. Instead, the payment is made directly to the trustee.
- Within 60 days after the filing of your bankruptcy petition, the trustee will hold a meeting of creditors. You will present your proposed repayment plan at the meeting. Your creditors have the opportunity to ask you questions about your finances to determine a fair payment amount each month. The trustee will also need to verify your financial ability to repay the debt. You may be asked to supply current pay stubs and bank statements. Payment plans are established for three- or five-year periods.
- A mandatory pre-bankruptcy counseling class must be completed within 180 days prior to filing bankruptcy. After filing, a debt education course is required. Be aware that bankruptcy will have a negative impact on your credit score. Chapter 13 bankruptcy will remain on your credit report for at least seven years from the date of filing the petition. Meet with an attorney before deciding to file. If you cannot afford an attorney, legal aid services in Connecticut help low-income homeowners. Statewide Legal Services of Connecticut offers homeowners access to local pro bono attorneys.
