Today was my 2nd client within two months where we have filed an emergency chapter 13 to stop a foreclosure where unsecured debt is not a problem and its simply arrears or a foreclosure on a hard money loan that has come due and cannot be paid immediately. The goal is to buy enough time for a seller in distress when the foreclosure comes before a buyer or the right market. I filed one case in San Diego a few months ago and my client who was a contractor was adamant that houses sell for more in the summer. He owed 700k on the house with 50k in arrears. The house according to zillow is worth 850k. He thinks this summer he will get 900k for it so instead of letting the bank sell it or buy it back from itself at 700k and flip it at 900 this summer, my client takes the reigns back and does it himself. We make a motion in the bankruptcy court to sell real property and as long as the creditors get paid there is no issue. He has no unsecured debt so its no issue. For people with unsecured debt, there is always an option of voluntarily dismissing the case and then closing escrow before a new foreclosure date comes up. It leaves you with your unsecured debt in that scenario but allows you to make the money that your house is potentially worth a year down the line. Chapter 13 has many options and can be a great tool. Call me if you have any questions when facing an imminent foreclosure.
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