Legal Question in Real Estate Law in Wisconsin

Paying on House in Foreclosure, Chapter 13 Bankruptcy Reinstates Loan

If you make payments after a foreclosure is started without first filing a chapter 13 bankruptcy, the bank will probably return your checks. The other possibility is that they will hold the payments in trust in a "suspense account" and not credit them to your loan, although they will eventually have to account to you for them. Such payments alone will not stop the foreclosure process. Short of a chapter 13 or a negotiated settlement with the bank, the payments would never be enough to catch up on the attorney fees and costs related to the foreclosure, which typically amount to at least few thousand dollars (as well as additional interest not included in your original payment schedule). You are liable for these fees under your mortgage agreement. You might be able to pay the foreclosing lawyer directly for these fees rather than having them added to you loan balance. A chapter 13 filing forces the bank to begin accepting your payments again and enables you to reinstate your loan if you follow all the court's orders. You should therefore consult with an experienced bankruptcy attorney as soon as possible.