When a debtor files Chapter 13 bankruptcy with a mortgage they may choose to keep their house and continue to pay the mortgage. However, because of the length of Chapter 13 bankruptcy cases, they may find themselves facing troubles paying their mortgage a few years down the line. If this happens there are a few options outside of dismissing the case or converting to Chapter 7 bankruptcy. Let's take a look at a few of those options:
Negotiate With Lender
If your financial problem is temporary, you may want to negotiate with the mortgage lender to catch up on payments. This will require that you continue to make regular mortgage payments, regular Chapter 13 bankruptcy payments and an additional payment to the mortgage lender to pay the arrears. This solution will only work if the financial problem is temporary and has passed once negotiations begin.
Modify Your Mortgage
Even if you are well into your Chapter 13 bankruptcy, you may still have an opportunity to modify your mortgage. By modifying your mortgage in bankruptcy you can decrease your monthly payment obligations. However, the mortgage company will only be amenable to modifying a mortgage in Chapter 13 bankruptcy if they see that you have been paying on-time post-filing. This is why this option works best if you try to modify before you begin missing payments. Also, any mortgage modification will need to win the approval of the bankruptcy trustee.
Modify Chapter 13 Bankruptcy
Work with your bankruptcy attorney to get the delinquent mortgage payments added to your Chapter 13 bankruptcy. To have post-filing arrears added to a Chapter 13 bankruptcy, the debtor will need to get the lender to agree to the change - they are not obligated to do this.