Keeping Your Home Through a Chapter 13 Bankruptcy
As the number of homes facing foreclosure continues to remain unacceptably high, many homeowners who are struggling to pay their mortgages seriously consider filing bankruptcy. But how can Chapter 13 bankruptcy help you keep your home?
Let’s take a look at a few facts:
- If you are earning an income, and you don’t qualify for Chapter 7 bankruptcy , you can file Chapter 13 bankruptcy, or what’s called a wage earners plan. Under Chapter 13 bankruptcy, a debtor has several flexible options to stop foreclosure .
- If a debtor is delinquent on their mortgage payments, they can use Chapter 13 bankruptcy to repay their past mortgage payments over the course of their plan which will last 3 to 5 years. For example, if they are in a three year Chapter 13 bankruptcy plan, they can make monthly payments to the mortgage company to catch up on late payments, in addition to making regular mortgage payments every month.
- If a debtor cannot afford to make payments on their mortgage, they may be able to negotiate a mortgage modification with their lender or if they have a second mortgage, such as a home equity loan, which is partially or wholly unsecured, they may be able to cram down the unsecured portion to lower their mortgage payment. The possibility of a cram down should be discussed with a bankruptcy attorney.
Whatever choice the debtor makes, they must keep to the bankruptcy repayment plan or their mortgage lender will be allowed to foreclose on the property. If you enter into a Chapter 13 bankruptcy repayment plan are unable to continue making payments contact your bankruptcy attorney immediately.