If you have fallen behind on your mortgage, Chapter 13 bankruptcy may be an option to consider to help you get caught up on missed payments. One of the most common reasons why Chapter 13 is filed is to cure a mortgage in default. The action not only helps in saving your home but in many cases, it can help reduce monthly payments allowing you to keep your home.
When Chapter 13 Bankruptcy is Filed
When Chapter 13 bankruptcy is filed the automatic stay goes into effect. If your home is facing foreclosure or the mortgage company is set to sell your home, the stay can stop either action from being enforced on your home. The stay can help give homeowners more time to come up with a plan that will help you keep your home. The stay will remain in effect as long as the homeowner makes payments according to the repayment plan.
Chapter 13 offers the opportunity to reorganize outstanding debt with a repayment plan approved by the court. The plan will be created based on your income and ability to make payments. The plan will include making mortgage payments that were missed. While you'll likely have to continue making monthly payments according to your mortgage agreement, the missed payments can be spread out over a 3 to 5 year period.
This means you'll be making regular mortgage payments along with missed payments to bring your mortgage current. Chapter 13 may also be an option to consider if your mortgage lender doesn't offer an affordable way for you to cure your mortgage.
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