In a recent interview, I revealed how you can protect your home by filing into Chapter 13 Bankruptcy.
When asked to comment, I said,
“Many of our clients are behind on their mortgage payments and are concerned about losing their home. Depending on their situation, filing for Chapter 13 could be the best way to protect their home in the short and long term.”
One of the greatest benefits of choosing to file for Chapter 13 Bankruptcy relief is that it forces lenders to stop foreclosures and to reinstate home mortgages, as long as the homeowner makes all future mortgage payments during the Chapter 13 case. During a Chapter 13 case all previously unpaid mortgage payments would be repaid by way of monthly payments over a period of up to 3-5 years.
“Upon filing into Chapter 13, homeowners will be granted an automatic stay, which means that creditors will be stopped from taking further action like foreclosure against your assets. In addition to this, you’ll also be able to file a plan that lasts between three to five years to catch up on your past due mortgage payments,” I said.
I added that a bankruptcy attorney will create a customized payment plan by taking your current and anticipated income into account.
“Because our clients were not able to stay current on their mortgages and now are facing foreclosure, we help them make a pragmatic plan that fits within the three-to-five-year period. This is important as these payments must be made on a regular basis to avoid the foreclosure,” I said.
Another caveat is that you’ll need to file within a certain time frame to take advantage of Chapter 13’s payment scheme.
When asked to elaborate, I said, “Timing is quite important when it comes to filing into Chapter 13 to stop a foreclosure. In order to save your house, you’ll need to file for bankruptcy prior to the scheduled foreclosure sale.”
Under certain circumstances, I said, homeowners could also get rid of their second mortgage by declaring Chapter 13 bankruptcy.
“What a lot of people don’t know is that Chapter 13 allows for people to wipe away a second or another subordinate mortgage on a home if it can be shown to the Bankruptcy Court that the balance owed on the first mortgage is equal to or greater than the home’s value,” I commented. I further added, “Determining whether you are able to save your home from being foreclosed in Chapter 13 Bankruptcy can be a complicated process, so the best thing to do is to contact an experienced bankruptcy attorney to see if you qualify.”