Mortgages In Chapter 13 Bankruptcy
Are you struggling to pay the payments on your home loan? Has your mortgage lender threatened to file or has filed a foreclosure action? Are you worried that you will lose your home and your family will have no place to live? If so, filing a Chapter 13 bankruptcy case may help you keep your home and resolve your financial problems.
Catching Up Past Due Home Loan Payments in a Chapter 13 Bankruptcy Plan
If you are behind on your home loan payments, you can catch up those payments through a Chapter 13 bankruptcy plan. In some cases, you may even be able to get rid of a second home loan if you meet the requirements to value the loan at zero.
When you file a Chapter 13 bankruptcy case, creditors must stop all collection efforts including foreclosures, repossessions, wage garnishments, and collection lawsuits. This gives the debtor an opportunity to propose a plan to reorganize his or her debts without creditors harassing the debtor for payment. It also protects the debtor’s property from creditors while the debtor works to get back on his or her feet financially.
If you are behind on your payments for your home loan, the arrearage is included in your bankruptcy plan to be paid over several months or years (depending on the plan and the amount you owe in past due payments) without interest. You resume your regular monthly home loan payments outside of the plan and keep your home.
Second Mortgages in Chapter 13 Bankruptcy
If you have a second home loan, you may be able to value that debt at zero. The market value of your home must be less than the payoff on your first mortgage in order to value a second home loan at zero. In this situation, the debt you owe on the second loan will be treated as an unsecured debt and receive the same percentage as other unsecured creditors (i.e. credit cards and medical bills).
An experienced bankruptcy attorney will evaluate your financial situation and advise you of the best course of action to take to resolve your debt problems and keep your home.