If you are a homeowner then there are a number of benefits that chapter 13 bankruptcy may offer you. You may see benefits if you owe more than one mortgage on your home, if you are currently in default on your mortgage, or if you are facing foreclosure and possibly the loss of your family home then filing for chapter 13 bankruptcy may help. The assistance may come in several forms and may allow you to keep the home and make your payments more affordable at the same time. The bankruptcy code has a number of chapters that can be used to file personal bankruptcy. Chapter 13 allows debts to be repaid over a period of time with bankruptcy court oversight, and this chapter will allow you to keep your home in many cases.
When you file for chapter 13 bankruptcy this step allows you to restructure all of your debts and financial obligations, and this normally includes any past due mortgage payments that you may owe in most cases. A chapter 13 bankruptcy case may last between 3-5 years and a repayment plan must be developed and approved by the bankruptcy court. You must make any current mortgage payments as they become due but past payments are rolled into the repayment plan and are paid off with a certain amount each month. This may mean going from being thousands of dollars behind in mortgage payments to being up to date and current as long as the debt payments are made to the bankruptcy court on time according to the approved payment plan.
Homeowners who have more than one mortgage may really benefit from a chapter 13 bankruptcy filing. The housing crisis has caused many homeowners to end up underwater, owing more on the home when all the mortgages are combined than the home is valued at. If you have second or third mortgages against your home then in many cases chapter 13 bankruptcy can eliminate multiple mortgages, so that only the first mortgage against the property remains. The bankruptcy court will lok at the current value of the home, the equity amount that you have in the property, and the remaining balance on the mortgages against the home.
If you are facing foreclosure with your home then chapter 13 bankruptcy can prevent the loss of the home in some cases. The automatic stay that is typically ordered when a bankruptcy petition is filed will stop foreclosure activity by the creditor until the bankruptcy court can sort out all of the relevant factors in the case. Under chapter 13 the lender is barred from any collection action including foreclosure as long as the bankruptcy court has approved a repayment plan that includes any past due mortgage payments, which in effect cures any default on the mortgage. If the mortgage is no longer in default then the lender can not take any collection action or attempt to foreclose on your home. A qualified bankruptcy attorney can advise you on whether or not a chapter 13 bankruptcy is the right choice for your debt and mortgage situation.