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Saving Your Home with Chapter 13

Many people declaring bankruptcy do so with the intention not only of freeing themselves from overwhelming credit card debt, medical bills, personal loans, etc., but to also free themselves from stifling mortgage payments. If you find yourself unable to handle the complete scope of your finances, but simultaneously unwilling to walk away from a home you love, we have the answer. It’s true that bankruptcy is the perfect time to simply walk away from a house you can’t afford, but that doesn’t mean that filing bankruptcy means you HAVE to lose your house.

If you decide to save the house rather than walk away from it during your bankruptcy process, your best method will be filing for Chapter 13. In addition to the automatic stay granted upon filing, the Chapter 13 bankruptcy allows homeowners to repay past due mortgage debt throughout the course of a 3-5 year payment plan agreed upon during proceedings. If attempting to keep your house while filing for Chapter 7 you will be required to pay past due amounts to the lender up front in order to avoid foreclosure. Most who find themselves in need of filing for bankruptcy find this situation untenable.

Before you make your final decision about whether or not you attempt to save your house or walk away from it, consider that when filing for Chapter 13, a lot of other debt will be discharged which could make your mortgage payment more appropriate for your lifestyle and level of income. With the Chapter 13, filers will be on a payment that lasts either 3 or 5 years (depending on your income). During the time period, monthly payments have to be made to the bankruptcy trustee. The trustee then disburses the payment amongst the various creditors as agreed in the Chapter 13 plan. If, during the course of a Chapter 13 payment plan, you experience a drastic life change such as loss of job or a divorce that inhibits your completion of a payment, it is important that you immediately notify the bankruptcy trustee to request a modification of the plan to accommodate your changed circumstances. If you don’t contact the trustee and you fail to make a payment your case will be dismissed.

In the majority of Chapter 13 cases, a large portion of unsecured debt is discharged upon completion of the 3-5 year payment plan. Unsecured debt includes: credit cards, personal loans, medical debts, etc. In this way, Chapter 13 filers are relieved of a substantial amount of their debt upon completion of the agreed upon payment plan terms.

Find out more about how you can save your home with a Chapter 13 bankruptcy by contacting Westgate Law today. We know exactly how to help you reclaim your financial health and stay in your family home at the same time.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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