Chapter 13 bankruptcy can help you save your house. How? It gives you time to make up your missed payments and can make your mortgage debt more affordable in the long term by reducing your overall debt load.
You get these crucial benefits by proposing to the court a feasible Chapter 13 debt repayment plan that satisfies all the legal requirements. In most cases, a plan will pass muster if it shows enough probable income to meet your regular and necessary living expenses (including your mortgage and payments towards any arrearage that has occurred) and to pay off certain debts, such as back taxes and child support.
It won't be easy to stick to this kind of a repayment plan for three to five years, but if you do, you’ll be well rewarded. All your remaining unsecured debt will be wiped out—and you will have kept your house.
The benefits of Chapter 13 bankruptcy start the minute you file. That’s because filing for bankruptcy immediately stops a foreclosure in its tracks. As soon as you file, the federal bankruptcy court issues what’s known as a stay. This is a court order that bars all of your creditors, including mortgage lenders, from making any attempt to collect a debt you owe unless they get court permission. And once the bankruptcy judge approves your repayment plan, you will be safe from foreclosure over the entire plan period, as long as you keep making the required plan payments and your loan payments.
More information on Chapter 13 bankruptcy. To learn more about this powerful remedy, see:
- the bankruptcy area of www.nolo.com
- The New Bankruptcy: Will It Work for You? (Nolo), which explains your bankruptcy options, and
- Chapter 13 Bankruptcy: Keep Your Property & Repay Debts Over Time (Nolo), a step-by-step guide to filing for Chapter 13 bankruptcy.