Can I get options from my mortgage holder when I'm in bankruptcy?

Chapter 13 bankruptcy is commonly used as a means of stopping foreclosure, or the forced sale of your home. As soon as you declare chapter 13 and file the appropriate paperwork with the courts, your bank will have to stop any foreclosure actions or other collections activities. This means you won't lose your house at that time. 

What will happen next depends on the situation, but chapter 13 does provide you with options for dealing with your mortgage. One major option that is used is something called a cram down procedure. A cram down allows a person who is upside down on his home to have the value of the loan reduced. For example, if you owe $200,000 on your home but property values have fallen and the home is now worth only $150,000, you may be able to have the balance due on the loan reduced to the market value of the house at $150,000.

By using a cram down, you may be able to keep your home if it makes your payments more affordable. Of course, after the chapter 13 filing, you will still need to make the mortgage payments that are required of you and/or that you agree to with your lender if you wish to keep your house. The bankruptcy is never going to erase the total value of the mortgage and allow you to keep the asset, since that would not be fair to the bank who holds the note on your loan.

To determine what effect your specific bankruptcy will have on your mortgage based on what chapter of bankruptcy you file and what state you live in, you should strongly consider speaking with an experienced bankruptcy attorney for assistance.