What will Happen to My Monthly Mortgage Payment if I File Chapter 13?

What happens with a Chapter 13 mortgage? A mortgage is a type of secured loan. This means the loan's security status allows the lender protection from a loss of its investment in the property. However, this is different in Chapter 13 bankruptcy. In many ways, this type of mortgage payment is critical to understand before you file for bankruptcy. For this reason, individuals should consult with an attorney before making the decision to move into bankruptcy.

Mortgages in Chapter 13

For those filing Chapter 13, mortgage holders as well as other secured lenders will need attention. Specifically, the individual must first determine if he or she has the funds to keep making monthly payments towards the loan. There are numerous things to keep in mind, including the following:

• If the bankruptcy filer wishes to keep his or her home, he will need to stay up to date on the mortgage.
• In situations where the property owner wishes to get out of the mortgage, and it is not behind, the individual can elect to sell the property or obtain a deed in lieu of foreclosure.
• In situations where the property owner cannot afford to keep the home and is behind on payments, a deed in lieu of foreclosure is possible. In other cases, the mortgage lender will foreclose on the property.

For those who choose to remain in their homes, it is critical to understand that the individual must keep making monthly payments throughout the bankruptcy payment period. This period lasts between three and five years. Mortgages are not usually part of this payment. Rather, this debt generally stays out of the bankruptcy repayment period but the borrower must stay current. To remain in the home, homeowners should reaffirm the debt with the lender, which means to tell the lender that he or she remains to keep the original terms of the loan intact.

In situations where the homeowner may need help getting caught up on mortgage payments, the bankruptcy court may work with the borrower or the lender to negotiate a method of getting caught up. Second mortgages, such as home equity loans, may be discharged or part of the bankruptcy filing, though.

Hiring an Attorney

Due to the complexity of Chapter 13 mortgage payments and arrangements, it is often best for the individual to seek out the aid of an attorney. Filing Chapter 13 bankruptcy without an attorney can be a risk situation. Avoid this and ensure the process goes smoothly by hiring an attorney.