How Bankruptcy Can Give You Time To Catch Up On Mortgage Payments
Chapter 13 and your mortgage
Chapter 13 bankruptcy can allow a homeowner time to get caught up on past due payments
You’ve fallen behind on your mortgage. The bank is demanding payment of the arrearages immediately. You don’t have the money but want to stay in your home. What can you do? First of all this is a common problem. Borrowers who fall behind on their mortgage are often hit with late fees and penalties that makes catching up seem impossible. To make matters worse, once you’ve fallen a few months behind your lender will “accelerate” the loan demanding the full principal balance to reinstate and avoid foreclosure.
Chapter 13 bankruptcy allows homeowners the opportunity to catch up on past due mortgage payments in small amounts over a period of 3-5 years rather than having to come out of pocket with a lump sum payment demanded by most lenders. This is an attractive option for those who need a little extra time to get caught up on payments but don’t have the ability to pay months worth of back payments at once. Under a chapter 13 plan, the amount you owe in past due mortgage payments will be broken up and paid to the bank in manageable monthly amounts. While your case is pending your lender is prohibited by law from foreclosing on your home. Be aware that while chapter 13 bankruptcy can give you time to catch up on your mortgage, you will have to continue making normal monthly mortgage payments if you wish to stay in your home and permanently avoid foreclosure.
See Also:
Can Chapter 13 Bankruptcy Lower My Car Payment?
