How Chapter 13 Really Works When You Are Behind on a Mortgage

Using a Chapter 13 Bankruptcy Filing to Restructure Your Mortgage

If you are in arrears on your house payments, a Chapter 13 bankruptcy reorganization filing can help you get your financial situation under control while simultaneously putting a stop to the seemingly endless calls, letters and threats of legal action from your mortgage lender. When you file for protection under Chapter 13, an automatic stay immediately goes into effect, preventing your lender from calling, writing or taking legal action to collect on the mortgage debt. At the same time, you can negotiate new terms to your mortgage loan so that your payments are within your means.

How It Works

In a Chapter 13 bankruptcy petition, you work with your creditors to put together an acceptable reorganization plan, whereby you agree to repay your creditors over a three-to-five-year period. In most instances, however, the amount due on your mortgage cannot be repaid in this period of time. Instead, what you will do is work out a new payment plan that is within your means during the bankruptcy period. Ideally, when you complete the Chapter 13 process, all or most of your other debts will be eliminated and discharged. You will then be able to afford your mortgage payment, and may even enter into an agreement to pay your home off in a shorter period of time.

You don’t need to worry that your mortgage lender will demand an unreasonable payment from you during the bankruptcy period. A bankruptcy “levels the playing field” and gives you and your lawyer the ability to counter unreasonable positions taken by secured creditors. This is the point when a good lawyer will help your creditors understand that smaller payments that you can afford are better than larger ones that you cannot.

Contact Neuner & Ventura, LLP

Let us help you take back control of your life! We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every new potential bankruptcy client. (We do, however, reserve the right to charge a fee to review any work done by another attorney). For an appointment, call Neuner & Ventura at (856) 596-2828 or send us an e-mail. Evening and weekend appointments are available upon request
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