Using Chapter 13 to Address Mortgage and Property Tax Arrearages

Often, when you have financial challenges, it’s your mortgage and/or the property tax payments that you can’t make in a timely manner. If you are behind on your mortgage, haven’t paid your property taxes, and are facing either foreclosure proceedings or a tax lien / tax sale, you can use Chapter 13 of the bankruptcy laws to reorganize your debt and negotiate new payment arrangements. That can apply to both mortgage obligations and tax debt.

Under Chapter 13, you’ll have three to five years to satisfy your creditors. While that’s likely not a long enough period to pay your mortgage in full, you may be able to enter into an agreement whereby you pay off all penalties and arrearages by the end of the bankruptcy. While you are doing that, you’ll enjoy the benefits of the automatic stay, a provision of the bankruptcy law that prohibits your creditors from calling, writing or taking any legal action outside of the bankruptcy process to try to collect the debt. As long as you honor your commitment, you won’t have to worry about the harassing phone calls and letters, or of any impending legal action.

In addition, if you avoid incurring new debt, you should have significant disposable income when you emerge from bankruptcy, so it should be easier for you to make your mortgage payments.

A Chapter 7 filing can invoke the automatic stay, and you can exempt your home from the bankruptcy sale. However, you can’t get relief from property tax payments in a Chapter 7 bankruptcy.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we provide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

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