Chapter 13 Bankruptcy provides opportunities for homeowners to delay or prevent foreclosure and pay off back debt on their mortgages. In some cases, homeowners can also eliminate the amount of second or third mortgages. In order for this option to work, you need to generate enough income to at least meet your current mortgage payment and your other basic expenses at the same time you’re paying off the mortgage arrearage.
When does it make sense to file a Chapter 13?
- To save you from mortgage foreclosure
- If you are behind on payments
- If your income is stable but you have too much debt
- To keep assets you would have to give up in a Chapter 7
When you file a Chapter 13 Bankruptcy petition, all foreclosure proceedings must stop until your Chapter 13 repayment plan is approved by the court. This is called the “automatic stay.” If your repayment plan includes provisions for paying off your mortgage arrearage, then once the plan is confirmed (approved by the bankruptcy judge) the lender is bound by the plan and cannot continue with the foreclosure, assuming you make your regular mortgage and bankruptcy plan payments.
After you complete your three to five-year plan, the company that financed your mortgage will have received the money owed; unsecured creditors such as a credit card issuer or a department store card may not have received anything. But it doesn’t matter; execute your Chapter 13 Bankruptcy payment plan and all debt balances are eliminated. Once that happens, your financial life begins all over again!
Whether you’re dealing with the possible loss of your home or your business, an experienced Chapter 13 bankruptcy attorney at Penachio Malara, LLP can help you get life back on track. If you’re the victim of job loss, wage garnishment, or creditor harassment in New York City or Westchester, Putnam, Rockland and Dutchess Counties, call our White Plains, NY law office now for a free consultation at (914) 946-2889.