If you are behind on mortgage payments, you may have several options to stop foreclosure. For example, a loan modification may allow you to change the terms of your original mortgage agreement. This could potentially lower payments, but it might also mean extending the repayment period and paying more in interest or fees. On the other hand, filing for Chapter 13 bankruptcy can also save your home. In fact, Chapter 13 offers you several advantages over other options, such as:
- Halting collection attempts: Filing for bankruptcy issues an automatic stay, which temporarily halts collection attempts by creditors. Creditors cannot foreclose on your home after you file for bankruptcy.
- Allowing you to become current: By filing for Chapter 13, your debts are grouped together into a three-to-five-year repayment plan (including arrears from late payments). In addition, your unsecured debts are discharged after completing your repayment plan, meaning you can focus on paying your mortgage.
- Reduce payments: In some cases, Chapter 13 allows you to strip additional mortgages, which can help reduce your monthly payments. To qualify for lien stripping, your first mortgage must be greater than the value of your home.
What Happens If I Do Not Complete My Chapter 13 Repayment Plan?
It is very important to continue making regular payments on your Chapter 13 plan. The court can dismiss your case if you fail to make payments. Dismissal would lift the automatic stay and allow your lender to resume the foreclosure process. In addition, your lender may also ask the court to lift the stay if you miss payments. Chapter 13 bankruptcy can save your home and discharge unsecured debts, but only if you complete the repayment plan. An experienced bankruptcy attorney can help you develop strategies for completing this repayment plan, such as setting up automatic payments.
The Kansas City bankruptcy attorneys at The Sader Law Firm can help you find possible options for preventing foreclosure. Our firm offers $0 up-front Chapter 13 filing fees.