Law Offices of W. George Senft


Will I Lose My Home If I File for a Chapter 13 Bankruptcy?

 Being in debt has been described as a snowball rolling downhill and gathering mass as it goes. For some of us, it feels more like an avalanche. It usually starts out slow where you can’t quite make a payment. Next thing you know, you haven’t paid your mortgage in months and you have no idea how you will ever get caught up.

The first thing you should do is take a close look at your budget and decide which areas you can cut. Contact your creditors and lenders to renegotiate your interest rates and monthly payments. You may also work out a payment plan. It is common to look into refinancing your mortgage as that could save hundreds of dollars a month.

If you have explored all of these options, bankruptcy may be the last option on the table for you. But what about your home? No one wants to lose quite possibly the largest investment that they have made over the course of their life. 


Bankruptcy Home Owner Options

 If the idea of losing your home is not acceptable, you may want to look at Chapter 13. This chapter allows a reconfiguration of your debt and puts you on a 3 to 5-year repayment plan. This plan is based on your income and debt amounts, often including missed mortgage payments into the total. The court will need to see that you are able to pay your full mortgage payments along with the repayment amount while still have enough left over to survive.

 It might be possible to convert a second or third mortgage(s) into unsecured debt. If you happen to be like many Americans and own more on your home than it is worth, you can try to move the excess to a low-priority debt that would be treated as credit card debt. These debts usually don’t get paid at all before the case is discharged. 


The Time You Need

 Once you file for bankruptcy, the court will put in place an automatic stay. This means that you can stop making payment to all your creditors without fear of foreclosure or repossession. Your creditors also have to stop contacting you once the automatic stay goes into effect. This will give you some time to get your finances in order.

Once you have a repayment plan that has been approved by the court trustee, you will have to start making your full payments again. If you are behind in payments on your mortgage, you will have to become current or the lender could foreclose on your home. If foreclosure is unavoidable, it may be the best thing for you. The process takes several months, and if you aren’t making payments during that time, you may be able to save up for a new place. If you find yourself in this situation, let me know as soon as possible so I can help you navigate the process

Planning Long-Term 

 There are some big choices that need to be made as you move forward. Don’t make them alone. I am here to help you have the best possible outcome.