Homeowners can solve multiple mortgage problems by filing for chapter 13 bankruptcy in Plano, TX. Many struggle with their mortgages, whether because of loss of income, excessive loan balances, or high-interest rates. Failure to make mortgage payments can lead to foreclosure, which then displaces the family and adds the burden of a deficiency balance after a foreclosure sale. Homeowners who are behind on their mortgages, who are facing foreclosure, or who have too many mortgages and not enough home value should know that Chapter 13 bankruptcy may provide a solution. Chapter 13 bankruptcy is available to most individuals and married couples who have a steady income and need to get out from under a bad mortgage situation. Here are the ways a Chapter 13 can help.
Chapter 13 Bankruptcy in Plano, TX: How it Works
Chapter 13 is almost like a reorganization for individuals. A homeowner who files Chapter 13 will file a proposed repayment plan which will last from three to five years, depending upon the household income and other factors. The homeowner will make monthly payments to a bankruptcy trustee, who will take the money to pay creditors, including the mortgage company.
Catching Up on Mortgage Payment Arrears
Through the Chapter 13 plan, a homeowner can repay any mortgage payment arrears over the three-to-five-year period of the plan while still making his regular mortgage payments. While this may be possible outside of bankruptcy, such as through a loan modification, bankruptcy is in many ways the superior option, as the mortgage company is required by federal law to accept the plan and accept the payments over time as long as the homeowner can show that he can afford the payments, and as long as the arrears are paid in full.
Filing any type of bankruptcy will stop a mortgage foreclosure. Even if the sale is scheduled for the next day, filing a bankruptcy case will stop the sale; the mortgage company will be forced to cancel the foreclosure sale to avoid violating federal bankruptcy law. Once a Chapter 13 case is filed, the homeowner can cure the mortgage default through the plan and come out of the bankruptcy completely caught up on payments.
Lien Stripping for Second and Third Mortgages
If a homeowner has more than one mortgage, Chapter 13 may provide him or her an opportunity to get rid of second and third mortgages through something called a lien strip. If the property is worth less than the balance due on the first mortgage, the homeowner can file something with the court seeking to get rid of the second and third mortgages. If successful in that request and if successful in completing the Chapter 13 plan, the homeowner will leave bankruptcy with only one mortgage.
These Chapter 13 benefits are not available to every homeowner; whether or not a Chapter 13 plan will be successful depends upon many factors, such as household income, stability of employment, the value of the property and how much the payments are behind. Speaking immediately to an experienced bankruptcy attorney is the first step to finding out if Chapter 13 can give a homeowner the advantage over his or her mortgage company. Call Collins & Arnove at (972) 516-4255 to learn more about chapter 13 bankruptcy in Plano, TX and to set up a free consultation.
Collins & Arnove | Chapter 13 Bankruptcy Plano TX | 972-516-4255