Mortgages and Chapter 13 Bankruptcy
Chapter 7 bankruptcy can only temporarily stop foreclosure and likely cannot ultimately save your home. Chapter 13 bankruptcy will stop foreclosure and reinstate your mortgage if the payment plan is successfully completed. Another benefit of Chapter 13 is the opportunity to modify your mortgage with the help of a court appointed mediator. Also if you have a second mortgage that is totally "underwater" (if the house is worth less than the first mortgage we may be able to help you eliminate the second mortgage. If you own real estate that is not your homestead, we may be able to "cramdown" the any mortgages to the value of the property. The remaining portion of the loan will then be unsecured.
Stop Foreclosure & Catch up with Chapter 13
Financial problems can have many consequences, especially if you are a homeowner. If you fall behind on your mortgage, you risk the loss of your home through foreclosure. In a chapter 13, If you can afford to make future payments as they come due and catch up on past due amounts over the three to five year payment plan, foreclosure will be averted and the home will be saved.
Chapter 13 Mortgage Modification Mediation
Bankruptcy courts have a program available under chapter 13 called Mortgage Modification Mediation. If you have been frustrated by mortgage modification programs outside of bankruptcy, you will be happy to know this program is much different. There are many benefits to this court directed program including:
- The court appoints a neutral mediator to "referee,"
- The program has a "good faith" requirement which encourages parties to reach an agreed solution.
- Payments during mediation may be limited to 31% of gross income or, in limited cases, delayed until confirmation of the plan
- The program directs documents and communications flow through a web-based portal
- If the lender does not object within two weeks, the court will start the process automatically
Stripping Second or Third Mortgages in Chapter 13
If the value of your home has fallen, you may owe substantially more than what it's worth. In today's housing market, many homes are worth less than what is owed, leaving second or third mortgages "unsecured". By filing for Chapter 13 bankruptcy, a homeowner can seek a court order to cancel their second or third mortgage IF there is no equity above the value of the first mortgage. In other words, if the house isn't worth as much as the first mortgage, any other mortgages may be "stripped off" and be converted to unsecured debt.
Foreclosure options we can help you with outside of chapter 13 include:
- Loan modification
- Deed in lieu / Cash for Keys
- Strategic default
Getting reliable legal advice is important when the loss of a home is imminent. At David Holland Law we are skilled in Bankruptcy Law, Debt Defense, Foreclosure Defense and other debt relief solutions. We will fight to protect your assets and rights. Our firm has experience representing clients in financial trouble, and will do everything possible to help resolve your situation. Our firm will explore all of your legal alternatives and help you arrive at the best decision regarding your home and provide the assistance you need to improve your overall financial condition.
David Holland is a dedicated bankruptcy attorney who can be depended on for sound financial and legal advice. Contact us today for legal counsel if you are in financial difficulties and behind on your mortgage payments.