Should I Continue Paying My Mortgage During Chapter 13 Bankruptcy?
If your goal is to keep your house, you should continue paying your mortgage while in Chapter 13 bankruptcy. If you stop making payments on this debt, you risk losing your home in foreclosure.
One of the main reasons why people choose Chapter 13 is when they’ve fallen behind on their mortgage and want to a chance to catch up. As a debt reorganization bankruptcy, Chapter 13 provides an opportunity to consolidate mortgage arrears and other kinds of debt into a repayment plan lasting three to five years.
During this time, mortgage lenders are prohibited from pursuing foreclosure as long as the bankruptcy filer can keep up with the repayment plan. This can allow someone a chance to keep their home in the long run, or it may provide them with enough time to prepare for alternative living arrangements.
Do I Have to Pay My Mortgage During Chapter 13?
No – you are under no obligation to continue paying your mortgage, especially if you realize you can’t afford it. If you’ve come across financial hardship, you may learn that homeownership is more of a burden than your finances can handle. In that case, you can decide to give up your home (as difficult as that may be) and put your financial resources to work in other areas of your life.
While your mortgage debt won’t necessarily go away when you give up your home, your lender’s stake in your debt is put at a lower level of priority. This means you won’t necessarily stay on the hook for mortgage arrears or the remaining balance. Instead, successfully completing your Chapter 13 repayment plan can eliminate your liability for this debt with a discharge.
How Do I Keep My Home During Chapter 13?
If you want to keep your home in Chapter 13, there are a few things you should do. Chief among these is remaining current on your mortgage if you are in Chapter 13 for other debt. If you are in Chapter 13 because of your mortgage, staying on top of your repayment plan is essential.
If you make any late payments on either your Chapter 13 plan or mortgage itself, be sure to pay any applicable fees or fines. Failing to do so could cause a default on either, which can snowball into losing your home.
If you have equity in your home, you should also be sure to pay for the amount you can’t exempt with bankruptcy exemptions. You can otherwise lose this equity, which can mean losing your home.
We Can Help with Bankruptcy
If you have additional questions regarding Chapter 13 or other types of bankruptcy, Buchalter & Pelphrey Attorneys At Law can help. As experienced bankruptcy attorneys, we have unique qualifications that can lend insight into your legal situation and help you move forward.
Learn more about how we can help during an initial consultation. Contact us online now to get started.