A few years ago, when I realized that I couldn't pay my mortgage anymore, I knew that I needed to do something to correct my finances. It seemed like I just couldn't catch a break, and after losing my job, I knew that I was in trouble. I started looking for new work, but I knew that I needed to fix my credit somehow. I was at the end of my rope, until a friend talked with me about the possibility of declaring bankruptcy. She explained that it helped her to start over. I met with a bankruptcy attorney who was incredible to work with, and I was amazed at how much it helped my situation. Check out this blog to learn how working with a bankruptcy professional could help you.
If you currently have two or more mortgages on your home and are in the middle of filing Chapter 13 bankruptcy, you may wonder if there's any way to make your repayment plan more affordable to avoid losing your home. Although Chapter 13 gives you a chance to pay off one home mortgage, it may be difficult to repay two or three mortgages if your income is less than all three mortgages put together. There are things you can do to make your repayment plan easier on you, including these below.
Apply for Lien Stripping
During a Chapter 13, bankruptcy court establishes a payback plan for you that reflects how much income you have coming in. In most cases, bankruptcy court eliminates the majority of your unsecured debts and reaffirms the secured debt you must pay your creditors to make the plan affordable.
In the case of your home's second and third mortgages, you can ask bankruptcy court to relist one or both mortgages as unsecured debt if your home no longer has the equity to cover all three mortgages, or if you don't have enough income to cover all three obligations. This is called lien stripping.
Lien stripping is used to help you do the following:
It's important that you keep up the payments on your first mortgage during your Chapter 13. If you don't meet the requirements, bankruptcy can place the second and third mortgages back on your repayment plan. If this happens, you'll need to catch up on both mortgages to keep your home.
It's a good idea that you speak directly with a bankruptcy attorney who specializes in foreclosures before asking the court to relist your second and third mortgages. An attorney may find additional options available to you that help you reduce your repayment plan even further, especially if you don't think you can afford the first mortgage's payments.
Reduce Your First Mortgage's Payments
Before you complete your Chapter 13, you must first make your mortgage's payments current. You usually do this by paying an additional fee along with your regular mortgage payments each month. If you don't think you can afford the arrears fees and regular mortgage payments without falling behind, you can ask bankruptcy court to reduce your regular mortgage payments based on the new changes in your income and expenses.
For example, if your income recently changed due to problems out of your control, such as job loss or extra child support expenses, bankruptcy court may reduce your mortgage payments to meet unexpected changes. It's critical that you bring copies of all your new expenses immediately to a bankruptcy attorney. After an attorney submits your information to bankruptcy court, he or she can recalculate your Chapter 13 bankruptcy's repayment plan to see if you can lower your mortgage payments.
For more details about Chapter 13 or how to keep your home from foreclosure, contact an attorney, such as the Legal Clinic Of Jerry Paeth, today.
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