Can Filing for Chapter 13 Help Me Save My Home?

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Have you fallen behind on your mortgage payments and are now at risk of losing your home to foreclosure? Is keeping your home something that you want? Would making your monthly payments be feasible if the amount due each month was adjusted to fit into your budget?

Frequently, we see homeowners at risk of foreclosure who are desperate to keep their homes. Many times, the homeowner has already applied for a loan modification with their mortgage lender. Unfortunately, waiting for a loan modification to be approved can drag on and on for many months.

If you have applied for a loan modification, your mortgage debt (including past due payments and late fees) will snowball while you wait for your loan modification to be approved. Sadly, many loan modifications are not approved the first time around, especially without help from a debt relief attorney. Either way, while you wait for an answer, the amount of arrears will continue to climb, making it more impossible than ever for you to catch up.

We’ve worked with clients who’ve found themselves in this exact scenario. As we recently discussed in our last blog post, many people wait until the last minute to ask us for help saving their home from foreclosure.

Though Veitengruber Law does have last minute strategies that can often help postpone a foreclosure, today we’d like to present you with a way to stop a foreclosure early, giving you many options and the time you need to reorganize your your debts.

While most people associate bankruptcy with chapter 7, filing for chapter 13 may be exactly what you need if you’re facing foreclosure while attempting to obtain a loan modification.

Chapter 13 is a good choice for you if:

  • Your lender has filed a Notice of Default [missed payment(s)].
  • Foreclosure appears imminent.
  • You want to keep your home.
  • A loan modification would make your payments achievable.

How can a chapter 13 bankruptcy help me?

  • Filing for chapter 13 puts a stop to any foreclosure proceedings, known as an automatic stay. Your mortgage lender(s) (and all other creditors) are legally prohibited from collecting payments during the automatic stay period.
  • You are permitted to continue seeking a loan modification during your chapter 13 bankruptcy proceedings.
  • While you are seeking the modified loan, you will still be able to make payments (in the amount you can afford) so that you don’t fall further and further behind.
  • Any unsecured debts that you may have in addition to your mortgage loan can also be reorganized or modified to make repayment achievable. Some unsecured debt may even be dismissed altogether.
  • As soon as you file for chapter 13, you will start communicating with the bankruptcy division within your mortgage company. Oftentimes this results in a loan modification application that gets approved!

Consult with an attorney who specializes in debt relief and loan modifications to find out if a chapter 13 bankruptcy is right for you. Send Veitengruber Law a message now or call us at (732)852-7295 for more information about bankruptcy and foreclosure in New Jersey.

Image credit: Anders Lejczak
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2 Responses to Can Filing for Chapter 13 Help Me Save My Home?

  1. Laurie says:

    Every situation is different. I always recommend that if a person is having difficulties and is considering bankruptcy to contact a reputable bankruptcy attorney to find out what the best option may be for their personal situation. Most attorneys offer a free consultation, so there really is nothing to lose. Thanks for sharing!

  2. Pingback: After Bankruptcy: Am I Doomed or Can I Rebuild My Credit? | Veitengruber Law

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