What Happens to Your Home in Chapter 13 Bankruptcy?
Filing for Chapter 13 bankruptcy can feel like a huge step, especially when you are worried about losing your home. However, Chapter 13 is specifically designed to help individuals keep their property while reorganizing their debts. If you are facing foreclosure or struggling to keep up with mortgage payments, Chapter 13 might be the solution you need.
How Chapter 13 Helps You Keep Your Home
One of the biggest benefits of filing for Chapter 13 is the opportunity to stop foreclosure and catch up on missed mortgage payments. Once you file, an automatic stay is put into place. This means that creditors must stop collection efforts, including foreclosure actions. With Chapter 13, you can spread out your missed mortgage payments over three to five years as part of a court-approved repayment plan.
While you catch up on past-due payments, you must also stay current on your regular monthly mortgage payments to keep your home. Chapter 13 does not eliminate your mortgage but gives you time to catch up without the threat of immediate foreclosure.
What to Expect During the Repayment Plan
In a Chapter 13 plan, you propose a repayment plan that outlines how you will pay off your debts over time. The plan is typically spread out over three to five years, and during this time, you make payments to a court-appointed trustee, who then distributes the funds to your creditors.
Your repayment plan will include both the missed mortgage payments and any other secured debts, such as car loans. As long as you adhere to the plan and make your regular payments, you will be able to keep your home and avoid foreclosure.
What If You Want to Sell Your Home?
During Chapter 13 bankruptcy, you can sell your home, although you will need court approval to do so. If the sale is approved, the proceeds will first go toward paying off the mortgage, and any remaining funds might go toward other debts.
Stay Protected with the Right Guidance
Filing for Chapter 13 bankruptcy offers powerful protections for homeowners. It can stop foreclosure, give you time to catch up on payments, and allow you to keep your home. If you are considering bankruptcy or want to learn more about how Chapter 13 can help, contact O’Brien Law Firm, LLC, for personalized legal advice.
