If you have fallen behind on mortgage payments or property taxes and are in danger of foreclosure, Chapter 13 bankruptcy can ensure that you will keep your house.

At the moment a bankruptcy is filed, the “automatic stay” takes effect, stopping creditor actions including foreclosure lawsuits. A Chapter 13 repayment plan is proposed, which allows payment of the mortgage and/or tax arrears to be spread out over a three to five year period. These amounts must be paid in full during this time, but the bankruptcy provides breathing room and a significant amount of time to bring the arrears current. The regular ongoing mortgage payments must be paid outside of the Chapter 13 plan.

Any other debts you have (e.g. credit card, medical, personal loans) must be included in the bankruptcy, but depending on your specific situation you may only have to pay a portion of those debts back during the three to five year plan, after which the remaining debt would be discharged.

Due to the coronavirus, some mortgage lenders are offering forbearance under the CARES act. This may provide some temporary relief for those who have not yet accumulated significant mortgage arrears. Barring further legislation, many people will soon face potential foreclosure. It is far better to consult a bankruptcy attorney before your arrears become very large or your home is about to be auctioned off. I can discuss your situation with you without charge. Contact me for a free consultation.

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