When you are struggling to make your mortgage payments and it looks like the foreclosure process is about to begin, you may feel like there is nothing you can do to fix things. This is not true though. Bankruptcy can sometimes allow you to lower mortgage payments and keep your home. Not every type of bankruptcy will work though, which is why it’s a good idea to talk to a Rockland County Chapter 13 bankruptcy lawyer before you make any major decisions.
Can I Lower Mortgage Payments in Any Type of Bankruptcy?
If your goal is reducing your mortgage payments, your best bet is filing for Chapter 13 bankruptcy. This type of bankruptcy creates a payment plan for your debts. Chapter 7, the other type of bankruptcy traditionally available to individuals, is more about liquidating assets to pay off debts. Some people keep their homes through this process, but that requires them to catch up with back mortgage payments and continue to make all of their future payments on time.
How Does Chapter 13 Bankruptcy Lower My Mortgage Payments?
Chapter 13 bankruptcy is ideal for this purpose for a few reasons. First, an automatic stay stops a mortgage lender from pursuing you for payments and starting or continuing a foreclosure process. They would have to file a motion in court and get their plans to move forward with such actions approved.
This type of bankruptcy can also give you the opportunity to negotiate with your creditors. As you make a plan to repay what you owe, you can also talk to your mortgage lender to work out a better payment plan. You may be able to negotiate for a lower interest rate or ask to extend your loan term. This can lower your monthly mortgage payments and make it easier to stay on top of them.
What If I Have Multiple Mortgages?
Filing for Chapter 13 bankruptcy can be especially helpful if your mortgage payments are high due to the presence of a second or even third mortgage on your home. If you owe more than the value of your home, you may be able to convert the extra mortgages into unsecured debt in a process known as “lien stripping.”
Most Chapter 13 plans do not require you to pay off your unsecured debts in full, so this can reduce how much money you have to pay. It also reduces your monthly mortgage payments because there are no longer multiple mortgages to worry about.
Talk to a Bankruptcy Attorney
So if you think that bankruptcy might be a good option for you, contact the Lauterbach Law Firm. We can schedule a consultation and tell you more about the potential benefits of this process and how you can get a fresh financial start.
