Falling into mortgage debt can be stressful because you could risk losing your home. The good news is that there are various paths you can take to hopefully keep your property. More and more people today are turning to Chapter 13 bankruptcy to help them reorganize their finances and maintain their most valuable assets. If you are currently struggling with an underwater mortgage, you might be wondering if filing for bankruptcy can be the solution you need. Our knowledgeable law firm is here to help. Read this blog to learn more about how filing for bankruptcy with a Rockland County Chapter 13 Bankruptcy Lawyer could benefit you.


When you use a mortgage loan to pay for a home, essentially you are borrowing money from a lender. Home equity is the difference between the current market value of your property and the amount you owe for your mortgage. Most likely you’ve bought your home when there was enough equity to cover the cost of the loan. However, an underwater mortgage is when the equity is not enough to cover your mortgage debt. This can have unfavorable consequences.


There are many different reasons why a mortgage might fall underwater. Most of the time, this can happen when homeowners struggle to keep up with mortgage payments or to increase their home equity. However, many other circumstances could lead to an underwater mortgage. The most common examples include:

  • The home’s market value has decreased since the time you bought it
  • You bought the home for an overpriced cost
  • You took out additional loans to pay for the property
  • You’re struggling with financial hardship and you’re having trouble keeping up with mortgage payments


Many homeowners in debt have found success by filing for Chapter 13 bankruptcy. This type of bankruptcy first restructures your finances to help you make smart financial decisions in the future. Then, the courts will enact a 3-5 year repayment plan to pay off all of your debts, including mortgages. Chapter 13 usually focuses on repaying secured debts first to ensure that you can keep your most important assets, and mortgage debt is a secured debt. If you took out additional loans to pay for your home, the courts can declare these as unsecured debts so that you won’t have to worry about paying them off.

Are you considering filing for Chapter 13 bankruptcy in New York? You might want to speak with an experienced bankruptcy lawyer who can guide you through the sometimes complicated process. Thankfully, our diligent team is on your side every step of the way! Contact the Lauterbach Law Firm today for an initial consultation.