Chapter 13 is a reorganization bankruptcy
Chapter 13 Bankruptcy is a “reorganization” bankruptcy. Although it can be used in a variety of different ways to solve your debt problems, it is primarily used when someone has fallen behind with their mortgage payments and they are trying to “catch up”and become current again.
For example, a homeowner’s regular monthly mortgage payment is $2,000 a month. They are 4 months behind, so they need $8,000 to get caught up. Chapter 13 simply divides the $8,000 by 60 months (a 5 year bankruptcy repayment plan) to equal a repayment plan of $133.33 a month. That’s it. You now restart sending your regular monthly mortgage payment of $2,000 to your mortgage lender, and an additional check of $133.33 to the bankruptcy court who will forward the check to the mortgage lender. If you want a shorter plan, such as 3 years, just divide by 36 months in the example above and your plan payment would be $222.22 a month.
It may even be possible to eliminate your entire 2nd mortgage loan in a Chapter 13 bankruptcy. Call us to find out if your 2nd mortgage loan qualifies to be eliminated.
Chapter 13 has been the answer when it comes to saving your house from foreclosure. With the economy the way it is today, and the difficulty and frustration that arises out of things like loan modifications and threats of foreclosure, there is nothing that empowers a homeowner more than a Chapter 13 bankruptcy. It allows you to control your mortgage payment and get you back on the road to recovery.