What Are the Benefits of a Chapter 13 Bankruptcy?

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Allows you to save your home

One of the most important questions on your mind may be, “What happens to my house in a Chapter 13 bankruptcy?” Filing your petition immediately imposes the automatic stay, which stops any home foreclosure. This gives you time to figure out what your options are, and what is best for you. If you have filed more than one bankruptcy, you may still have options for obtaining the automatic stay.

If you are behind on your mortgage payments, a Chapter 13 bankruptcy can force creditors to accept monthly payments of your arrearages (missed payments and late fees) over a maximum of 60 months. This provides you the opportunity to get back on your feet and pay back only a small portion of your delinquent payments over an extended period of time.

Eliminates a second or junior mortgage

Many homeowners now find themselves living in a home that is worth less than they owe. Under some circumstances, if your home is worth less than you owe, it is possible to eliminate a second or junior mortgage. This is called lien stripping in a Chapter 13 bankruptcy.

For example, say your house is valued at $100,000, and you owe $200,000 on your first mortgage and $50,000 on your second mortgage. Your house is considered "underwater" because the value of your home is less than what you owe on your first mortgage. If you are in this situation, we may be able to "strip" the second mortgage and erase the debt so that you no longer owe money on the second mortgage.

Lien stripping can involve lots of paperwork, which can be complicated and needs to be completed accurately.

Call Boston bankruptcy attorney Tameka Grantham today by telephone at 978-341-5044 or via email.
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