How to Stay in Your Own Home with Chapter 13 Bankruptcy
One of the most frightening things that ever comes in the mail is a notice that you are behind on your mortgage payments and your bank is considering foreclosure. If you act quickly, it is likely that you can avoid foreclosure through Chapter 13 bankruptcy.
Debt reorganization, officially called Chapter 13 bankruptcy, is a way to lower all of your other payments so that you can afford to pay your mortgage. This process is designed for people who are unable to keep up with the full load of their monthly payments. It is not designed for people who are totally unable to pay their debts and may be better served by Chapter 7 bankruptcy.
In order to be eligible to file under Chapter 13 in Illinois, you must earn an income. This income must be enough to allow you to pay your mortgage and still have money left over to take care of your family. Additionally, you must also be willing and able to make a reduced payment to the rest of your creditors for three to five years. As long as you continue to make your payments, you will not have to surrender your home or any other property to the court or lenders.
When you file your action in federal court, your bankruptcy attorney will help you come up with a repayment plan. This plan consolidates all of your unsecured debts into one payment. This payment, which gets divided between the credit card companies and other debtors, is typically much lower than what you had previously been paying. You must make this payment monthly for the duration of the plan. At the end of the plan, these debts are discharged.
Throughout the bankruptcy process and afterwards, you must keep making your mortgage payments. Because your other payments will be lowered significantly, this payment should be much easier for you to afford than it is currently. In fact, your bankruptcy plan will not be approved unless you earn enough to make this payment.
If you fail to pay your mortgage during the process, your lender can start the foreclosure process, so it is important to keep paying.
At DebtStoppers in Chicago, we take every possible step to keep you in your home while reducing your payments. To find out which options make sense for you, schedule a free debt analysis with our team. Call us today at 312-913-0630 or contact us online.