Chapter 13 of the Bankruptcy Code affords debtors several benefits over Chapter 7. Aside from things like structuring a payoff of debt rather than discharging it, cramming down the principal value of a vehicle, or protecting co-signers, Chapter 13 can help you stay in your house, even if you are underwater on your mortgage—even if you are facing foreclosure. Here is what you would need to do.
- The first thing to do is file bankruptcy. The reason to list such an obvious step is that with the bankruptcy filing comes the automatic stay, which halts any foreclosure proceeding. Beware, though, that it is possible to file too late for the stay to help.
- Because the repayment plan requires you to pay off secured creditors before unsecured ones, the repayment plan you design can help your position vis-à-vis your mortgage lender while allowing you to anticipate discharging your unsecured debts after the repayment plan is concluded. Thus, you can promise to include the full monthly payments to the creditor as though no default occurred.
- If there is an arrearage in your mortgage, you can use Chapter 13 to cure that too. The way to do this is by proposing that you pay off the arrearage over the period of the plan plus interest. Lenders agree to such plans.
- Include other creditors as your payment plan allows you.
- When you leave bankruptcy your situation with your mortgage lender should be resolved. You are back on track and your arrearage has been paid down.
Chapter 13 is also often used in conjunction with an earlier Chapter 7 filing. Debtors who are underwater on their primary mortgage can discharge subsequent mortgages in Chapter 7. After that bankruptcy is concluded, they can file again in Chapter 13, and after the payment plan is concluded they can strip the lien(s) off the junior mortgage(s). Upon leaving Chapter 13, the debtor has no obligation to pay the subsequent mortgages and has a fresh start.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.