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Can Filing for Chapter 13 Change My Mortgage?

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Can Filing for Chapter 13 Change My Mortgage?

chapter 13 bankruptcy

Are you behind on house payments? Facing foreclosure? Wondering what will happen to your family’s home? You’re facing a very difficult situation, and you may be curious about how bankruptcy might be able to help. While bankruptcy isn’t a cure-all, it can improve your overall financial picture significantly, especially if you are falling behind on mortgage payments.

Will Bankruptcy Lower My House Payment?

Bankruptcy can do many things to stabilize your finances, but, in most cases, it can’t modify the terms of a primary residential mortgage. Although bankruptcy modification of mortgages has been discussed in the U.S. Congress and many legal experts are in favor of it, so far, no changes have been made to the bankruptcy code in this regard. This means generally that Chapter 13 bankruptcy cannot change your monthly payment or reduce your total mortgage debt. However, bankruptcy can buy you some time to contact your mortgage lender and negotiate a modified payment plan, which can be just what you need to get your finances under control.

Can Bankruptcy Stop a Foreclosure?

Bankruptcy is very effective at stopping foreclosure by implementing court ordered protection called the automatic stay. When you file for bankruptcy, the automatic stay halts attempts to seize your home and other assets. As long as the home has not yet been sold, you can use bankruptcy to interrupt the foreclosure process and take time to sort through your financial situation. Chapter 13 allows three to five years for your repayment plan. This plan can catch you up on mortgage payments, modify car loans, and force unsecured creditors like medical bills and credit cards to take what the law says you have to pay before an ultimate discharge of most unsecured debt balances.

Will I Lose My House?

Whether you lose your house depends largely on timing and how far into the foreclosure process you are before filing for bankruptcy. Chapter 13 can help you and your family stay in your house and can either reorganize the mortgage arrears or buy you time to apply for a modification. It prevents losing your home – unless your home has already been sold at a sheriff’s sale. Timing is extremely important in this situation. Act quickly if you are facing foreclosure.

Should I Go Ahead and File for Chapter 13 Bankruptcy?

We strongly advise you to contact a bankruptcy attorney before filing for Chapter 13 bankruptcy. Your attorney will help you make choices that are 100% in your best financial interest. During this challenging time, you may get bad advice from well-meaning friends and family members, and your creditors may try to trick you into making bad decisions. But your bankruptcy attorney is always on your side, using the power of the law to protect your home, your family and your financial future.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.

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No upfront attorney fees in qualifying cases. Pay only court filing fee, credit reporting fee, and pre-bankruptcy credit counseling session fee to get a case on file to stop garnishments, repossessions, and certain court actions. Restrictions may apply. Please call to discuss your situation and learn how we can help.