How to Pay Mortgage Arrears in a Bankruptcy
If you are in arrears on your mortgage and want to keep your house, you may have to make the difficult decision to file for bankruptcy. Bankruptcy gives you options. If you include your mortgage payments in a Chapter 13 bankruptcy case, you keep your house upon the completion of your case. Bankruptcy laws have made it difficult to file for bankruptcy on your own, so to avoid mistakes, which could cause you to lose your house, consider hiring a competent bankruptcy attorney to guide you through the steps.
Other People Are Reading
Instructions
-
-
1
File for Chapter 13 bankruptcy. File your bankruptcy petition and bankruptcy schedules. The bankruptcy court requires that you pay a $235 filing for Chapter 13 bankruptcy as of the time of publication. As soon as you file the bankruptcy petition, an automatic stay goes into effect. The automatic stay prevents your creditors from attempting to collect from you. That ensures your home will not go into foreclosure while your case is in process.
-
2
Propose a debt repayment plan to the court. Within 14 days of filing your bankruptcy petition, you must file a debt repayment plan. The debt repayment plan should cover a period lasting three or five years. Determine the duration of your debt repayment plan by comparing your family income to the median family income for your state. The debt repayment plan should account for the payment of all your past due debts. To include your mortgage, take the past-due amount on your mortgage and divide it by 36 for a three-year plan or by 60 for a five-year plan. Upon the completion of all plan payments, you will no longer be in arrears on your mortgage and no longer in danger of foreclosure.
-
-
3
Make payments on the debt repayment plan. Within 30 days of filing your Chapter 13 case, you must begin making payments on your debt repayment plan. This holds true even if the bankruptcy court has not yet confirmed your plan. Make these payments to the bankruptcy trustee, and the bankruptcy trustee will, in turn, distribute payment to each of your creditors.
-
4
Attend the plan confirmation hearing. Within 45 days of filing your Chapter 13 case, you will appear before the judge at a plan confirmation hearing. The judge has the final decision on whether the plan is feasible and complies with the federal Bankruptcy Code. Under Chapter 13 bankruptcy, the federal Bankruptcy Code requires that your creditors receive as much money as they would have received if your assets were liquidated under Chapter 7 bankruptcy.
-
1
Tips & Warnings
You can find state median incomes on the U.S. Trustee Program website.
You are required to receive credit counseling before filing your bankruptcy case.
