Saturday, February 8, 2020
Saving Your Home from Foreclosure under Chapter 13 Bankruptcy
Chapter 13 bankruptcy can be used to save your home or investment property from a mortgage or association foreclosure. The filing of a chapter 13 case generally stops the foreclosure case and gives you the opportunity to propose a plan to reorganize your mortgage or association payments. The chapter 13 case though must be filed before the foreclosure sale.
Cure Mortgage Arrearages
One typical Chapter 13 Plan provides for the catching up-to-date of your past due mortgage or association payments. The Chapter 13 Plan usually involves paying off the mortgage or association arrearages over a 3 to 5 year period in addition to making your regular ongoing monthly mortgage or association payments.
The Bankruptcy Court's Mortgage Modification Mediation Program
The Bankruptcy Court in Miami started a new mortgage mediation program on April 1, 2013. Under this program a mediator is appointed by the Bankruptcy Court to assist in the process and documents and communications are exchanged over a special internet portal.
Avoid Second Mortgage
If your home has decreased in value, sometimes you are able to wipe out or "avoid" your second mortgage. For example, if you owe $300,000 on your first mortgage and $100,000 on your second mortgage and your home has gone down in value to $250,000, there is no equity or value to "secure" the second mortgage. Under these circumstances, the Chapter 13 Plan may provide to wipe out or avoid the second mortgage lien. The $100,000 debt owed on the second mortgage will be wholly unsecured and usually only receive a small dividend together with other general unsecured creditors.