Chapter 13 bankruptcy can be used to save your home or investment property from a mortgage or
Cure Mortgage Arrearages
A Chapter 13 Plan may provide for the catching up-to-date of your past due mortgage or association payments together with your ongoing regular monthly mortgage or association payments.
The Bankruptcy Court's Mortgage Modification Mediation Program
You may also apply for a mortgage modification under the Bankruptcy Court's mortgage modification mediation program. Under this program a mediator is appointed by the Bankruptcy Court to assist in the process, including the furnishing of mortgage modification documents. Communications between the parties are 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.
You may also apply for a mortgage modification under the Bankruptcy Court's mortgage modification mediation program. Under this program a mediator is appointed by the Bankruptcy Court to assist in the process, including the furnishing of mortgage modification documents. Communications between the parties are 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.
