One of the first questions I ask prospective clients during their free initial consultation is whether they own or rent their home. If they own, my next question is whether or not they are current on their mortgage. If they are behind on their mortgage payments, I ask if their mortgage lender has started the foreclosure process.
If you are behind on your mortgage and want to keep your home, you may be limited to filing Chapter 13 bankruptcy. Section 1322(b)(3) of the Bankruptcy Code states that a plan may provide for the curing a default. Chapter 7, liquidation bankruptcy, does not allow you to get caught up on your mortgage arrears. For most people, Chapter 7 will only delay the foreclosure process if it has started.
One note of caution, however. You must get caught up on your mortgage over the course of your Chapter 13 plan. For example, if you are $10,000 behind, you must pay that entire $10,000 in addition to your regular mortgage payment over the 36 or 60 months of your plan. What this means is that Chapter 13 may not be a viable option if you can not afford your regular payments, arrears payments, and the other expenses in your plan. If that’s the case, your only option may be to surrender your home to the lender and file a Chapter 7 bankruptcy.
As grim as that option is, ask yourself if you would rather hold onto that home and continue struggling to make ends meet, or get your finances under control and provide for your family without the stress of being financially strapped.
If you have questions about how bankruptcy can help you get your finances under control, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy attorney. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.
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