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How Can Chapter 13 Bankruptcy Help Me Avoid Foreclosure?

Posted on in Chapter 13 Banruptcy

McHenry county bankruptcy attorneyAnyone can encounter unexpected financial problems that can put him and his family in a difficult position. This has been especially true during the COVID-19 pandemic, which has caused millions of people throughout the United States to lose their jobs or suffer health-related setbacks that have affected their income or resulted in large debts. A family that has struggled to pay ongoing expenses may be concerned that it may face foreclosure if they default on their mortgage. Fortunately, homeowners may be able to receive relief through Chapter 13 bankruptcy. By filing for bankruptcy, homeowners may eliminate certain types of debts and avoid losing their homes.

Addressing a Mortgage During a Chapter 13 Bankruptcy

First, filing for bankruptcy will place an automatic stay on any collections by creditors. This will put a halt to foreclosure proceedings that have been initiated by a lender, giving a debtor the necessary breathing room to determine his options. He can then determine what types of debts will be included in his bankruptcy and create arrangements that will allow them to maintain ownership of his home.

During the process of Chapter 13 bankruptcy, a repayment plan will be set up in which a person will pay back some of his debts throughout a period of either three or five years. Once the debtor makes all required payments, he will no longer be required to repay the balance of any unsecured debts that were included in the plan. In addition, any creditor who failed to file notice of its claim will not be required to be paid at all.

Depending on a homeowner’s circumstances and his disposable income, Chapter 13 bankruptcy can also provide other advantages. If the debtor has missed any mortgage payments, these payments and any related penalties or fees may be included in the debtor’s repayment plan, allowing him to pay these amounts in full over time and come current on his mortgage. In some cases, such as when a person owes more on his mortgage than his home is actually worth, a second mortgage may be removed as a lien on the house and converted to an unsecured debt to be paid through the plan.  The remaining balance that is not paid through the plan would be discharged at the conclusion of the bankruptcy.

Contact Our Kane County Chapter 13 Bankruptcy Lawyer

If you are struggling with overwhelming debts that have caused you to be concerned about the possible loss of your home, you will want to work with a lawyer to understand how bankruptcy can provide you with relief. At Thomas Law Office, we can help you determine the best available options for avoiding foreclosure. We will work with you to make sure you will be able to complete the bankruptcy process successfully. Contact our McHenry County bankruptcy attorney today at 847-426-7990 to get the legal help you need.