It is one thing to realize that your debt has you in over your head. It’s another thing entirely to realize that the most important piece of property you own, which you have spent your entire life working for, could be lost as you try to fix your finances. If you are already behind on your mortgage, you’re probably on the verge of panic, if you aren’t there already. Thankfully, when it comes to bankruptcy, there are a couple of different options available. You may even be able to decide for yourself whether you want to keep the house or include it as part of the bankruptcy and let it go. Click here to read about foreclosure defense.
The Difference Between Chapter 7 and Chapter 13 Bankruptcy
First of all, it’s a good idea to understand the difference between a Chapter 7 and a Chapter 13 bankruptcy. Chapter 7 is a discharge of debts. The goal is for everything listed to be discharged so that you no longer have to worry about those accounts. Bear in mind that any secured loans may be met with repossession of items, including a house. However, you can file Chapter 7 and simply not file on the house. Conversely, Chapter 13 reorganizes your debts, so you still have to repay them, but it allows you to buy a little more time in cases where things like foreclosure might be an issue.
Dealing with a Past Due Balance on Mortgages
Chapter 13 doesn’t reduce your debt on your house or mean that you are no longer obligated to pay your mortgage. What it does do is create a payment arrangement that enables you to catch up on the past due portion of the loan. If you file a successful Chapter 13 on your house, it separates the past due portion from your normal mortgage payments so that you can catch up on the mortgage without having to come up with one lump sum all at once. This allows you to continue paying for your home in manageable amounts and, at the same time, decreases the risk of losing your home for nonpayment of the mortgage.
Options Before Filing Bankruptcy
If you are trying to catch up on your payments, you may want to try and refinance your house with the bank or come up with some sort of payment plan that enables you to get caught up. Just know that once you are behind, the bank doesn’t have to accept payments, although they most likely will. However, in some cases, the banks simply won’t budge for one reason or another, and you could be at risk of losing your home to a foreclosure. Once you are caught up on your payments, the bank will once again be obligated to accept payments toward the existing mortgage. It is also possible to negotiate a new payment plan while you are under Chapter 13, but the bank is not in any way obligated to do this.
Why You Need an Experienced Florida Bankruptcy Lawyer
Before you make any solid decisions regarding bankruptcy, you should speak with an experienced bankruptcy lawyer. Your personal situation is unique, and our lawyers can provide assistance and legal advice to help see you through it. Changes in circumstances can cause just about anyone to be in a position where meeting a house payment in addition to other debts is a challenge. We can take a look at your situation and suggest the next course of action and the best possible route to get you moving forward.