If you are behind on your mortgage and facing foreclosure and the loss of your home, filing a Chapter 13 bankruptcy can be an effective way to save your home from foreclosure and also get three or five years to catch up on the past due mortgage payments that you are behind. Keep in mind that the bankruptcy court generally has no authority to lower your monthly mortgage payment or to change the terms of your loan or mortgage. For most people, Chapter 13 bankruptcy will only work for you if you have regular monthly income. Upon filing your case, you will be legally required to begin making your regular mortgage payments to your lender, plus and extra payment to catch up on the past due mortgage payments. This extra monthly payment will be paid to the Chapter 13 Trustee, who will keep track of your payments and pay off your creditors over the 3 or 5 year timetable.
For example, let's assume that your regular mortgage payment is $1,000 per month and that you are 6 months behind. Also, by this time, your bank has usually hired attorneys, which you will have to pay for because you agreed to that when you signed your mortgage and promissory note. It is common to see legal fees you now owe your bank, totaling around $3,000 to $5,000 depending on how much work the bank's lawyers have done. If an auction of your home has been scheduled, you will also likely have to pay auctioneer fees and advertising fees in addition. So now you owe the bank $6,000 for past due mortgage payments plus $3,000 in legal fees, for a total past due amount of $9,000. In most cases, the bankruptcy court will make you repay that $9,000 by dividing the payments up over 3 years or 5 years. So that means that each month you will pay your $1,000 mortgage payment to the bank, plus you will have to make an additional payment of $250 each month for the next three years in order to catch up on your mortgage. If you miss too many payments, usually two or three, the court will usually dismiss your case, which means you are no longer under bankruptcy court protection and the bank can reschedule the foreclosure auction of your home.
Chapter 13 also works if you are behind on car payments, SUV payments, motorcycle payments truck, camper, boat or RV payments or generally anything you are behind on and want to keep for one reason or another. Keep in mind that if you have other debts, such as credit card bills or other unsecured loans, that you will also have to pay a portion of those back, which means that your extra monthly payment will be higher in order to pay back all your creditors a portion of what is owed and after you complete the three year repayment plan, any remaining balances on your credit card debts or other unsecured debts are discharged and you will never have to pay them again. The monthly payment you make will be determined according to your Chapter 13 "Plan." The Plan is a document that has all your debts, both secured and unsecured, as well as the amount of your regular monthly income and also indicates how much your monthly payment will be. As soon as your Plan is agreed to by the Chapter 13 Trustee, and the Judge, your Plan will be confirmed and as long as you make the monthly payment to the Chapter 13 Trustee, who will pay each of your creditors a little money at a time, according to your Plan, you will be on your way to a successful Chapter 13. But don't forget, you still have to make your regular mortgage payment to your lender, as well as make any other payments to secured lenders, such as car payments or installment payments on furniture or other household items.
A Chapter 13 also has some other benefits for people, depending on their individual circumstances. One of the most helpful benefits is that in some cases, a Chapter 13 can get rid of a second mortgage off your house and you will never have to pay it again. This is called a "strip off" and whether you can take advantage of it or not depends on several factors, including the fair market value of your house and how much you owe the first mortgage holder. If you have student loans, or income taxes owed, a Chapter 13 can stop collection enforcement and the accumulation of interest on past due amounts for tax liabilities, as well as give you protection from your creditors because any payments made to them will be subject to court oversight. Another benefit of a Chapter 13 is that is protects co-signers on your accounts because they will receive the same bankruptcy court protection that you do, even though they are not filing bankruptcy.
As with a Chapter 7 bankruptcy, a Chapter 13 bankruptcy will require you to produce substantial documentation of your financial affairs, so that your attorney, your creditors, the trustee and the court, will have an accurate picture of your finances as of the date of filing your case. You will be required to have your tax returns filed and up to date and you will have to show the trustee your paystubs, or other evidence of income if you do not receive a paycheck. In addition, you will have to produce a binder for your homeowner's insurance on your house, as well as provide evidence of the value of your house, which usually comes from a real estate broker who can give an opinion as to your homes fair market value.
This is only a brief overview of some of the main areas of how a Chapter 13 bankruptcy works. There are many other aspects to a Chapter 13 and each case is different because no two people have exactly the same set of circumstances. Bankruptcy law is complicated, and it is always best to be represented by an experienced bankruptcy attorney who can help you get a fresh start through completing a Chapter 13 repayment plan.
By Attorney Richard S. Ravosa
©Richard S. Ravosa
http://www.MassachusettsBankruptcyCenter.com
Article Source: http://EzineArticles.com/?expert=Richard_S._Ravosa,_Esq.
Article Source: http://EzineArticles.com/8273578
For example, let's assume that your regular mortgage payment is $1,000 per month and that you are 6 months behind. Also, by this time, your bank has usually hired attorneys, which you will have to pay for because you agreed to that when you signed your mortgage and promissory note. It is common to see legal fees you now owe your bank, totaling around $3,000 to $5,000 depending on how much work the bank's lawyers have done. If an auction of your home has been scheduled, you will also likely have to pay auctioneer fees and advertising fees in addition. So now you owe the bank $6,000 for past due mortgage payments plus $3,000 in legal fees, for a total past due amount of $9,000. In most cases, the bankruptcy court will make you repay that $9,000 by dividing the payments up over 3 years or 5 years. So that means that each month you will pay your $1,000 mortgage payment to the bank, plus you will have to make an additional payment of $250 each month for the next three years in order to catch up on your mortgage. If you miss too many payments, usually two or three, the court will usually dismiss your case, which means you are no longer under bankruptcy court protection and the bank can reschedule the foreclosure auction of your home.
Chapter 13 also works if you are behind on car payments, SUV payments, motorcycle payments truck, camper, boat or RV payments or generally anything you are behind on and want to keep for one reason or another. Keep in mind that if you have other debts, such as credit card bills or other unsecured loans, that you will also have to pay a portion of those back, which means that your extra monthly payment will be higher in order to pay back all your creditors a portion of what is owed and after you complete the three year repayment plan, any remaining balances on your credit card debts or other unsecured debts are discharged and you will never have to pay them again. The monthly payment you make will be determined according to your Chapter 13 "Plan." The Plan is a document that has all your debts, both secured and unsecured, as well as the amount of your regular monthly income and also indicates how much your monthly payment will be. As soon as your Plan is agreed to by the Chapter 13 Trustee, and the Judge, your Plan will be confirmed and as long as you make the monthly payment to the Chapter 13 Trustee, who will pay each of your creditors a little money at a time, according to your Plan, you will be on your way to a successful Chapter 13. But don't forget, you still have to make your regular mortgage payment to your lender, as well as make any other payments to secured lenders, such as car payments or installment payments on furniture or other household items.
A Chapter 13 also has some other benefits for people, depending on their individual circumstances. One of the most helpful benefits is that in some cases, a Chapter 13 can get rid of a second mortgage off your house and you will never have to pay it again. This is called a "strip off" and whether you can take advantage of it or not depends on several factors, including the fair market value of your house and how much you owe the first mortgage holder. If you have student loans, or income taxes owed, a Chapter 13 can stop collection enforcement and the accumulation of interest on past due amounts for tax liabilities, as well as give you protection from your creditors because any payments made to them will be subject to court oversight. Another benefit of a Chapter 13 is that is protects co-signers on your accounts because they will receive the same bankruptcy court protection that you do, even though they are not filing bankruptcy.
As with a Chapter 7 bankruptcy, a Chapter 13 bankruptcy will require you to produce substantial documentation of your financial affairs, so that your attorney, your creditors, the trustee and the court, will have an accurate picture of your finances as of the date of filing your case. You will be required to have your tax returns filed and up to date and you will have to show the trustee your paystubs, or other evidence of income if you do not receive a paycheck. In addition, you will have to produce a binder for your homeowner's insurance on your house, as well as provide evidence of the value of your house, which usually comes from a real estate broker who can give an opinion as to your homes fair market value.
This is only a brief overview of some of the main areas of how a Chapter 13 bankruptcy works. There are many other aspects to a Chapter 13 and each case is different because no two people have exactly the same set of circumstances. Bankruptcy law is complicated, and it is always best to be represented by an experienced bankruptcy attorney who can help you get a fresh start through completing a Chapter 13 repayment plan.
By Attorney Richard S. Ravosa
©Richard S. Ravosa
http://www.MassachusettsBankruptcyCenter.com
Article Source: http://EzineArticles.com/?expert=Richard_S._Ravosa,_Esq.
Article Source: http://EzineArticles.com/8273578
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