How does chapter 13 work with mortgages?
How does chapter 13 work with mortgages?
When filing for bankruptcy, individuals can opt for Chapter 13 in order to eliminate their debts. The plan requires an individual to have sufficient income to pay creditors on time and in full. The plan also requires that the debtor pay all of their priority debts, such as new taxes and support obligations.
Although borrowers are allowed to refinance a mortgage after filing for bankruptcy, they may be forced to wait for two years before applying for a new mortgage. This is because banks take on an extra risk when they fund these types of loans. Because of this risk, interest rates and fees will be higher. In addition, bankruptcy filers may wish to borrow a higher loan amount or wait a shorter time to refinance their mortgage. However, they should consider their budget and how much homeownership they are willing to afford.
In addition, bankruptcy can prevent the lender from foreclosing your home. The automatic stay prevents your lender from initiating the foreclosure process, so your lender may be more likely to negotiate a more affordable plan with you. Depending on your situation and your current financial situation, your lender may be willing to lower your interest rate and extend the terms of your mortgage.
In order to qualify for a Chapter 13 plan, you must pay your mortgage arrears. If you fail to pay the mortgage payments, you will have to make up the arrears over a three to five-year period. In addition, you will need to include the mortgage proof of claim and escrow statement in your bankruptcy plan.
If you have any questions or in need a Chapter 13 Bankruptcy Attorney, we have the Best Attorneys in Utah. Please call this law firm for free consultation.
Ascent Law LLC
8833 S Redwood Road Suite C
West Jordan UT 84088
(801) 676-5506
