Saving Your Home: Call a Chapter 13 Bankruptcy Attorney
If you are behind on your mortgage payments and foreclosure threatens, contact an experienced Chapter 13 bankruptcy attorney to see if you qualify for relief under Chapter 13 of the Bankruptcy Code, which allows debtors to reorganize their financial obligations according to a court-approved plan.
Often referred to as a “wage earners” or “homeowners” plan, a Chapter 13 plan provides individual debtors who have sufficient regular income with a “doable” way of curing the default – that is, paying off mortgage arrears via plan payments to the Bankruptcy Trustee. Be aware, however, that the debtor must also be able to keep current with regular mortgage payments (which remain payable directly to the lender) on an ongoing basis in order to avoid foreclosure. While no additional interest is usually charged on the arrears, they must be paid off completely in order to cure the default. This applies to primary or first mortgages as well as second/junior mortgages. Also, as creditors’ claims in bankruptcy are paid in order of priority, and since mortgage arrears are paid ahead of unsecured debts (such as credit card charges), Chapter 13 debtors can cure the mortgage default while permanently avoiding up to 100% of their unsecured debt.
A Chapter 13 bankruptcy attorney will be able to explain other significant benefits that a Chapter 13 debtor may be entitled to, such as:
- Judicial lien avoidance. A judicial lien (also known as a judgment lien) is a lien against your property that is imposed as the result of a money judgment against you, that can be ‘demoted’ to unsecured debt status and satisfied in full for a fraction of the debt, or nothing at all. The judgment creditor is paid along with the other general unsecured creditors and any unpaid balance is discharged. Note that this does not apply to statutory liens such as liens imposed by the IRS or other taxing authority. In Pennsylvania, 100% of the equity in property held by married individuals as tenants by the entireties (married people) is exempt.
- Removal of second mortgage lien. In a Chapter 13 bankruptcy, a second mortgage can treated as a general unsecured debt if the primary mortgage balance is greater than the value of the home. The debtor must be able to establish that there is no remaining value in the property, which can be done by obtaining a professional appraisal.
As you probably know, mortgage loans are frequently bought and sold (in some cases, multiple times over the life of the loan), so it is not unusual for a mortgage to change hands during the course of a bankruptcy proceeding. This can cause administrative complications if the Bankruptcy Trustee is not notified of the transfer in a timely fashion and/or if payments on the arrears are misdirected. Fortunately, you can rely on your Chapter 13 bankruptcy attorney to deal with the mortgage company, the Bankruptcy Trustee, and the court to protect your interests.
Call a Philadelphia Chapter 13 Bankruptcy Attorney at Alfred Abel Law Offices
Philadelphia based Chapter 13 bankruptcy attorney, Alfred Abel, will help you protect your interests. Always consult a professional when considering bankruptcy. Alfred Abel has over 25 years of experience and will explain the significant benefits of Chapter 13 as well as guide you through the process. Contact Alfred Abel today for a consultation.