Due to bad financial conditions, people might find paying for even essential things like the mortgage, difficult. The situation could be worse for those, who had bought property when the rate was at the peaks as this has resulted in high mortgage payment for a property which is no longer worth as much. This situation is not uncommon, but all is not lost as Sacramento based law firm Recovery Law Group provides options for people who have a home which is worth less than what they are paying in mortgages.
Trusting experienced bankruptcy lawyers with problems related to foreclosure and underwater mortgages can help provide you with various options that are available for you. There are legal options available to provide relief in such situations including mitigating unsecured debt and tax commitments, and short sales and deed in lieu of foreclosure. For people, who despite having an underwater mortgage wish to retain their home, Chapter 13 bankruptcy is an option. In this chapter, debt is restructured and debtor needs to repay the creditors in a 3-5 years’ timeframe. On conclusion of the plan, some unsecured debts might be discharged if you made manageable and timely payments as per the repayment schedule.
Since Chapter 13 allows you to keep your home, it is preferred by debtors who have failed to qualify for Chapter 7 bankruptcy, in case of underwater mortgage too. The advantage of this chapter is that you can retain your home, while making payments towards a mortgage instead of opting for short selling, foreclosing of property by lenders and letting go of your home.
Benefits of Chapter 13 Bankruptcy
A number of advantages are offered by Chapter 13 bankruptcy, including:
- In case of more than 1 mortgage, it helps eliminate other mortgages including any lien on the property. If you continue making payments as per repayment plan, bankruptcy laws help remove any liens against your property.
- Repayment plan includes debts such as medical bills, credit card bills, car payment, home equity loan amount, etc. The monthly payment towards the debts is calculated by the trustee on the basis of your income and you need to be abiding by the agreement made.
- Any debt eliminated after Chapter 13 bankruptcy ends, will free up funds which can be used to pay your mortgage and other dues.
Considering that every situation is unique, it would be best to consult a bankruptcy lawyer and find out the best option for you. The lawyers are better able to assess the situation and find out if Chapter 13 is the best form to deal with your underwater mortgage.