Filing for bankruptcy under Chapter 13 allows you to keep your home and other properties, and not lose them to the bankruptcy trustee. Bankruptcy filing likewise does not affect your mortgage. But, you may lose your house through foreclosure if you fail to keep up with your payments.
Your chapter 13 bankruptcy attorney here in Utah can guide you through the entire process. Going through the process on your own may be difficult. Here is what you need to know:
You need to pay all your mortgage arrears before the end of the allowed period for repayment. Otherwise, you will lose your home to foreclosure. In general, you have 3 to 5 years to cover for your arrears. This feature makes Chapter 13 more attractive than Chapter 7 to people who are facing foreclosure.
Foreclosure and Chapter 13
When you are already in foreclosure when filing for bankruptcy under Chapter 13, foreclosure proceedings stop. This is because provisions of Chapter 13 prevail over the foreclosure. Your lender cannot foreclose as long as you remain up to date on your payments.
You then make up for the arrears via your Chapter 13 arrangement.
Stripping Junior Mortgages Off
If you have a HELOC (home equity line of credit) or second/third mortgages that find no support in the equity you have in your home, filing for Chapter 13 bankruptcy will help you strip the loans off. The loans will then become part of your total unsecured debt.
Under your Chapter 13 plan, you can pay your unsecured debt at a steep discount. When the repayment period ends, and you still have remaining balances on your stripped off loans, these balances are discharged.
To sum it all up, filing for Chapter 13 bankruptcy is a good option when you want to keep your home. With the help of your lawyer, you can have a fresh start once the process is over.