Considering filing for bankruptcy but worried about losing your home? There are numerous benefits of filing a Chapter 13 bankruptcy. One of those benefits is that you don’t run the risk of losing your home as you might in a Chapter 7 filing. A Chapter 13 bankruptcy can sometimes be a savior to those who are facing foreclosure because it allows you to keep your home and make up the mortgage arrears through a 3 to a 5-year payment plan. This is something that is not available in a Chapter 7 bankruptcy.
However, just because you won’t lose your house through the Bankruptcy process does not mean that you cannot lose it in other ways.
What do I need to do to keep my house during a Chapter 13?
The number one way to keep your home in a Chapter 13 is to keep your mortgage current throughout the entire bankruptcy. Your second priority is paying your Trustee payment. By doing this you are paying back those arrears on your house and at the end of the bankruptcy, you will not have to face the fears of foreclosure. However, some common things that arise during a Chapter 13 bankruptcy that people don’t really think about are:
- If you are paying your mortgage through an automatic debit this will stop once you file for bankruptcy. This means that you need to manually make your payment each month instead of expecting it to automatically come out.
- Maintain your home while in your bankruptcy so that you can avoid large repairs. If you see that a repair might be coming up, or you have noticed it for a while, do not use your mortgage money in order to make these repairs all at one time. Instead, you will need to budget a little money each month in order to slowly make these repairs.
- Accidentally falling behind on your payments. Sometimes when the mortgage company claims that you are behind on your mortgage payments, it doesn’t always mean that you missed last month’s payment or even the month before that. Sometimes it means that you have been making partial payments each month so you are constantly behind, or you missed a payment 8 months ago. Even though you haven’t missed one since, the mortgage company still shows that you are behind on a payment.
- It’s always a good idea to keep a record of your mortgage payment history in a safe place. In case the mortgage company claims that you are behind on payments, you will have to provide these anyway, so having those on hand makes the process a lot smoother.
Remember why you filed for bankruptcy in the first place: to keep your home. Make sure to keep your eye on the prize throughout the bankruptcy by making your monthly mortgage payments. As always, give our office a call if you have questions at 757-276-6555!