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Chapter 7 and Chapter 13 Bankruptcy - Am I at Risk of Losing My Home?

Chapter 7 and Chapter 13 Bankruptcy - Am I at Risk of Losing My Home?
"""The filing of Chapter 7 or Chapter 13 bankruptcy results in a """"automatic stay"""" that immediately stops any foreclosure proceedings on the debtor's home.

Under Chapter 7, the debtor has the following options:

one) retains the property, ""reaffirms"" the mortgage, and continues to make regular payments to the lender; or,

2) Surrender the property to the lender and release virtually all additional liability on the mortgage.

When a consumer """"reaffirms"""" the debt, he is essentially eliminating the debt through his bankruptcy proceeding and agreeing to continue to be responsible for the debt. To reaffirm the debt, the creditor must execute a standard """"reaffirmation agreement"""".

To reaffirm a loan, the borrower must either (a) be current on mortgage payments, (b) bring the loan current within a short time after filing for bankruptcy, or © negotiate a payment arrangement or mortgage loan modification with the lender prior to or after filing for bankruptcy.

Unless the borrower negotiates a favorable deal with the lender, Chapter 7 bankruptcy will not allow the borrower to keep the property if the mortgage is past due. If the home loan is delinquent when a borrower files for Chapter 7 bankruptcy and he fails to bring it current or negotiate a satisfactory repayment plan with the lender, the lender may file a """"motion for relief from the automatic stay"""" asking the bankruptcy court for permission to begin or continue foreclosure proceedings.

Under Chapter 13, the debtor has the following options:

one) supports the home and continues to make standard mortgage payments to the loan provider. If the mortgage is delinquent at the time the Chapter 13 petition is filed, the borrower may have up to Five years (60 months) to bring the mortgage current via a repayment plan. The """"overdue"""" or """"arrearage"""" amount may be divided into no more than sixty equivalent monthly payments that must be paid to an assigned personal bankruptcy trustee; or even into a lump sum.

two) """"surrender"""" the property to the lender and release all or most of the debtor's liability on the mortgage.

If the borrower falls behind on either standard or """"arrearage"""" payments during the bankruptcy proceeding, the bankruptcy court may authorize the mortgage company to begin or continue foreclosure proceedings on the home, or it may dismiss the bankruptcy proceeding entirely.

The bankruptcy court does not have the legal authority to modify a mortgage on a primary residence and, as a result, cannot reduce the regular payment amount or interest rate as stated in the mortgage documents, except in rare instances. When the rental property is not the actual debtor's primary residence, Chapter 13 allows the creditor to reduce the interest rate to the market rate. ""Special """"balloon payment"""" mortgages may be extended for an additional five years at a reduced interest rate.""

" - https://www.affordablecebu.com/

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"Chapter 7 and Chapter 13 Bankruptcy - Am I at Risk of Losing My Home?" was written by Mary under the Finance / Wealth category. It has been read 207 times and generated 1 comments. The article was created on and updated on 01 June 2023.
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