Can I Keep My House if I Am Behind on Payments but File for Chapter 13 Bankruptcy?
Also known as wage earners’ bankruptcy, Chapter 13 bankruptcy plans offer debtors certain advantages, including the option of keeping their homes. This type of bankruptcy restructures your debts into manageable monthly payments based on your income and expenses while stopping all collections, repossession, and foreclosure proceedings.
Although filing for bankruptcy can temporarily pause foreclosure proceedings, the court must approve the proposed bankruptcy plan if you’re behind on your mortgage payments. Discuss the benefits and limitations of Chapter 13 with the dedicated Florence, S.C. bankruptcy attorneys at Reed Law Firm, P.A. Call (843) 679-0077 or connect with us online to discuss protecting your home.
Advantages of Chapter 13 Bankruptcy for South Carolina Homeowners
In traditional Chapter 7 bankruptcy cases, the court liquidates the debtor’s assets – including his or her home – and distributes any non-exempt funds to eligible creditors before discharging any remaining debts. Chapter 13 bankruptcy works differently. It allows you to stop foreclosure and make up (cure) missed or late mortgage payments over time. The plan generally lasts from 3 to 5 years, depending on your income level and expenses. However, you must continue to make any mortgage payments that come due during Chapter 13 proceedings.
Stopping Florence, S.C. Foreclosure Proceedings
The automatic bankruptcy stay stops all civil legal proceedings – including foreclosures – as soon as your attorney files the bankruptcy petition. The court does not need to decide on the petition before the stay comes into effect, giving you time to consider your options and propose a workable repayment plan. During this period, the court will consider the following factors in determining whether you qualify for Chapter 13 bankruptcy protections:
- Monthly income
- Mortgage amount
- Family size and support obligations
- Medical expenses
- Credit card debts
- Car payments
- Utility bills
If you have enough income to pay down some debts, the court may grant the petition and restructure your debts into manageable monthly payments.
Keeping Your House During Chapter 13 Bankruptcy
Because mortgages are secured debts, your mortgage lender has priority. You will be permitted to make up missed mortgage payments over the plan period, but you must still pay your mortgage in full to keep your home. Secured creditors must obtain at least the value of the secured collateral if you want to keep your house. If you cannot make your mortgage payments during the plan period, the court might convert your case into Chapter 7 liquidation proceedings. This forces the sale of your home, but also discharges personal liability for any remaining balance once the home is sold.
Stay in Your Home with Help from a Florence Chapter 13 Bankruptcy Lawyer
You might keep your home and make up missed payments by filing for Chapter 13 bankruptcy in South Carolina. If you have stable income but are struggling to cover your mortgage and additional expenses, requesting a wage earner’s repayment plan could be the best option. Chapter 13 stops all foreclosure and collections proceedings and may help you remain in your home even if you’re behind on your mortgage payments.
Discuss whether Chapter 13 is the right option for your family with the dedicated Florence, S.C. bankruptcy attorneys at Reed Law Firm, P.A. Schedule a confidential consultation to save your home today by calling (843) 679-0077 or connecting with us online.
