As an Asheville bankruptcy attorney, I meet almost every day with someone who is behind on real estate mortgage payments. Depending on your goals, various options exist via Chapter 7 and Chapter 13 bankruptcy cases.
If you want to keep the property:
Chapter 13 is a type of bankruptcy designed to help you “catch-up” on missed payments. If you are behind 10 mortgage payments on a $1000/month mortgage, you can file a Chapter 13 case and establish the right to pay your mortgage company back the $10,000 over a 5 year repayment plan. So, instead of having to cut a check to the bank for $10,000, the bankruptcy code provides you the right to pay that portion of your debts back at the rate of $167.67/month along with your normal mortgage payment, during a Chapter 13 repayment plan.
In addition, the bankruptcy code allows you to strip a second mortgage off of your house if the value of your home is less than the payoff on your 1st mortgage. This can be extremely helpful for homes which have been the family for years and have emotional value beyond dollars and cents.
If you want to eliminate liability on the mortgage:
Frequently, when folks are ready to move on from a bad real estate deal, we file Chapter 7 cases to eliminate their liability on the mortgage and surrender the real estate. This can also be done in Chapter 13 if you don’t qualify for Chapter 7 relief or if there are other non-exempt assets we need to protect.
The bottom line is that if you are behind on mortgage payments, you should make an appointment to meet with an experienced professional who can inform your decisions. For those of you in Western North Carolina, I would be happy to speak with you during a free, initial bankruptcy consultation.
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