Millions of Americans have different, lower-paying jobs than they had in 2019. In some cases, they may have no job at all. For California residents, what might have been a reasonable house payment two years ago is now more than they can handle.
If you’re behind in mortgage payments or your lender is threatening foreclosure, you may be looking for options. Chapter 13 bankruptcy may help you manage the situation and keep your home. At the Law Office of Terrence Fantauzzi, we have been helping homeowners stop foreclosure in Rancho Cucamonga for more than 10 years.
Stop Collection Activity
When you file for bankruptcy, the court issues an injunction called an Automatic Stay which prohibits debt collectors from continuing legal action and stops all collection activity. Chapter 13 bankruptcy allows you to catch up on your missed mortgage payments through a repayment plan. You and your attorney can propose a plan that will enable you to do this by paying monthly installments for three to five years.
Apply for a Mortgage Modification
Even though you’ve developed a plan that lets you get caught up on your mortgage, you still have to pay the current amount due each month. A mortgage modification is a change to the terms of your loan. This could include adjusting the interest rate and other financial components which reduces the monthly payment.
A loan modification can also add the missed payments to the end of the loan. Although this increases the length of the loan overall, monthly payments are lower, and your mortgage will be current when the modification goes into effect. You must present the modification plan for approval by the bankruptcy judge assigned to your case. As long as the new terms are reasonable, judges typically approve the plan.
Continue (or not) with Bankruptcy
If your repayment plan was created primarily so that you could pay your mortgage, it may no longer be necessary after the modification. However, if you have financial issues other than making your house payments, bankruptcy can help you deal with them once and for all. Things to consider before deciding to stop your case include:
- Do you have significant credit card debt that Chapter 13 can resolve favorably?
- Is your car loan part of your repayment plan?
- Are you willing to handle creditors without the protection offered by bankruptcy?
There are many benefits to Chapter 13. Yes, it affects your credit, but it also helps you stop foreclosure, keep your car and ultimately receive a fresh start financially.
Rancho Cucamonga Foreclosure Lawyer
You worked hard to become a homeowner, so don’t let it go to foreclosure without a fight. Contact us today to schedule a free consultation. We can discuss your situation and determine if bankruptcy can help you keep your home.