Written by Charleston Bankruptcy Lawyer, Russell A. DeMott
Chapter 13 bankruptcy is more involved that Chapter 7 bankruptcy. There are things you can do in Chapter 13 that can’t be done in a Chapter 7. This video post gives a good overview of Chapter 13–what you can do and what you can’t do. Note that one useful thing that can be done in is stopping mortgage foreclosure. Chapter 13 bankruptcy will stop the foreclosure and allow the homeowner to cure–catch up–the mortgage arrearage over the life of the plan, usually three to five years. For more information on stopping foreclosure, take a look at my post “Chapter 13 Bankruptcy Stops Foreclosure.”
However, when trying to decide whether you should attempt to save our home, you first need to think about whether you can actually afford it. This is called “feasibility.” If you can’t make your regular monthly mortgage payments, you won’t be able to afford both your mortgage payment and your plan payment, which will consist of an additional amount used to cure your mortgage arrearage.
However, mortgage modification through the HAMP program (“Home Affordable Modification Program”) has been a failure, so more traditional remedies like Chapter 13 are options you should understand.
Chapter 13 is a legal process. It’s not a voluntary program in which lenders may or may not participate. (There are also many who officially “participate” in the HAMP program who, in reality, seem to be interested in good public relations but permit very few mortgage modifications.) Bankruptcy law is federal law implemented by federal judges. Lenders must allow you to cure your mortgage arrearage, providing you follow the law and otherwise qualify for relief.
This is the third video done by Kurt O’Keefe that I’ve posted. Kurt’s a colleague of mine practicing in Detroit. He’s done several excellent videos, so I’ll post more from time to time. I hope you find this overview useful.