If your mortgage payments are too high and other financial obligations are starting to become too much to deal with, then you may want to consider filing for bankruptcy. This can give you a fresh financial start and the opportunity to negotiate for lower mortgage payments. It’s not the right path for everyone, but a Bergen County Chapter 13 bankruptcy lawyer from our firm can advise you about the potential benefits of filing.
How Would Chapter 7 Bankruptcy Affect Mortgage Payments?
The first thing it’s important to know is that there are some significant differences between different types of bankruptcy. Chapter 7 bankruptcy is commonly referred to as a liquidation bankruptcy. This means that you sell off many of your assets to pay down your debts.
There are exemptions, including one for your primary residence. If this is the mortgage you are struggling to pay, you can decide whether you want to keep making payments or give up your home. You can submit a petition concerning your plans to the court. You usually won’t have a chance to renegotiate any part of your mortgage arrangement. The choices are to catch up on old payments or give up your home.
How Can Chapter 13 Bankruptcy Lower My Mortgage Payments?
This is why Chapter 13 bankruptcy can be preferable. This reorganizes your debts and allows you to make a payment plan. You don’t have to sell off any assets.
If your mortgage payments are a major financial burden, you can use your debt payment plan to pay off anything that’s past due. Then you can talk to your lender about some potential changes to your mortgage. The most common accommodations are a reduction in interest rates or an extension of the loan term, which results in smaller monthly payments.
What Should I Know About Lien Stripping and Multiple Mortgages?
There is another way that Chapter 13 bankruptcy can help you. If you have multiple mortgages and owe more than your home is worth, you may be able to take advantage of a process known as “lien stripping.” When you owe someone money, they can place a lien on your home and make it impossible to sell it without paying them back.
If you have a second or third mortgage, the bank can put a lien on your home. When you file for Chapter 13 bankruptcy, you can treat these mortgages like other unsecured debt and pay them off as a part of your debt repayment plan. This means that you only have to worry about making monthly mortgage payments on one mortgage instead of multiple.
Meet With Bankruptcy Lawyers Today
If you want to learn more about how bankruptcy could help you negotiate and lower mortgage payments, contact the Law Office of Boyd & Squitieri. We can schedule a consultation and tell you more about this process and how it can help you address your current financial burdens.
